• CBRE Research confirms that the momentum effect—widely studied in the financial markets—is present in metropolitan office markets.
  • Over a 20-year period, strong momentum metropolitan areas—those markets with the highest total return over the previous year—consistently outperformed slower momentum markets, on average, over one-, three- and five-year holding periods.
  • Despite a higher variance in the returns among strong momentum markets, their return per unit of risk—or Sharpe ratio—is higher.
  • Houston, Oklahoma City and Nashville were most often in the strong momentum group over the 20-year period studied.
  • CBRE Research’s analysis shows that the momentum effect is an important factor in explaining office returns. It may be utilized to guide asset-allocation and market-selection decisions at a high level.