For much of the past decade, primary markets like New York, Los Angeles, Chicago, and San Francisco commanded the lion’s share of institutional commercial real estate capital. That dynamic is shifting. According to NAIOP research, conditions are increasingly favorable for a move toward secondary markets, driven by improving investor risk tolerance, more stable national economic trends, and a widening yield gap between primary and secondary metros.
At the same time, industries that once clustered almost exclusively along the coasts are relocating. Job growth and new industry investment in Midwestern and Southern metros are giving investors more reasons to look beyond the usual gateway cities. NAIOP has also pointed out that secondary markets tend to carry less competition and lower barriers to entry, with some benefiting from federal programs supporting domestic manufacturing.
For investors chasing yield in an environment where primary-market pricing has compressed, secondary markets increasingly look less like a compromise and more like a genuine opportunity. continue
By SVN Staff