MIAMI—With the flood of capital coming into the multifamily sector, where do tertiary markets rank on the investor radar screen? That was one topic of discussion at RealShare Apartments East last week in Miami.
In a panel called “Under Pressure: Inside the Capital Stack,” Tim O'Connor, senior vice president and regional manager at NorthMarq Capital moderated a discussion between Paul Ahmed, senior vice president at Walker & Dunlop, Jim Fried, managing director at Aztec Group, Steven W. Moreira, broker president at Magic Properties & Investments, and Marcus Suarez, senior vice president at Hunt Mortgage Group. You may be surprised about what some of them said about tertiary markets.
“Some life companies that view Orlando as a tertiary market,” said Ahmed. “They want to be in Dallas, San Francisco, Miami or New York City. Then there are others who view Orlando as a major market. That would be one differentiation between primary and secondary.”
As for Ahmed, when he thinks of primary and tertiary markets in Florida, he sees Fort Meyers as a tertiary market and Orlando, Miami and Jacksonville as primary markets.
“People still gravitate here due to the growth and economics,” Ahmed said. “Orlando continues to be a favored market. In tertiary markets, lenders will you look at and loan on but maybe they will do it more conservatively. Some won't loan there at all.”
As for Hunt, Suarez said a lot of the decision making on projects in tertiary markets has to do with the operator. His firm looks at network and liquidity.
“At the end of the day from a multifamily perspective, the secondary and tertiary markets … People work and live there and raise their families there,” Suarez said. “We are going to follow our borrowers to these markets. We'll get aggressive in the right secondary tertiary markets.”
Moreira offered some sage advice for multifamily developers targeting tertiary markets: build a relationship with a strong regional bank.
“If you are going into a smaller market, put a couple million dollars in that bank create a banking relationship,” Moreira said. “Banking is still a business in America. It doesn't all happen on Wall Street. The banking relationships that developers from 500 to 2,000 units that want to grow in secondary and tertiary markets need to look for that capital. You can always pay it off with life down the road. Start looking for your local banks that will do lines of credit.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
