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If you’re looking for the best real estate to invest in, you may have already heard the phrase “location, location, location!” Indeed, finding the right location is an important starting point. In addition to identifying the right location, you need to choose an asset class, such as multifamily, retail, office, or development. We discussed this in detail in a previous article. You will also need to develop a business plan to present to others, including partners, lenders, and other investors.
As you go through this process, keep in mind that analyzing the right data can reveal many factors about the market you are considering. The key is finding and interpreting the right data when evaluating the market. You may find that the property you are considering is located in a growing area or has the potential to increase in value due to economic factors in the area.
As you review your data and make your real estate investments, keep these guidelines in mind.
Pay attention to employment statistics
When considering investing in a city, it may seem reasonable to evaluate the job market. A region that is growing and hiring more workers may be a sign that the economy is doing well. But in today’s hybrid world, determining job growth can be more difficult. If a job is reported in one market, the person hired may live in another state and remain there to work remotely. With this in mind, employment data related to cities may not provide a complete picture of who lives there. Be sure to check where the job openings are being posted.
Check population data and demographics
If a city grows and more professionals move in, that could bode well for the local economy. Check out our Return to Office Survey and resources like Kastle, which analyzes office occupancy rates, to see if the locations you’re considering have employees working in-person. You can also check what types of businesses are active in the area. Knowing this will allow you to consider real estate assets that complement the trend. For example, if a market is known as a large technology center, you can consider what kind of office space is needed. You can also see what type of housing is in demand, such as whether the worker is looking for a roommate for an apartment or prefers a single-family home. To understand housing trends, look at apartment occupancy rates.
Understand pedestrian counts
With the advent of anonymized mobile phone data, it is now possible to access useful information about the market and see relevant trends. You can check the number of pedestrians in the location you are evaluating. You might be able to identify commuting patterns and understand how people move through certain spaces. This is especially useful when making decisions in an office or retail store.
View city tourism and projects
Check out our transit research to find out the numbers associated with subway, rail and highway routes. Find out how many people regularly use nearby airports, check tourist numbers and hotel occupancy rates. If these statistics are rising, it could be a sign that the local economy is doing well.
In some areas, you may also notice changes in infrastructure, such as new subway stations or line additions under construction. Learn about plans to build city parks and other public spaces. Knowing which projects have been identified and when they are expected to be completed will help you make decisions. Compare this insight with other information you’ve gathered to get a solid picture of where the market is heading.
While location is an essential consideration when making a real estate investment, there are many additional resources you can take advantage of. With the data currently available, you can examine population changes, see which industries are booming, and learn how people move in an area. All these factors will help you decide whether the location you are considering is suitable and has the potential to generate a significant return on your investment.
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