A new report from CBRE titled Energy Revolution Impact on Americas Commercial Real Estate explores the latest unconventional energy advancements and their impact on the CRE market in North America. According to the report, the billions of dollars investments toward energy exploration is dramatically impacting economic and commercial real estate activity, creating opportunities for both investors and developers. The study was authored by Dallas-based Sara Rutledge, and Denver-based Jessica Ostermick. An excerpt from the summary follows:
Operations markets (locations that house the headquarters and/or regional operations centers of office-based energy professionals) have experienced tightening office market fundamentals over the past few years. Caracas and Houston, which both have seen 500-basis-point drops in vacancy since 2010, have led this trend.
Exploration activity applies numerous pressures to commercial real estate markets in regions where resources are extracted and/or processed, oftentimes creating a marked imbalance between demand and supply. This dynamic has resulted in high lease rates across all property types, significant development activity and above average investment returns, which is attracting growing interest from the real estate investment and development community.
The report notes that the rise in unconventional oil and gas development has created a shift in the geography of production, a change that has led the global supply to be increasingly driven by the Americas region – a trend that is expected to last through 2040. The movement, according to the report, suggests that the investment horizon may sustain over several decades and not mirror the boom and bust cycle of past conventional plays.
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