Boston, LA office landlords to benefit from “flight to quality” amid economic slowdown

Secondary cities like Austin more susceptible in downturn

Mar.March 19, 2019 10:00 AM

Boston and L.A. skylines (Credit: Wikipedia)

As the U.S. economy slows, cities with more diversified economic bases stand to gain as investors move away from riskier bets.

Such cities include Los Angeles, which is seeing a tech and media boom, and Boston, where a strong biotechnology sector is supporting the city’s traditional financial-services base, Bloomberg reported.

“The focus should be on quality of market and quality of real estate,” JPMorgan Asset Management co-portfolio manager of real estate Ann Cole told Bloomberg. “As you get later in the cycle, that’s not the time to be taking additional risk.”

Secondary cities like Austin, Texas may offer higher yields, but they are often more susceptible in a downturn due to reliance on one industry or one company.

Economic growth in the U.S. is expected to slow down over the next few years, hitting a low of 1.8 percent in 2021 according to Bloomberg data, and this will correlate strongly with office-building performance.

“In every recessionary environment, there’s always a flight to quality,” Cole said. [Bloomberg] — Kevin Sun

Related Articles


Real estate stocks push up this week as U.S.-China trade tensions ease

Eric Gordon

Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world

Big Tech locations in NYC

MAP: Here’s a look at all the Big Tech locations in NYC

An example of roll-off waste management (Credit: YouTube, iStock)

Big building owners prevent city from dumping container-pickup in trash-collection reform

From left: RealPlus' Eric Gordon, Corcoran's Pam Liebman, Halstead's Diane Ramirez, Douglas Elliman's Howard Lorber and Brown Harris Stevens' Bess Freedman (Credit: Eric Gordon by Emily Assiran, Getty Images, Halstead, BHS, iStock)

Terra sells part of RealPlus stake to Corcoran and Elliman

Joel Schreiber (Credit: Shir Stein and Wikipedia)

WeWork’s first investor used his stock as collateral. Now his lenders are suing him

“I can talk about erections all day”: NAR tech consultant’s bizarre fireside chat

Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio