Like suburban markets, secondary and tertiary markets in the U.S. have been seeing a surge in population. According to Marcus & Millichap’s report Beyond the Global Health Crisis: Population Mobility, the rise in residents in secondary and tertiary markets has outpaced growth in large primary metro markets by 70 percent over the last 20 years. And since 2014, the secondary and tertiary markets have seen their populations rise more than 200 percent over that of gateway cities, due in no small part to changing household compositions and quality-of-life goals. Looking at the top 15 U.S. markets by five-year population growth, six secondary markets—Austin, Texas, Orlando, Fla., Las Vegas, Phoenix, Nashville, Tenn., and Charlotte, N.C.—top the list. A single primary market, Dallas/Fort Worth, makes the top-10 category, the remainder of which consists of tertiary markets Salt Lake City, San Antonio and Jacksonville, Fla.
Mimicking the population patterns, many companies—in the pursuit of diversifying their workforces and decreasing overhead—have expanded their horizons and set up shop outside high-priced primary markets. The trend among the population and businesses has altered demand in some commercial real estate sectors. “Despite some concerns of overbuilding since the last recession, apartment, office and industrial availability have all fallen more dramatically in smaller cities than larger ones,” according to Marcus & Millichap’s Population Mobility report. “Corporate and residential growth in non-gateway markets has also increased the demand for industrial space, as exemplified by a similar decrease in vacancy.”