As the current workforce population ages and the real estate cycle matures, suburban office locations near major metropolitan areas offer great potential. In comparison to the high-priced commercial real estate in the urban core, suburban markets offer more favorable options. Besides providing value, according to the Urban Land Institute’s (ULI) Emerging Trends in Real Estate Report, suburban markets are likely to experience increased demand over the next decade. The ULI forecasts suburban office markets will see continued job growth, limited new supply, positive net absorption and in-migration of young workers as they begin raising families. Analysists at ULI are confident that the oldest group of millennials, in their mid-30s, are only beginning to move to suburban communities. As millennials age and continue to move out of urban areas, suburban population growth will continue over the next decade.
After years of investors, developers, and commercial real estate brokers prioritizing the urban core, it may be time to again investigate suburban office opportunities. Buildings with premium amenities are positioned for success. Motivated by livable communities and an affordable lifestyle, commercial real estate in the suburbs offers an attractive opportunity. In markets with “millennialized” class-A buildings designed around creative office space, investors, developers, and brokers are already seeing a substantial leasing activity. Therefore, these markets indicate that their might already be demand for premium suburban workspaces.
As we are about to see a demographically inspired shift in the market back to the suburbs, opportunistic investors are starting to recognize the potential of suburban markets, including the Cook and the Lake County suburban markets. However, the key question after examining demographic trends is less if we will see a resurgence in the suburban office market but when? Only time will ultimately tell if pioneering investors in the suburban office market timed the demographic shift appropriately.