THESE 11 SECONDARY
MARKETS ARE POISED
Eleven secondary US counties are poised to thrive over the next decade
amidst a rapidly changing real estate land-
scape, according to CBRE research.
The markets include counties in theBoise, Columbus, Des Moines, GrandRapids, Greenville, Indianapolis, KansasCity, Knoxville, Ogden, Omaha, andSpokane metro areas.
The research highlights the growingappeal of secondary markets and the pushaway from large gateway cities—a trendthat accelerated during the pandemic, asCOVID- 19 shutdowns forced many companies to recalibrate priorities of locationstrategies and their real estate footprints.
“It’s important to keep in mind what
this analysis shows us and what it doesn’t,”
said Tedd Carrison, senior financial ana-
lyst in CBRE’s Location Incentives Group.
“What this demonstrates is that you can
analyze many locations against wide rang-
ing economic, education, environment,
fiscal, transportation, and health metrics.
And the results don’t always point to the
largest metropolitan centers.”
The CBRE report evaluated the regions
on the basis of population size and density,
population growth and momentum, pub-
lic transit dependence, housing costs and
foreclosure risks, fiscal impacts, university
pipeline, major airport access, and climate.
The report noted that COVID- 19 will
be central to any near-term location strat-
egy, as concerns about population den-
sity, remote work, indoor entertainment
and public transportation continue to
mount. It also identified a “sea change”
in national demographics that could
have long-lasting implications for HR
departments to maintain hiring advan-
tages: as millennials move into middle
age, they are increasingly flocking to
more affordable, family-friendly suburbs
and smaller cities between the coasts.
While the largest American “superstar”cities—which led the economic comeback from the last recession—will alwaysfunction as dynamic centers of talent,innovation, and culture, secondary markets may be “less-heralded alternatives”providing their own advantages over thecoming years.
The national office vacancy rateclimbed to 17.7% in the fourth quarter, upfrom 17.4% in the third quarter and
16.8% a year ago. Office rents have beenslower to decline, falling .6% in the fourthquarter and only .7% for the year.
Retail has been among the hardesthit commercial real estate sectors; however, fundamentals have not deteriorated more significantly than apartments of office. Retail vacancy increasedto 10.5% at the end of the year, up from
10.4% in the third quarter and 10.2%last year.
Unfortunately, Moody’s doesn’t have abetter outlook for 2021. The reportexpects fundamentals to continue todecline this year, particularly in office andretail where tenants that have been lockedinto long-term leases have not yet had theopportunity to downsize or vacate theproperty.
—Kelsi Maree Borland