Insurance companies consider non-traditional areas for relocation

Insurance companies are looking at the Sunbelt region as options.

Property management companies with interests in the Southern part of the country, as well as non-central business district areas, may see a boost in insurance companies looking for commercial space in the area.

Insurance companies are already jumping at opportunities to get to parts of the Sunbelt region, where many metropolitan areas are experiencing notable growth, according to CoStar Group. This includes cities in areas such as Arizona, Georgia and Texas.

Growth was notable in Houston, as net absorption rose more than 5 million square feet from the previous year. Phoenix and Atlanta both had growth exceeding 2.7 million square feet during 2012, as well.

While the South is getting some notable new insurance tenants such as State Farm, other tenants are looking to different parts of the country, but avoiding the central offices in these locales, the news source explained. This includes some spots in the Greater New York area and the Ohio Valley.

One of these states receiving a notable amount of attention is Indiana, the news source said. Major insurers Geico and Baldwin & Lyons are planning significant moves to Carmel, Indiana. These gradual transitions will occur in the next several years, but can help local jobs and properties.

"Each of these big office deals involves moves into, or staying within, markets with costs of operations that are below those of expensive markets like New York, Boston, San Francisco and L.A.," said Walter Page, director of research for office at CoStar. "These metros offer affordable housing, reasonable air transportation and access to the type of employees that firms like insurers want to have."

Private equity firms show interest in CRE
Continued help from major companies heading to non-power markets may show the recovery situation in commercial real estate is growing beyond traditional primary areas. Another signal is from the heightened level of interest from private equity companies looking to take advantage of the market.

Many insurance companies became active purchasers of commercial property in recent years, but those working in private equity should ramp up interest this year, as this was the theme in recent months, according to a report from CIT Group. Additionally, more industry members are looking at some commercial properties considered distressed, as there is an interest in receiving competitive lending levels for these buildings.

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