As Covid-19 accelerated a demographic shift from urban areas to suburban areas amongst younger populations, investor appetite for suburban office properties has risen in tandem. A combination of lower cost of living and larger living spaces has driven people to move to the suburbs. “The top-performing suburban assets over the past several years and amid the pandemic are those that best emulate the environment of a CBD within a lower-cost, lower-density environment,” explains Bruce Miller, a senior managing director in the capital markets group of real estate services firm JLL. “Core suburban investments have averaged about 100 to 150 basis points higher total returns than core CBD investments,” Bruce continues. “Again, much of the interest in suburban assets is in stabilized properties. Investors are also taking advantage of record low interest rates to enhance cash-on-cash returns.”
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