How Tech Tools Can Help Investors Detect Future CRE Hotspots

Find out how technology has helped savvy investors discover hotspots like San Francisco and Seattle — before prices skyrocketed.

The ability to accurately detect a future CRE hotspot is highly dependent on how much information is available to the investor in question. Urbanization and shifting demographics will always be key factors, influencing where people want to work, where they want to live, and what kind of property will fit their needs — but predicting how these factors will play out before they occur is an intricate process.

When choosing a commercial real estate data platform that will best suit your investing needs, it’s important that you identify what specific information will enhance your ability to identify future CRE hotspots. Let’s take a look at four key factors that every investor should take into consideration when identifying areas primed for commercial growth:

There’s All This Data — But What Info Do You Really Need?

1. Corporate Growth

Be aware of rapidly growing corporations in certain regions, as well as existing entities that may be looking to open campuses in new locations. Not only will the companies themselves — depending, of course, on the health and sustainability of their business model — likely expand with the potential to lease progressively larger properties, but they will also serve to alter the city’s market conditions, increasing the value of other commercial properties in the area and enticing owners to sell.

Uber and AirBnB, for example, recently expanded their offices to Seattle, enticed by the city’s talent pool — attracted and maintained by the three aforementioned corporate giants — as well as the city’s affordable prices compared to cities San Francisco (prices that are unlikely to last much longer).

2. Income Growth

3. Market Fundamentals

Strong market fundamentals — low interest rates, steady rental growth, and rising property values — indicate a market primed for investment, and each contributes to increased lending activity in a given region (as investor activity increases, so too does the demand for loans to finance said investments). High lending activity is generally a sign of a healthy market, indicating a strong financial landscape for future investment.

4. Mortgage Maturity Dates

Low interest rates also incentivize borrowers to refinance their maturing loans in order to lock in lower rates. When a loan is set to mature, investors are likely to refinance with long-term loans to secure favorable rates. For instance, if multiple properties in a densely populated urban area with low unemployment rates are due to mature, it may be a good time to invest or refinance. If, on the other hand, numerous properties in a small town with declining income have upcoming mortgage maturity dates, it may indicate an upcoming market downturn. It’s important to pay close attention not only to the mortgage maturity date of properties in which you might be interested in investing, but in the mortgage maturity of surrounding parcels.

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