The Urban Land Institute recently asked 700 real estate professionals to name the best--and worst--places to invest in commercial real estate in the coming year.
Those surveyed included private developers, Realtors and Real Estate Investment Trust executives. Their answers also apply to the residential market, since the single-family-home sector typically follows the economy. As wages go up and there are more jobs, more people can buy homes. This pushes prices up. Cities were judged on a scale of one to nine (one being an abysmal place to invest and nine being excellent).
Best Chances: Los Angeles, Calif.
While the areas east and south of Los Angeles suffer from some of the worst foreclosure rates in the nation, L.A. benefits from a diverse economy, a strong port and a downtown where new condos are helping create a 24-hour city.
Best Chances: Seattle, Wash.
Seattle has a reputation for nurturing brainy industries like aerospace and software. That should help it weather the coming financial storm. Seattle also stays strong because of its vibrant, livable downtown where rents are going up and tenants are likely to stick around.
Best Chances: San Francisco, Calif.
San Francisco learned from the mistakes of the 2001 tech bust. This time around the city didn't overbuild, so vacancies shouldn't be too much of a problem. The city's beauty will continue to attract tourists.
Worst Chances: New Orleans, La.
The city has yet to fully recover from 2005's Hurricane Katrina. Businesses that fled to nearby Houston and Dallas are unlikely to come back. Others see the city as too risky, especially after this year's scare with Hurricane Gustav.
Worst Chances: Cleveland, Ohio
With the recent failure of National City Bank one local columnist said, "Cleveland is racing toward economic irrelevancy with no U-turn in sight." Never a good sign.
Worst Chances: Detroit, Mich.
The Motor City has struggled for years, but with car makers stooping to federal aid things could get even worse. Chilly Detroit is unlikely to find a replacement industry any time soon.
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