What are Commercial Real Estate Submarkets?
In commercial real estate, a submarket is simply a smaller part of a larger market. While a market may be a city or MSA, such as New York City, or the Dallas-Fort Worth-Arlington MSA, a submarket is likely to be a neighborhood or Suburb, such as Williamsburg, Brooklyn or Downtown Dallas. While CRE markets are usually externally defined by city boundaries or by MSA classifications, submarkets are often informally defined by investors, developers, and other commercial real estate professionals working within a specific local area.
Property Type Submarkets
In addition to being divided by general suburb and neighborhood boundaries, submarkets may also be divided based on property type. For instance, one market area could be split into different submarkets; one generally composed of office properties, one mainly subsisting of retail properties, and one containing mostly single and multifamily residential properties. While this can lead to some oddly-shaped borders for submarkets, it can make things more efficient from an organizational standpoint.
For investors and developers interested in determining the exact boundaries of submarkets in their area, CoStar offers a free, searchable glossary of submarket maps throughout the U.S.