While the impacts of the current coronavirus pandemic are being felt all over the world, the industry is getting tons of new data regarding how different locations are either thriving or struggling amid this kind of crisis.
We’re able to derive new values, insights, and operational capacity analyses in a situation that we’ve never seen before – meaning that COVID-19’s nonstop business disruptors aren’t really all bad.
While it is undoubtedly a tragic and taxing time, the pandemic is forcing us all to adapt to the unthinkable, teaching us new lessons along the way. Having gone through this revolutionary and historic moment in modern history, we’re emerging stronger, smarter, and more strategic than ever before.
Our post-COVID-19 world will have a new understanding of how business works, and especially what falls short when normalcy is interrupted by unpredictable factors.
One such aspect of real estate that we’re better understanding is the true value of secondary markets.
In line with all of the recent predictions that secondary and tertiary markets will remain steady in the face of an economic downturn.
Let’s explore what we’re discovering about secondary markets during COVID-19 and how it will impact real estate into the future.
Big Populations, Big Problems
Due to their larger population densities, capital markets in the United States are being hit harder by COVID-19’s pandemic than smaller, remote areas. New York City is the virus’ epicenter in the United States, with Washington D.C. and Los Angeles not too far behind.
The regularly high rates of traffic, tourism, and travel in popular cities have caused the virus to impact the country’s biggest metros with greater intensity.
Shelter-in-place orders that have been going strong for weeks in big cities are just now starting to activate in smaller locations, meaning the economies of varying markets are operating on different COVID-19 timelines.
It seems that the most attractive feature of primary metro markets, being the magnanimous and constant flow of consumer traffic, is actually its downfall in a situation like we’re facing today. As real estate developers, investors, and professionals observe the current state of the industry, the lesson ‘bigger isn’t always better’ is hitting home.
It’s Not All Good News
While secondary markets aren’t being impacted as much as primary locations, that doesn’t mean they’re in the clear. In response to the uncertainty of COVID-19’s coming ups and downs, investment in secondary cities is expected to see a slowdown over the next 9 months.
Expert analysts anticipate that investment levels in secondary markets won’t fully recover to their baseline norm until November 2020. This is largely due to the overarching economic slowdown resulting from the far-reaching effects of COVID-19.
Secondary Markets Still Assert their Value
Even though we’re seeing the expected ramifications of COVID-19 on secondary markets, it’s not diminishing the value of smaller market locations. When life in big cities is on hold as they’ve been hit first, other locations aren’t experiencing the same force of the crisis – enabling their economies to march forward.
While there’s no place that’s completely untouched by COVID-19, secondary and tertiary cities are shining lights amid a national emergency.