The real estate investment landscape is shifting. Traditional gateway metros like New York, Los Angeles, and San Francisco have long dominated investor attention, but the focus is now expanding to smaller, fast-growing secondary cities. These markets present compelling opportunities for investors seeking value, growth, and diversification (Smith, 2024).
Why Secondary Cities Matter
Secondary cities are metropolitan areas outside major, high-cost markets. They often have smaller populations but are experiencing strong population in-migration, job growth, and infrastructure investment (Johnson, 2023). Unlike heavily saturated gateway metros, these cities can offer attractive acquisition costs and higher potential yields (Brown & Martinez, 2023).
Drivers of Investment
Several key trends are fueling interest in secondary cities:
Affordability and Entry Costs
Skyrocketing property prices in major markets make it harder to generate strong cash flow. Secondary cities, with lower purchase prices, allow investors to achieve better initial yields and spread capital across multiple properties (Lee, 2022).
Demographic Shifts and Remote Work
The rise of hybrid and remote work has enabled more families and professionals to relocate to cities with a better quality of life and lower housing costs (Anderson, 2023). This shift is driving demand for residential and mixed-use development in secondary markets.
Economic Diversification and Infrastructure
Many secondary cities are improving broadband, transportation, and business-friendly policies, creating a stable environment for long-term real estate growth (Smith, 2024).
Advantages of Investing in Secondary Cities
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Higher cash-flow potential: Lower acquisition costs and steady rental demand can produce more substantial immediate returns (Johnson, 2023).
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Diversification: Investing across multiple properties or cities reduces exposure to a single economic shock (Dirksen, 2025).
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Early-stage growth advantage: These markets are often earlier in their growth cycle, offering potential for appreciation before larger investors enter (Brown & Martinez, 2023).
Risks to Consider
Secondary markets are not without challenges. Potential risks include:
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Liquidity constraints: Fewer buyers may slow resale (Lee, 2022).
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Economic concentration: Cities dependent on a single employer or industry are vulnerable to downturns (Anderson, 2023).
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Infrastructure limitations: Some secondary cities may still lack well-established property management networks or public services (Smith, 2024).
Mitigating these risks requires diligent research, strong local teams, and careful selection of markets based on growth metrics and migration patterns.
Evaluating the Right Market
Investors should examine:
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Population growth, especially in younger cohorts
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Job diversification across multiple industries
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Home price to rent ratios
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Migration trends
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Quality-of-life indicators and infrastructure development (Brown & Martinez, 2023)
Conclusion
Secondary cities offer a strategic opportunity for investors willing to look beyond traditional gateway markets. By identifying growing markets with favorable economics and demographic trends, investors can capture meaningful returns while diversifying risk. These cities are not replacing major metros but are expanding the frontier of real estate opportunity.
If you’re an investor, city leader, or partner interested in advancing sustainable, mass-timber and Net-Zero projects in high-growth secondary cities, I’d love to connect. Evolve Development Group is actively planning a pipeline of mass-timber and Net-Zero projects currently in design development. Contact us at info@evolve-us.com to start a conversation.
For more information, interviews, or investment insights:
Tyson Dirksen
Founder, Evolve Development Group
Email: info@evolve-us.com
Website: evolve-us.com | tysondirksen.com
LinkedIn: linkedin.com/in/tyson-dirksen-a543827/
https://evolve-us.com/why-secondary-cities-are-the-new-frontier-for-real-estate-investment/
