Secondary Markets Are the New Black

ATLANTA—With class A multifamily assets—and land in prime development locations—becoming harder to find across the Southeast and beyond, some are starting to venture into secondary markets. Indeed, across the nation some investors are even looking at class B assets and developers are looking at broader submarkets where there is a clear demand for multifamily rentals.

“Secondary markets are the new norm for rental choices,” Ella Shaw Neyland, president of Steadfast REIT, tells GlobeSt.com. Steadfast has been focusing some of its investments in Atlanta suburbs. The firm recently spent $51 million on a multifamily asset in Buford, GA. and laid down another $49 to buy a multifamily asset in Kennesaw, GA and $99 million on apartment complex in Suwanee, GA.

“Markets have always been viewed based on the size of their MSA, so larger cities were considered primary,” Neyland says. “But today, markets are being viewed by the rate that jobs are being created since jobs are the major drivers of demand for apartments. You get a job—you need a place to live.”

Neyland points to an example—and one beyond Atlanta suburbs. Austin, she says, has some of the highest job growth in America driven by light manufacturing, technology, financial services and research. Yet it has only about 1.8 million residents. 

“It was once considered a secondary market, but by all of the important metrics to a successful apartment community, it is ground zero today,” Neyland says. “So people need to rethink the old standards in this new world of apartment living lifestyles.”