The 5 Secondary Market for Real Estate Investor That Will Thrive in 2012

Dallas and Minneapolis Named Best Secondary Market for Real Estate Investors


Investors have been moving into secondary markets such as Dallas and Minneapolis amid growing confidence in the recovery and soaring prices that drove down yields on office buildings, shopping malls and apartments in prime cities including New York, San Francisco and Washington. Purchases of commercial properties in secondary markets had been increasing this year, extending a rebound that started in the big coastal areas.
Purchases of commercial properties in secondary markets had been increasing this year, extending a rebound that started in the big coastal areas. Building values and rental rates don’t appreciate as fast in secondary markets compared with land-constrained coastal markets because it is easier to construct new buildings.
The Federal Reserve said on Aug. 9 that it will maintain record-low interest rates at least through mid-2013 to boost growth that has been “considerably slower” than it forecast.
If the Fed is successful, prime and secondary commercial real estate markets should benefit.

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As of 2009, it was estimated that there are dozens of dedicated firms and institutional investors that engage in the purchase of private equity interests in the secondary market with upwards of $30 billion of capital available for such transactions.The market for secondary interests is still highly fragmented. Leading secondary investment firms with current dedicated secondary capital in excess of circa $3 billion include: AlpInvest Partners, AXA Private Equity, Coller Capital, HarbourVest Partners, Lexington Partners, Pantheon Ventures, Partners Group, Neuberger Berman, and Paul Capital.