Keep in mind the Urban Land Institute targets institutional investors and developers. That being said, the lead paragraph from the ULI’s Emerging Trends in Real Estate 2012 report:
For 2012, U.S. real estate players must resign themselves to a slowing, grind-it-out recovery following a period of mostly sporadic growth, confined largely to “wealth island” real estate markets—the primary 24-hour gateways located along global pathways. A handful of cities also should continue to benefit from expansion in locally based technology- and energy-related industries. Otherwise, most commercial markets have stabilized, but will find marked improvement in occupancies and rents relatively elusive. Despite some stepped-up bargain hunting, capital generally will continue to avoid commodity real estate in most secondary and tertiary cities. Among the property sectors, only apartments will score especially well: demographic trends and the aftermath of the housing bloodbath combine to increase and sustain demand for multifamily units.
And from the summary for San Francisco, the ULI’s number three U.S. market to watch:
“It’s back”—near the top—and rates as the survey’s best buy for office and apartments. “Bullish market timers bet on room for big future office rent increases, pushing purchase pricing way ahead of fundamentals.” Empty buildings counterintuitively look most attractive to some buyers: “They see so much upside in rents.” In fact, the South of Market district “catches fire”—reminiscent of pre-tech-bubble-burst days in 2000. Computing and internet firms expand to satisfy young tech-savvy hires who want to work and live in the midst of 24-hour city amenities and action. Unlike tentative tenants in most other markets, Bay Area tech companies readily lease large blocks of space for future expansion. But overall market vacancies still register in the mid- to low teens, and demand in this Pacific gateway can fall suddenly.
∙ Emerging Trends in Real Estate 2012 [uli.org]