LOS ANGELES – (Realty News Report) – Houston, which led the nation’s real estate markets in 2015, has fallen dramatically to No. 60 in the Urban Land Institute’s latest ranking of the best U.S. markets for investment opportunity.
Seattle claimed the top position this year. Austin, the three-year leader prior to this report, dropped to No. 2, while Dallas placed No. 5.
These rankings appear in ULI’s annual Emerging Trends in Real Estate report, produced in partnership with PwC US. The report synthesizes perspectives from hundreds of commercial real estate professionals, including developers, financiers, brokers, fund managers, lenders and advisors.
The research highlights a clear shift in investor interest toward smaller and secondary markets. Along with Houston’s slide, Manhattan also experienced a steep decline to No. 46. Interviewees cited Manhattan’s high asset prices and an over-supply of new construction, noting “too many cranes in the skyline,” as factors weighing on its attractiveness.
Conversely, Salt Lake City rose sharply to No. 3, becoming the smallest city ever to break into the Emerging Trends Top Ten.
“The trend of smaller markets displacing larger ones as investment hubs is setting a new course for urban development that is reshaping cities across the nation,” said Patrick L. Phillips, Global Chief Executive Officer of ULI. “These cities are positioning themselves as highly competitive in terms of livability, employment offerings, and recreational and cultural amenities.”
The report was unveiled Thursday at the ULI Fall Meeting in Los Angeles.
Houston’s steep fall in the rankings is largely attributed to turmoil in the energy sector, which has produced layoffs, increased office vacancies and a rise in sublease space—factors that have dampened the city’s investment appeal.
Editor’s note: Realty News Report is staffing this event and will provide updates as they become available.