Boston Among Top Targets for Commercial Real Estate Investment in 2023

Heather Brown
Simon Butler

Boston – A recent survey of commercial real estate investors ranked Boston as one of the top 10 target among U.S. metros. CBRE’s 2023 U.S. Investor Intentions Survey ranks the Boston real estate market number nine.   The survey found that more investors are prioritizing high-performing secondary markets in 2023 (as opposed to gateway markets), particularly those with strong job and population growth prospects, which can translate into greater potential for both equity and income growth. Sun Belt markets are the most appealing: Dallas is the top preferred market, followed by Austin. “Despite rising cost for debt capital and fears of a potential recession, the Boston market remains one of the top markets for investors given the stability of the local economy with the meds and ed’s sectors leading the way,” said CBRE Vice Chairman Simon Butler.  “Buyers and lenders have been increasingly selective given the Fed’s monetary policy and shifts in underwriting criteria,” added CBRE Executive Vice President Heather Brown. “But a lack of quality product and rising rents in many sectors of the market, including office, industrial and retail, still make Boston one of the most active markets in the nation.”Other Key Findings from the 2023 Survey (conducted in December 2022):

  • Investors cite rising interest rates, a potential recession and limited credit availability as their greatest challenges this year.
  • More than half of investors expect to decrease purchasing activity in 2023 compared with 2022 levels. Amid lower pricing dynamics, 60% of respondents say they will either sell less than last year or not sell at all.
  • The most sought-after sectors remain multifamily, particularly apartment complexes, and industrial, led by modern logistics facilities in major markets. Grocery-anchored centers are the most popular subsector for retail investors, while office investors largely prefer Class A assets in prime locations.
  • More investors will implement opportunistic and debt strategies than last year because of attractive returns amid higher interest rates and tighter financial market conditions.
  • While investors remain committed to environmental, social and governance criteria (ESG), nearly half of respondents say that the worsening economic outlook will limit the extent to which they consider ESG criteria in their investment decisions.