Projected Hottest Secondary Markets for Real Estate 2013
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Article by, TRiTON Capital Advisory, www.tritoncapitaladvisory.com
While many CRE equity investors continue to seek “Safe Harbors” for their investment capital, some equity investors are now focusing on deploying their capital into secondary commercial real estate markets in an effort to achieve their target investment returns. While we are not expecting 500K SF Speculative Offices to start popping up in Waco, many secondary markets offer attractive risk-adjusted returns for commercial real estate acquisitions. By comparison, Cap Rates are higher in secondary markets, and there is less competition for deals.
Secondary markets are going to be the in thing of 2013. (Main factors: Job growth and a business-friendly environment.) So where will you find the best deals this year? We were surprised by some of the cities our experts suggested.
San Antonio—Boxer Property director of acquisitions Andre Pereira(whom we snapped yesterday afternoon) tells us San Antonio is the city he most hopes to shop in this year. Job growth is strong, and it’s a tight market with very little development. Plus, values took aminimal hit through the recession and they’re raring back now.
Atlanta—RCA managing director Dan Fasulo believes Atlanta will see the best value recovery this year. He says capital will go where product is, and Atlanta boasts plenty of institutional product and tenants. It’s been off to a slow start this cycle, but look for that tochange in 2013.
Salt Lake City—Dan thinks California is becoming increasingly business unfriendly, so international companies who want West Coast/Asia coverage will need an alternative. He predicts Salt Lake will be especially targeted, and Las Vegas and Phoenix should also benefit.
Denver—Act fast: Andre says there are still good opportunities, but Denver is heating up quickly and may start to get competitive.
Minneapolis—Dan says the turnaround in Minneapolis has been dramatic. Only a few years ago, people were discussing how weak the market was. Now it’s considered a stable investment.
North Carolina and South Florida—Andre says Sunbelt cities withjob growth are definitely on his radar. In particular, he’s eying Charlotte, Miami, Fort Lauderdale, and Orlando.