Emerging Investment Trends – Value-Add and Secondary Markets

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A lot has changed since Atlanta first felt the effects of the recession in 2008. We saw investment strategies do a complete 180; the same companies that were known for purchasing and then quickly disposing of valuable assets turned their attention towards purchasing distressed properties and other assets in an effort to beef up their portfolios. Many REITs saw the number of distressed and foreclosed buildings as an opportunity to grow their portfolio without spending the money they would have in the early-mid 2000s.

Two new trends have emerged in the last two years; we are seeing investors pay much more attention to value-add properties and properties in secondary office markets than ever before. Some of the larger, more established investors are refusing to jump on this bandwagon, and in turn it has created many more opportunities for smaller investors to get their foot in the door and begin to expand their portfolios.

Investors like secondary markets, especially the ones around Atlanta, for a couple of reasons. The first reason is that Atlanta’s secondary markets have good fundamentals. Job growth and other factors lead investors to believe that the secondary markets will continue to strengthen and will provide good return in coming years. The second reason is that there is less competition in these smaller, tertiary markets; as stated before, many of the big investment teams don’t want to play ball in secondary markets and this leaves room for smaller investors to come in and create a presence.

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