Commercial Rebound to Focus on Secondary Markets

The U.S. real estate recovery is set to continue into 2014, as investors increasingly look beyond some traditionally popular markets for higher yields in secondary markets, according to Emerging Trends in Real Estate 2014, co-published by PwC US and the Urban Land Institute (ULI).

As opportunities in core markets become harder to find and the best assets more expensive, investors will look to secondary markets for higher returns. The report suggests that 2014 may be the year for many investors who have focused on large established markets such as Boston, Chicago, Los Angeles, New York City, San Francisco and Washington to expand their focus, given the steady pace of improvement in market fundamentals in secondary markets.

Respondents were particularly positive about the prospects for equity capital from foreign investors, institutional investors and private equity funds, as well as debt from insurance companies, mezzanine lenders, and issuers of commercial mortgage-backed securities.

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