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What Off-Market Data Tells Us About the Rise of Secondary Cities

While primary cities continue to prosper, secondary markets are quickly on the rise. As costs continue to climb in primary markets, American secondary markets, like Houston, Denver, and Miami, are reaping the benefits in terms of economic expansion and the subsequent real estate development. With the introduction of Opportunity Zones, many of which are located in previously downtrodden areas of secondary markets, these markets are looking even greater than it already was.

Handpicked to stimulate struggling economies across the nation, these designated census tracts are attracting investors and developers of all sophistication for their substantial tax breaks on capital gains. Attention is piqued, but time is of the essence; as more and more players enter the market, competition for high-demand assets will stiffen. So how can investors find these high-demand assets efficiently before others do, especially in aggressive, up-and-coming cities?

Commercial real estate technology that is backed by robust off-market data enables users to better navigate the complex world of Opportunity Zones. Although sales listings provide a decent baseline for research, off-market data widens the scope of potential real estate options to include unlisted properties as well. As competition for these prized properties stiffens, off-market data and commercial real estate technology give users a tool to find these assets faster, while empowering stronger, smarter deal-making across attractive secondary markets, like Houston, Denver and Miami.

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Off-Market Data: The New Essential

The race for investing in Opportunity Zones is on, meaning investors and developers need to widen their scope of potential options to beat the competition for high-demand assets. Comprised of an area’s entire property stock, including unlisted, unmarketed assets, off-market data expands an investor’s realm of possibilities. Rather than relying on the sliver of sales listings, off-market expands the pool of parcels individuals can choose from, increasing the likelihood of finding a property in these secondary markets, and enabling them to beat out less-sophisticated competitors.

Tech tools like Reonomy, which collect expansive datasets and serve up viable options with the click of a button, are becoming a necessity in the Opportunity Zone search. It’s this elevated level of efficiency, combined with the granularity and integrity of off-market data, that empowers investors to find and make deals before others do. Rather than physically digging through property records and scouring for ownership details, commercial real estate platforms enabling users to access associated property information, including transactional history. In the later stages of contacting and deal-making where information is of the essence, off-market data allows investors to leverage property, owner, and portfolio details to make smarter, more customized deals directly with decision-makers.

Surveying Top Secondary Markets

With an assortment of Opportunity Zones across the country, how can the real estate community better focus their attention? And how can off-market data help make smarter buying decisions? While the country’s primary markets, like New York City and San Francisco, continue to flourish, it’s the secondary markets investors should keep an eye on—particularly in Houston, Denver and Miami.

What do these metros have in common? All of these cities are experiencing significant economic expansion, the majority of which are leading to positive commercial real estate growth across asset classes. Considering the burgeoning population in each city, multifamily is especially flourishing across the board. Houston’s current unit absorption and occupant rates are quickly closing in on 90 percent, while Denver’s rate of per-capita multifamily construction currently ranks second in the country. Miami, too, is on target for an upward trajectory, with an estimated 260 people moving to the South Florida area every day.

With populations surging in these locations, real estate professionals should consider high-yielding multifamily investments in each city’s surrounding Opportunity Zones. Currently, our data shows there are more than 1,200 multifamily assets in Denver’s Opportunity Zones. Houston and Miami have significantly larger property pools, with more than 4,700 and 7,100 assets in each, respectively. Leveraging such comprehensive off-market data can help users identify lucrative assets near, or in, each of these area’s nominated census tracts—beyond just those listed as for sale. By expanding their potential scope of properties in each Opportunity Zone, investors increase their chances of finding a high-demand property to potentially pursue.

It’s also the depth of this data that prepares real estate professionals to approach decision-makers with informed and tailored deals. The extent of off-market data empowers investors and developers to explore property information before making an offer. This insight sets a stronger foundation in valuation and negotiation, and in turn, yields more flexible deals for both parties.

America’s secondary markets are likely to continue to thrive. While demand for undervalued property increases, in and outside of associated Opportunity Zones, real estate technology and off-market data can empower a more proficient search experience. Ultimately, those who understand and utilize the right data platforms will be the ones able to gain a leg-up on the competition.

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