Please move to our suburban apartment building

Multifamily building owners in the suburbs are having to offer steep discounts on market rents to maintain occupancy, while urban properties are filling up much more easily, according to the National Real Estate Investor. "The commercial real estate industry is noticing a dichotomy between property fundamentals for commercial buildings in Central Business Districts (CBDs) and those in the suburbs," according to the report. "Rent growth for multifamily projects located in CBDs has outpaced rent growth for suburban projects by 3 percentage points, according to the CoStar Group, a Washington, D.C.–based research firm. Today, occupancy at CBD-based multifamily buildings averages a full percentage point higher than in the suburbs. Similarly, in the third quarter of 2012, average rents for office buildings in CBDs nationwide stood at $30.10 per sq. ft.—a premium of more than $10 per sq. ft. over suburban office buildings. Vacancy at CBD office properties was also lower, at 0.1 percent, compared to 0.12 percent for suburban assets." For commercial real estate investors and developers today, the decision to build in cities is a no-brainer, NREI says.

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