Tertiary Markets Lure Investors Due to High Yields and Growth Opportunities: Data
Originally published on February 14, 2022, by Beth Mattson-Teig by WealthManagement.com.
Apartment investors are jumping at the chance to buy properties in Manhattan at 6 percent cap rates—Manhattan, Kansas, that is. Buyers that used to dismiss such tertiary markets as “flyover country” are now stopping to take a second look.
Capital chasing better yields and growth opportunities in secondary markets is spilling over into even smaller cities. According to Real Capital Analytics (RCA), investment sales volume in tertiary markets jumped to $147.0 billion in 2021. Although tertiary markets account for a smaller percentage of the overall sales market at about 18 percent, last year’s sales volume represented a 56 percent increase over the $94.2 billion in sales transactions recorded in 2019. (RCA defines tertiary markets as those outside the top 40 MSAs it tracks as major and secondary metros.)