The Great Migration: Why Secondary & Tertiary Cities are the Hottest Investment Spots
For decades, the bulk of institutional capital flowed into “Gateway Cities” — New York, Los Angeles, and Chicago. These real estate investment hubs offered stability and liquidity, but also saw sky-high prices and razor-thin returns.
Today, a seismic shift is underway, as investors pivot dramatically toward secondary markets and tertiary cities, recognizing them as the new frontier of high-growth, high-yield opportunities.
This great migration of capital is reshaping the economic map, driven by three powerful forces: remote work, affordability, and organic population growth. Let’s examine all three…
Remote Work Impact Fuels Population Shift
The single largest catalyst for this investment shift is the pervasive adoption of remote work. No longer chained to expensive urban cores, professionals are prioritizing quality of life, more space, and lower living expenses. They are trading in tiny city apartments for larger homes in metros that offer a better work-life balance and at a significantly lower cost of living.
This has resulted in a demographic boom for secondary markets like Nashville, Raleigh, and Boise, which offer a compelling mix of cultural amenities and financial feasibility. The influx of new, often high-earning, residents into these areas creates immediate demand across all real estate sectors:
The search for affordability is directly translating into a massive, sustained tailwind for these smaller metropolitan areas, and the central driver here is the wide implementation of remote work policies.
Affordability Drives Higher Investment Returns
One of the most compelling reasons for the investment pivot is the financial math. In primary markets, competition for assets has driven capitalization rates (cap rates) down to historical lows. By contrast, secondary markets offer significantly lower barriers to entry and far more attractive cap rates, allowing investors to achieve higher cash flow and better long-term returns.
The focus on affordable housing is particularly strategic. As costs continue to climb nationally, properties in these emerging top investment cities serve a dual purpose: they meet a critical public need while delivering robust, consistent cash flow for investors.
They’re especially attractive due to:
Top Investment Cities & the Future of CRE
The real estate investment community is actively seeking out the next wave of high-growth metro areas. These are not homogenous markets, as the most successful top investment cities possess diverse economies, strong educational institutions, and pro-business local governments.
While the specific cities shift a bit from year-to-year, the characteristics that make them attractive remain constant: sustained job growth, low unemployment, and a steady stream of inward migration. This organic growth offers investors a more stable and predictable appreciation trajectory than the more volatile, trend-driven primary markets.
The “Great Migration” is more than a temporary blip; it is a fundamental, long-term reallocation of economic activity accelerated by remote work impact. For forward-thinking investors, turning their attention to secondary markets is not just an opportunity for diversification, but a necessity for capturing the highest growth and most sustainable returns in the current real estate landscape.
