Think Again About Secondary Markets
Looking to buy high-end apartments at high-end prices? Alpha cities have you covered. But there's lots of action nationwide in other places, Passco acquisitions SVPÂ GaryÂ Goodman tells us. (All this underdog talk has us excited for the Winter Olympics.)
Risk-adjusted yields are usually superior in secondary and even some tertiary markets--which is where Passco is leaving no stone unturned, looking for deals. "Cap rates for Class-A properties are over 100 basis points higher in those markets, and the development pipeline isn't usually as full as in so-called primary or gateway cities," Gary notes.
Many of the company's target markets are enjoying relative higher job growth, as cities and states offer tax incentives and right-to-work environments to woo businesses. (Instead of De Beers this Christmas, try getting that someone special De Rebate.) Recently Irvine-based Passco acquired Wakefield Glen Apartments, a 246-unit property in Raleigh, NC, for $31M. This particular property is near Research Triangle Park, which has 170 companies and employs about 38,000.