GRAND RAPIDS, MI—Joe Elias has always believedin the potential of the American Midwest. The Michigan native spent15 years developing real estate projects in the region, andrecently helped launch the Grand Rapids, MI—basedLoquidity, a real estate crowdfunding platformthat aims to build communities by drawing in investment that mightotherwise gravitate toward the coasts.

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Although Elias and his partners launched their platform thissummer with a multifamily project, they are already talking toother brokers about using the platform for industrial, office andretail spaces. They will concentrate real estate investments inMichigan, Illinois, Ohio, Wisconsin, Iowa, Nebraska, Minnesota,Missouri, Kentucky, Pennsylvania, Virginia, Tennessee, Indiana andKansas.

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The real estate markets in coastal cities like New York, SanFrancisco and Houston came roaring back several years ago. ButElias believes it is now the Midwest's turn, and what had been arelatively slow recovery is now gathering steam. GlobeSt.com spokewith Elias on the strengthening recovery and why now is the time toinvest in the region.

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Where do Midwest real estate marketsstand?
The Midwestern US, like other regions in the country, took a bighit during the Great Recession. For a region whose core industryhas historically been manufacturing, the effects of a slowedeconomy were felt most acutely by the millions of workers who losttheir jobs. The region's recovery was initially slower thanothers', but is now showing signs of increasing velocity,particularly in major markets like Detroit, West Michigan, Chicago,Kansas City and others. For this reason, key property markets inthe Midwest—a region that has been overlooked by investors for awhile—are now in higher demand.

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Why are these markets accelerating now?
Increased manufacturing demand is one important reason. Recenteconomic reports show that key industries in the region aresteadily rebounding, leading to a decrease in the unemployment ratein major metropolitan areas like Detroit, Chicago, Cleveland andelsewhere. A recent economic survey by the FederalReserve, for example, stated that “Chicago and Clevelandnoted strength in energy-related industries…Steel production was upslightly in Cleveland, where activity related to oil and gas wasalso reported to be strong.” The Bureau of LaborStatistics' latest unemployment report shows the Midwest,along with the South, to have the lowest unemployment rate of anyregion in the U.S. Additionally, a recentCareerbuilder and EMSI reportnamed Detroit as one of the top ten areas for job growth in the US.Obviously, this is great news for real estate investors in theregion, as increased economic activity is strongly correlated withnew construction demand and lower commercial and multifamilyhousing vacancy rates.

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What are some of the strengths that people from outsidethe region might not understand?
There is tremendous diversity in the region's industry. It is hometo some of the nation's leading research universities, and theregion's younger generation is tech savvy, educated and highlyambitious. Many colleges have founded their ownincubator/accelerator programs for startups, hoping to make theircommunities more competitive in attracting venture capital andskilled workers and thus increasing the diversity of industry inthe region. Chicago alone saw a 169% increase in startup funding in2013, over the previous year. The concerted effort to attractskilled knowledge workers and promising companies to relativelyless expensive locales is a savvy one that will help strengthen anddiversify the local economies of this region.

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Have there been any major changes in thesemarkets?
A region renowned for its close-knit rural communities is steadilychanging as workers—particularly younger ones—migrate to urbanareas for a variety of reasons. As GlobeSt.com recently reportedregarding Kansas City's economic revival, “companies that want totap into this new and growing concentration of potential employeeshave also followed, filling up old, underused structures and evendeveloping new towers.” The migration to urban centers is in partcorrelated to the burgeoning technology and entrepreneurial scenesin Midwestern cities mentioned above.

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What is the market like in your home base GrandRapids?
Grand Rapids is currently looking at a multifamily housing vacancyrate of less than 5% and was also ranked as the nation's top marketfor job growth, according to a 2014 survey. The same report saidthat this growing West Michigan city is the best place to ownrental property, in part because of the strong regional economy andjob growth. Detroit, Flint and Saginaw, Mich. were also recentlycited as among the top places to be a landlord.

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Does the Midwest have any advantages over thecoasts?
In pursuit of ever-higher returns in “hot” markets, investorsflocked to the coastal regions of the country in the early 2000s,driving up property values higher and higher. Unfortunately, thesesame markets suffered the most in terms of declining propertyvalues, having reverberating effects across the country. TheMidwest, however, endured lower decreases in property values, andcontinues its steady upward march. Investors learned some importantlessons during the Great Recession in diversifying real estateportfolio risk across both debt and equity assets, regions andproperty types. The Midwest is proving to be a great place to getstarted.

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Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.