Seattle-Tacoma-Bellevue is the top secondary metro for CRE investment, according to a new study from Trepp, followed by San Jose-Sunnyvale- Santa Clara and Orlando-Kissimmee-Sanford, Florida.

"The three MSAs benefited from having investment profiles that touted strong weighted average debt service coverage ratios (DSCRs), high outstanding volume growth (OVG) since 2020, and low distress rates (delinquency and special servicing rates) despite economic uncertainty," Trepp analysts say. Trepp analyzed multiple factors in analyzing a total of 24 metro areas to arrive at its rankings, including weighted-average DSCR,  MSA outstanding volume growth rate (OVG), new issuance (Jan 2022 – August 2022), population growth rate, unemployment rate, CMBS delinquency rate and CMBS special servicing rate. CRE collateralized loan obligations were also added to this year's data set, as was agency data from Fannie Mae and Freddie Mac.

"This year, the findings were heavily made up of the MSAs that have found a way to heal from old distress and manage new economic outcomes," the report notes. " A common theme in these MSAs was low CRE distress and low unemployment levels – pointing to areas that have been able to make up ground on their pandemic losses while also maintaining through this economic cycle."