SAN FRANCISCO—Wouldn't it be convenient if someone had clear, intelligent answers to most of your CRE-related questions? Problem solved. Nina J. Gruen, a.k.a. Ms. Real Estate, a.k.a. the principal sociologist overseeing market research and analysis at Gruen Gruen + Associates, is here to answer readers' questions.

Dear Ms. Real Estate:

I am looking to invest in a multifamily project located in an area where our company has not developed before. Which of the following options do you feel will have the greatest upside value: a location close to the CBD, or within one of the emerging suburban communities?

—Fine-Tuning a Multifamily Foothold

Dear Fine-tuning:

It is crucial to remember the “old adage” that all real estate markets are local. Since you indicate that you are not new to the multifamily housing industry, but just to the area, I'm certain Ms. Real Estate does not need to provide you guidance on how to check out the current and likely future supply of multifamily units and what has been happening to rent and condo prices in the two locations you are evaluating.  The type of industries within the metropolitan region will provide you with insights as to the primary demographic markets you will be serving. For example, if R&D and technology are growing substantially, you can count on a young demographic (twenties and early thirties). If finance is a major economic engine, thirties and forties. In either case, the prospective renter or buyer will need to be employed in higher wage jobs, or if older Boomers, to have accumulated assets from moving from larger, single family homes.

But the trend has been and will continue to be that the locations that offer exciting activity nodes of food, entertainment, shopping, services and cultural activities have strong appeal to primarily childless, higher income households, since it is these prospective multifamily renters and buyers who have the wherewithal and time to enjoy participating in diverse activities.

Therefore, you will want to select a multifamily location that is close to where the cool activities are, or will be in the not too distant future, and is relatively close to or accessible by public transit to industries that employ these higher wage earners. Most CBDs, in economically vibrant places, fit these specifications. But some suburban centers in most regions either have or are in the process of developing the dense nodes of food, entertainment, shopping and cultural activities that turn on households with few or no children. If, in the regions in you're looking at, both the CBD and emerging suburban activity center have what it takes to attract relatively affluent households from both ends of the age spectrum, your choice boils down to picking the place with the best land bargain. If you see the best land buys in emerging suburban centers that have not quite made it but are well on the way, you may want to consider developing a mixed-use project that helps push a more dynamic activity center out of the evolutionary womb. The answer to your question will vary from region to region. Picking a winner will require evaluating the one with the highest ratio of attraction for affluent renters and condo buyers to all-in development costs.