This Year's Promising Property Sectors

Few investors or commercial brokers would dispute that 2009 will continue to be a tough year for sales. But some sectors will come out better than others.

April 1, 2009

Despite the downturn, some property types are likely to fare better this year, says Ken Riggs, CRE, president and CEO of Real Estate Research Corp.

Student housing.

The combination of two factors—universities facing a financial squeeze and the surge of college-bound Generation Y members, the second largest demographic in the United States—creates strong demand for student housing. "Declining employment opportunities mean higher college enrollments," says Riggs.

Medical offices.

Aging boomers and their readiness to spend on health care make this a solid investment, especially if located near hospitals and nursing homes.

Tax-credit housing.

An unmet need for affordable housing, combined with the federal government’s willingness to provide funding via low-income housing grants and tax-exempt housing bonds, may make this an attractive niche for conventional multifamily developers.

Residential building lots.

Smart developers are compiling parcels now so that approvals can be in place. "Lots are becoming targets for vulture funds that want to profit from the housing crisis and buy at 50 percent of value or less," says Riggs.

Neighborhood centers.

Retail is risky at best, but people will always need staples, even in the tough times. That’s why neighborhood retail centers are a winner, especially in mature trade areas with a strong grocery or drug store anchor.