Investing in markets outside the core presents an opportunity to capitalize on the demand for downtown assets without the downtown address. Stephen Catarinella of CAPREIT discusses what factors to consider when acquiring communities in these areas.
Many aspire to be in the center of the urban core and amidst all the action, but that doesn’t mean they can afford to be there. Others crave the benefits of the city, but don’t necessarily want the nonstop hustle and bustle to be a part of their everyday lives.
This presents a prime opportunity for apartment owners to capitalize on the demand of downtown without the downtown address. Many of the tertiary markets surrounding these cores are often overlooked, but apartment communities in these neighborhoods can provide significant returns and strong investment opportunities.
Considering that most new construction in urban core markets is Class A, a market remains for quality housing that offers many luxury-like conveniences without the astronomical price tag.
Solid returns have surfaced in many of these markets, both on the management side and for investors. St. Charles in suburban St. Louis is an example of where to find success. Another is Louisville—on both the Kentucky and Indiana sides—and the Southfield/Ann Arbor areas near Detroit. Value-add has produced strong returns in Durham, N.C., with its research-focused demographic.
These are a few examples of many lucrative tertiary markets across the nation, but uncovering success is more than just discovering a market that makes sense. Here is a look at many of the factors to consider when acquiring one of these communities.