With so much having changed and evolved in commercial real estate within recent years, there are definitely some pockets within the country where commercial real estate activity has really been outpacing most other areas. With this in mind, the parts of the country that have been doing the best have recently revolved around industries like technology and energy production. In addition, New York City has been doing very well because, in addition to it being a major hub for both business and financial activity, its financial sector has benefitted greatly from receiving so much bailout money. Anytime you add billions and billions of dollars into a local economy, people will be smiling.
But in terms of areas where the production of energy has been an important part of the economy, like in both Texas and in North Dakota, these areas have been doing phenomenally. Since the price of oil has risen substantially in recent years, it’s now become profitable to both drill for and refine oil that would have been too expensive to consider going after years ago. This kind of oil is located in more difficult locations to get to, it’s more expensive to drill for, and it’s more expensive to refine, too. But with the price of oil now more than $100 a barrel, as compared with just $25-$35 a barrel years ago, this kind of oil can now be processed and sold for a solid profit. As a result of this, the local economies around these specific areas of energy production are now booming, as are the commercial real estate markets around these areas, too.
One stunning statistic amid all of this shows us what’s really been going on in North Dakota. This state previously had never really been known for its oil production, but with the rising price of oil, production there has been booming. They have there what is known as the Bakken formation, which at today’s higher oil prices is now yielding huge amounts of this dirtier, hard to get to oil…which is now being refined and sold for a profit. As a result of all of this, North Dakota has now skyrocketed from being 39th in the United States in per capita income in 2006…all the way up to now being 6th in per capita income! In addition, their commercial real estate market is booming also.
Texas has been so on fire with new energy production in recent years, that if Texas were now its own country, it would rank 13th in the world overall in oil production. In addition, Texas has also experienced an extremely solid commercial real estate market that parallels this boom in oil production, too.
In San Francisco, which benefits greatly from the number of technology companies that are located in the area, there are currently 3,000,000,000 square feet represented in signed office leases where the buildings haven’t even been built yet!
The current state of any given commercial real estate market usually revolves around the condition of the local economy. Whenever the businesses and industries within the local economy are doing good, the commercial real estate market is oftentimes doing good, too. With this in mind, you’ll want to make sure that the type of property you own, and the location that you own it in, are always poised to position you very well for the future.