Commercial Investment Real Estate March/April 2013 - Page 32
Will investors play ball in secondary and tertiary markets?
by Malcolm Davies
March | April | 2013
are taking advantage of record low interest rates and are searching
for new investment opportunities.
Overall, deals are becoming much more common and prof table
for investors and lenders alike. If these real estate players are willing
to look outside the safe primary markets and take a bit of a risk, there
is a very successful game in which to play.
Primary Market Expansion
To understand secondary markets, it is important to f rst under-
stand primary or gateway markets. In the past, if a lender or equity
investor was asked what he or she would consider a primary or gate-
way market, the answer would likely be six or seven metropolitan
statistical areas: Los Angeles, San Francisco, New York, Chicago,
Washington, D.C., Boston, and Dallas.
Commercial Investment Real Estate
very real estate professional is well aware that commercial
real estate is making a comeback. Even during the depth of
the recession, the market of 2009 presented a great deal of
opportunity for investors and lenders. Many of those who took
advantage of the chance to buy properties at low prices are now
cashing in on these investments.
But where can investors and lenders achieve that kind of success
in today’s market?
While the caliber of reward achieved by investments in today’s
market may not be as large as it was in 2009, the opportunity for prof t
still exists. Lenders and investors are f nding a whole new ball game
in the secondary and tertiary markets, turning prof ts that of en beat
out their primary market comparables. As primary and gateway
markets have become saturated with competition, savvy investors