Over time, the evolution of real estate markets can create a disconnect between long-held beliefs and the current market reality. Sometimes these changes result in short-term anomalies, but they also can trigger secular shifts capable of altering the trajectory of a market or sector. With respect to investing in secondary markets, an in-depth analysis of several widely accepted notions can validate common assumptions while simultaneously challenging outdated expectations.

Market delineation

If 10 real estate investors were asked to create a list of secondary markets, it could easily result in 11 different answers. Joking aside, investors generally agree on definitions regarding the four common market categories (i.e., gateway, primary, secondary and tertiary). Gateway and primary markets share some of the same characteristics — a substantial employment base that generates tenant demand that typically matches or exceeds available supply, while suppor