Institutional investors are increasingly eyeing so-called "third cities" — tertiary markets across the US with populations between 100,000 to 200,000 residents and within several hours from a major hub — as regions for major potential upside as changing migration patterns continue to disrupt how Americans live, work and play.

A new report from Graceada Partners says these third city markets, or TCMs, "are paving the way for a more geographically diffused economy," noting increasing momentum toward certain TCMs and away from certain primary and secondary markets, especially in the Heartland, the Southwest (the Cactus Belt), and portions of the Pacific Northwest and Mountain West (Western Interior). The Graceada study examined more than 65 TCMs across the US and compiled a list of the top 20 based on criteria such as renter value, rent growth potential, and purchase value collected using CoStar, as well as quality of life measurement using AARP data and population growth analysis using Census data.

The top 10 TCMs, according to the firm's analysis, are Cheyenne; Rapid City, SD; Redding, Calif.; Columbia, Mo.; Lake Havasu City, Ariz.; Idaho Falls; LaCrosse, Wisc.; Pueblo, Colo.; Bakersfield, Calif. (South); and Yakima, Wash.