The Future of Secondary and Tertiary Markets: Why Investors Are Looking Beyond Major Metros
As real estate costs in primary markets like New York, Los Angeles, and San Francisco continue to rise, more investors are eyeing secondary and tertiary markets for new opportunities. The shift is driven by affordability, population migration, infrastructure improvements, and government incentives that make smaller cities more attractive for CRE investments.
The COVID-19 pandemic accelerated population migration trends, with many professionals and businesses relocating from expensive urban cores to more affordable regions. According to a 2024 report by the Urban Land Institute, cities like Nashville, Charlotte, and Austin have seen significant job and population growth, positioning them as prime secondary markets.
Additionally, tertiary markets—such as Boise, ID, and Greenville, SC—are benefiting from improved infrastructure and economic diversification. Investments in transit systems, high-speed internet, and workforce development programs have made these cities more viable for businesses and residents alike.
Nashville, TN – With a booming healthcare and tech sector, Nashville has seen an influx of businesses and investors seeking lower operational costs compared to coastal cities.
Raleigh-Durham, NC – The Research Triangle remains a hotspot for biotech and pharmaceutical companies, driving demand for commercial space.
Boise, ID – Low tax rates, a growing tech scene, and a high quality of life have made Boise a rising star in the tertiary market.
San Antonio, TX – With affordable land, a growing population, and an expanding military presence, San Antonio is an attractive option for long-term investments.
Secondary and tertiary markets are becoming increasingly attractive due to a combination of affordability, economic incentives, infrastructure development, and shifting workforce trends. Lower land and construction costs make these markets especially appealing for developers looking to maximize their investments.
Many states also are offering tax credits and financial incentives to encourage businesses to relocate, further driving economic growth in these regions. At the same time, significant investments in transportation projects and smart city initiatives are enhancing infrastructure, making these areas more competitive. Additionally, the rise of remote and hybrid work models has allowed companies to establish offices in more cost-effective locations, fueling demand for commercial real estate.
As investors continue to seek higher yields and portfolio diversification, secondary and tertiary markets will likely remain in the spotlight. Success in these regions will depend on identifying areas with strong economic fundamentals, an available workforce, and supportive government policies that foster business expansion and long-term growth.
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