One major segment of the market attracting bigger players is multifamily. In fact, Real Capital Analytics reports that apartment REITs as a whole are spending more money in secondary markets than in the core these days.

On the private side, Waterton, an investment and property management company focusing on multifamily and hospitality assets, recently completed the acquisitions of Parkside at Firewheel, a 594-unit rental community in Garland, TX, and the 426-unit Addison Park in Charlotte, NC. According to Philip Martin, vice president of market research, the company in the past year has also made acquisitions in such cities as Fort Lauderdale, Orlando and Raleigh, NC.

For its part, HSA Commercial Real Estate, a full-service firm active in brokerage, management and development, is pursuing industrial projects and investments in several secondary markets. “We recently completed the lease-up of Gateway Industrial III, a 220,000-square-foot spec distribution center in Plainfield, IN, immediately southwest of the Indianapolis International Airport,” Bob Smietana, HSA Commercial's vice chairman and CEO, tells GlobeSt.com. “Our pipeline projects include a smaller 150,000-square-foot spec warehouse that will be built adjacent to Gateway Industrial III, the fifth and final building our firm plans to develop in the Gateway Business Park.” The firm also has developments planned this year in both Nashville and southeast Wisconsin.

Fairbridge Properties, a privately held real estate company specializing in acquiring undervalued commercial properties, is currently betting on the office markets of Cincinnati, Salt Lake City, Denver and Portland, OR. As Dmitry Gordeev, Fairbridge's managing principal and founder, sees it, secondary and tertiary office markets are just at the beginning of their cycle. Having lagged behind the primary markets, he tells the potential income opportunities in these locations are higher than in primary markets.

“A quick comparison of the cap rates for office assets in Cincinnati versus Chicago serves as a nice example,” Gordeev tells GlobeSt.com. “According to the CBRE North America Cap Rate Survey for the second half of 2015, the cap rate for a class A stabilized property in Cincinnati is 8.25% to 8.75%, whereas the cap rate for a class A stabilized property in Chicago is 5% to 5.5%.”

More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

ATLANTA—Commercial real estate prices have skyrocketed and are not expected to dip in the near future. In fact, it's not uncommon for even class A properties to sell at A-plus rates because of the heavy competition for these prime assets.

It's well known that core markets have historically provided stronger and more consistent returns over the long term. Yet these days, secondary and even tertiary markets are enticing more strategic investors, looking to achieve preferred yields through value-add opportunities—to bet on strong assets in non-core markets.

“The days of 'pass the parcel' are over, and long-term secure investments in core markets will be the norm,” John Friedrichsen, global chief financial officer of Colliers International Group, tells GlobeSt.com. “At the other end of the risk spectrum, large volumes of capital already raised will increasingly seek out opportunities in tier two cities and recovering markets.”

So the key questions are: Who are the big fish that have chosen to enter secondary and tertiary markets and what's driving them there? What challenges are they facing? And where's the sweet spot—that balance between buying into core markets and settling down in non-core cities?

One major segment of the market attracting bigger players is multifamily. In fact, Real Capital Analytics reports that apartment REITs as a whole are spending more money in secondary markets than in the core these days.

On the private side, Waterton, an investment and property management company focusing on multifamily and hospitality assets, recently completed the acquisitions of Parkside at Firewheel, a 594-unit rental community in Garland, TX, and the 426-unit Addison Park in Charlotte, NC. According to Philip Martin, vice president of market research, the company in the past year has also made acquisitions in such cities as Fort Lauderdale, Orlando and Raleigh, NC.

For its part, HSA Commercial Real Estate, a full-service firm active in brokerage, management and development, is pursuing industrial projects and investments in several secondary markets. “We recently completed the lease-up of Gateway Industrial III, a 220,000-square-foot spec distribution center in Plainfield, IN, immediately southwest of the Indianapolis International Airport,” Bob Smietana, HSA Commercial's vice chairman and CEO, tells GlobeSt.com. “Our pipeline projects include a smaller 150,000-square-foot spec warehouse that will be built adjacent to Gateway Industrial III, the fifth and final building our firm plans to develop in the Gateway Business Park.” The firm also has developments planned this year in both Nashville and southeast Wisconsin.

Fairbridge Properties, a privately held real estate company specializing in acquiring undervalued commercial properties, is currently betting on the office markets of Cincinnati, Salt Lake City, Denver and Portland, OR. As Dmitry Gordeev, Fairbridge's managing principal and founder, sees it, secondary and tertiary office markets are just at the beginning of their cycle. Having lagged behind the primary markets, he tells the potential income opportunities in these locations are higher than in primary markets.

“A quick comparison of the cap rates for office assets in Cincinnati versus Chicago serves as a nice example,” Gordeev tells GlobeSt.com. “According to the CBRE North America Cap Rate Survey for the second half of 2015, the cap rate for a class A stabilized property in Cincinnati is 8.25% to 8.75%, whereas the cap rate for a class A stabilized property in Chicago is 5% to 5.5%.”

More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.