Secondary markets lagging behind in CRE recovery

Commercial real estate is witnessing secondary markets struggling compared to larger areas.

A report from FTI Consulting noted that while many primary commercial markets in the United States have experienced improvements in recent months, secondary markets may be far behind, and commercial real estate companies may want to look elsewhere.

The economic recovery is expected to last just a few years for the major markets in the U.S., according to Marc Shapiro, a managing director and head of real estate valuation services for the real estate solutions group at FTI Consulting. However, secondary markets may not receive the same luxuries. More difficult market conditions in these areas could prove that the markets are a couple of years behind the rest of the major markets in regaining property values and attracting investment.

"Specifically, the failure of the recovery to gain widespread momentum in 2011 combined with the unpredictability of the financial markets has caused uncertainty in those secondary commercial real estate markets and even in some primary markets, like Chicago and Atlanta," Shapiro explained.

The report added that commercial real estate companies need the country's gross domestic product to continue to improve in order to put these areas in a better situation. While the GDP isn't projected to grow by more than 3 percent for a few years, if it does, this would likely help.

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