A look at investment opportunities in global secondary markets

The hunt for yield and portfolio diversification has sparked institutional interest in global secondary markets in recent years, and potential shifts in behavior related to the COVID-19 pandemic could further strengthen those strategies.

Institutions are casting a wider net to find opportunities that generate higher returns in what remains a competitive investment market. That is especially true in the United States, where cap rates, in some cases, have dipped below 4 percent for core assets in major metros. “The primary markets are very competitive, which has forced a lot of investors, including us, to take a closer look at secondary markets,” says Tim Wang, head of research at Clarion Partners. Clarion Partners is an active buyer of industrial assets, with more than 195 million square feet and $22.5 billion in industrial assets under management. Clarion Partners is currently monitoring 50 markets across the United States and actively investing in about 30.

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