It is no surprise to most real estate professionals that the industry is cyclical. 2008/2009 was rock bottom for the real estate industry. Slowly the industry has made a steady rebound thanks to the private investment. As in many recoveries, the primary major metropolitan areas mostly situated along the East and West Coasts have seen much of the activity in office, industrial, multi-family residential and hospitality. As cap rates in the primary markets have decreased along with investment opportunities, the secondary markets are looking like a very smart investment.
When you think of secondary markets think of metropolitan areas like Cleveland, Columbus, Cincinnati, Indianapolis, Louisville, Oklahoma City, Omaha, Minneapolis and Denver. Cap rates are strong, the local economies are robust and less affected by global volatility. While the activity in the secondary markets has increased, there remain many opportunities to invest in assets which look like a smart move compared to the familiar primary markets.
Another little secret is that transaction costs are typically less. Hence, you can pick up a higher yielding performing asset and not have to spend an arm and a leg to do so. Don’t just fly over us, stop and take a look around, we are sure you will not be disapointed.