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

Secondary cities like Austin more susceptible in downturn

National /
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

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
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
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
MAP: Here’s a look at all the Big Tech locations in NYC
Mayor of New York City Eric Adams (Photo Illustration by The Real Deal with Getty Images)
NYC turns back to hotels to grow homeless shelters
NYC turns back to hotels to grow homeless shelters
Leonard Stern with Wyndham Garden Hotel Newark Airport (Getty, Hotels Combined)
Hartz buys Newark Airport hotel for $34M, plans demolition
Hartz buys Newark Airport hotel for $34M, plans demolition
Brookfield Property Partners CEO Brian Kingston and 660 Fifth Avenue (Brookfield Properties, Getty Images)
Major asset manager moves to 660 Fifth Avenue
Major asset manager moves to 660 Fifth Avenue
Cushman's Gary Gabriel and Adam Spies with one of the Long Island Industrial Assets (Cushman, Sherwood Equities, Getty Images)
Silverman grabs Sherwood industrial portfolio for $76M
Silverman grabs Sherwood industrial portfolio for $76M
50 Pennsylvania Avenue (LinkedIn, Pennrose)
Supermarket nabs 20K sf at Pennrose project in Brooklyn
Supermarket nabs 20K sf at Pennrose project in Brooklyn
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...