Capital Migration: Primary or Tertiary Markets
Smaller Metros Increase their Share of CRE Sales Activity
CRE Sales Activity Shifting Across Market Types
Transaction activity was previously concentrated in primary markets
The share of transactions in primary markets fell from 60% in the early 2000’s, to 34% by 2022
Tertiary markets now house most transactions, accounting for almost half of deals
What is Driving Activity in Tertiary Markets?
Properties often trade for a lower price and provide higher average yields
Population growth rate has been faster in smaller metros
Will Sales Activity Remain Elevated in Tertiary Markets?
Current demographic trends favor tertiary markets
Primary markets would benefit from a return to the office
Sales activity has increased across all property types
*Through 1Q
Trailing 12-month average; includes apartment, retail, office and industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, Real Capital Analytics, CoStar Group, Inc.
