Cities such as Bakersfield, Calif.; Orem, Utah; and Loveland, Colo., aren’t typically top of mind for institutional investors. But groups that once bypassed such secondary and tertiary markets in favor of major metros are now putting these smaller markets on their radar.
Institutions have traditionally viewed commercial real estate investment through a fairly narrow geographic scope, with their sights firmly set on acquiring assets in primary markets. Even as competition and a search for better risk-adjusted yields pushed investors to expand their focus beyond the top 10 metros, they have typically moved cautiously and targeted large, fast-growing secondary markets.
That investment thesis is now changing, thanks in large part to greater transparency and historical data that present a solid business case for the strong performance of assets in smaller secondary and tertiary markets. Graceada Partners recently conducted an in-depth analysis of economic metrics and real