Survey: Developers eye non-core markets
PARSIPPANY, N.J. - Coldwell Banker Commercial Affiliates, in partnership with National Real Estate Investor and Retail Traffic, released the results of a joint survey uncovering the perception of smaller, non-core (alternative) markets among owners and investors.
As the commercial real estate sector continues to recover, the core “primary” markets such as New York, Washington, D.C., Southern California and San Francisco continue to be the most desirable locales for larger, institutional investors. According to the survey results, secondary and tertiary markets are proving to be an increasingly attractive investment.
The survey of developers, owners, and managers found 41% of respondents believe that smaller secondary and tertiary markets offer the best development opportunities today. It also revealed that 44% of respondents plan to make additional investments in non-core markets in 2011. Additionally, nearly half (48%) of the respondents plan to upgrade their properties in secondary and tertiary markets this year.
“Smart money is looking at alternative markets due to better returns, higher upside and less competition,” said Fred Schmidt, president and chief operating officer of Coldwell Banker Commercial Affiliates.
“Secondary and tertiary markets allow investors to achieve a higher yield, along with diversification of assets and geography. They offer an opportunity to generate real wealth and returns.”
“Despite a challenging commercial real estate market, alternative markets provide the potential for equal or better returns than primary markets,” said Schmidt.
“This survey shows that owners and investors are beginning to take risks again and are looking for opportunities in smaller markets.”
Survey respondents reported that the state of the local economy and availability of financing were the two most important factors for investors and owners weighing opportunities in secondary and tertiary markets. In addition to uncovering the current perception of these markets, the survey examines the factors necessary for investment and provides examples of where growing industry, population and the local economy are creating attractive opportunities for investors in smaller markets.
A white paper based on the survey results is available on the Coldwell Banker Commercial web site.
