Investors are flocking to secondary and tertiary markets, playing on a trend that's been picking up steam for the last several decades and lurched into high gear as the pandemic drove activity away from dense urban cores.

A new investor outlook from Marcus & Millichap shows that while transaction activity dropped dramatically in the second quarter of 2020, it gradually recovered and was almost back to normal on a macro level by Q4. But while total CRE deal count was only down 5 to 10% years-over-year, those numbers don't tell the whole story, according to John Chang, senior vice president of research services at M&M.

Property type and geographic factors accounted for vast disparities in sales volume, Chang said, with full service hotel sales, for example, logging a 61% decrease compared to 2019. Meanwhile, industrial warehouse facilities priced at between $2.5 and $10 million were up by more than 25% in Q4, and generally speaking sales of properties under $20 million recovered faster than those over that threshold.