Trepp Ranks the Top 21 Secondary Metro Areas for Commercial Real Estate Investment

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Trepp has released new research on the top markets for economic growth and commercial real estate investment, citing employment figures, the exposure to hotels and retail, CMBS issuance, and property fundamentals as key criteria.

The impact of the pandemic was especially severe in top-tier metro areas, many of which completely shut down businesses. While most secondary markets also saw a similar fate, some have fared better than others.

Trepp, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has published a new research report on the top 21 secondary metropolitan statistical areas (MSAs) for commercial real estate investment. Instantly access the complete report here: https://info.trepp.com/ranking-secondary-msas-report-august-2020-pr.

Using a wide range of commercial real estate and economic data, Trepp’s report found the Austin, TX-MSA to be the highest-ranked MSA for its commercial real estate investment potential. Austin was ranked first due to the high rate of population growth rate, low unemployment rate, and a continued increase in new CMBS issuance. It was followed by the San Jose, CA-MSA, which reported low CMBS delinquency rates, low lodging and retail exposure, and a high average occupancy rate and weighted average debt service coverage ratio (DSCR).

“The impact of the pandemic has been especially severe in the top-tier metropolitan areas, many of which had completely shut down businesses,” said Jyoti Yadav, Trepp research analyst. “While most secondary markets also saw a similar fate, some have fared better than others.”

Trepp called upon seven data variables in this study in order to complete the rankings, giving each an equal weighting. In addition to key data such as employment numbers and population growth, Trepp used the following criteria from their own commercial loan database to tabulate their rankings:
‣    The MSA’s exposure to lodging and retail CMBS loans.
‣    The average debt service coverage ratio (DSCR) level weighted by each loan’s outstanding balance.
‣    The percentage of delinquent loans measured in July 2020 against July 2020.
‣    And more.

The two lowest-ranking secondary MSAs were Cleveland-Elyria, OH, and Minneapolis-St. Paul-Bloomington, MN-WI. The delinquency rate and unemployment rates recorded significantly high in both cases, while also having very low weighted average DSCR.

For the complete list of metro areas and corresponding statistics, instantly download Trepp’s ranking of the Top 21 Secondary MSAs: https://info.trepp.com/ranking-secondary-msas-report-august-2020-pr.

For daily commercial real estate updates and news, follow @TreppWire on Twitter.

About Trepp

Trepp, founded in 1979, is the leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency, and investment performance. From its offices in New York, San Francisco, and London, Trepp serves its clients with products and services to support trading, research, risk management, surveillance, and portfolio management. Trepp is wholly-owned by Daily Mail and General Trust (DMGT). For more information, visit https://www.Trepp.com.

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Hayley Keen
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