Institutional Investors Look to “Build to Core” To Find Yield

Last week, the Real Estate Investment Advisers held a panel on investment trends. Everyone was complaining of the intense competition for properties driving down yields. One strategy discussed was to seek properties in secondary markets. Some investors sought properties in the best secondary locations to make up for the yield compression. However, unlike previous expansions, more investors are now seeking to move up the risk curve in new construction in prime markets. These investors claim that when the market turns down, these markets will suffer less or return much faster than secondary markets.

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