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- March 1, 2015: Vol. 27, Number 3

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Cities on the rise: Gateway markets have become crowded and expensive, driving investors to a broader slate of metropolitan areas

by Suzanne Franks

With gateway cities having turned hyper-competitive and overpriced, a slew of second-tier markets are on the rise and attracting investor capital. Cities such as Atlanta, Austin, Houston and Miami appear second-to-none in the eyes of investors looking to put their capital to work.

It is about time for the bridesmaids to take center stage as they scramble for the bouquet. We have reached the point in the real estate cycle where the usual belles of the ball — the gateway cities — are becoming less attractive as prices rise and yields fall, while the charms of so-called secondary cities are tugging at investors’ heartstrings and wallets.

There is general agreement as to which U.S. markets are the perennial “belles.” Real Capital Analytics cites the metropolitan areas of Boston, Chicago, Los Angeles, New York City, San Francisco and Washington, D.C., as “gateway” markets. In fact, RCA data indicates that during the past 10 ye

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