The ‘Third City Market:’ An Under-the-Radar Market for Investment and Development

  • Employees lead the shift from primary and secondary cities to more affordable and livable areas with the rise of hybrid work environments
  • Graceada Partners ranks and evaluates 20 undervalued growth cities across America

MODESTO, Calif., Feb. 6, 2023 /PRNewswire/ — Graceada Partners’ released a new whitepaper identifying and ranking tertiary markets that represent strong potential for real estate investment. The detailed report lists the top 20 third city markets, ranked by affordability and livability. Markets topping “The Emergent Value of Third City Markets” report list included Cheyenne, Rapid City, and Redding.

Third City Markets (TCMs) are defined as a tertiary market with between 100,000 to 200,000 residents that is within several hours drive or a short plane ride from a major hub. To find these undervalued TCMs, Graceada Partners analyzed U.S. Census data, AARP livability statistics, and metrics through CoStar to refine their list. The top 20 TCM cities were chosen and ranked based on aggregating these benchmarks.

“Through flexible work agreements from hybrid to remote, businesses have continued to expand into secondary and tertiary markets — which includes hiring workers specifically in secondary and tertiary markets,” explained Joe Muratore, co-CEO, Graceada Partners. “TCMs—such as Cheyenne, Rapid City, and Redding which we ranked as the top three tertiary markets—are proving to be a place for both investors and residents as the next frontier of value.”

The full list includes:

  1. Cheyenne, Wyoming
  2. Rapid City, South Dakota
  3. Redding, California
  4. Columbia, Missouri
  5. Lake Havasu, Arizona
  6. Idaho Falls, Idaho
  7. La Crosse, Wisconsin
  8. Pueblo, Colorado
  9. Bakersfield, California
  10. Yakima, Washington
  11. Yuma, Arizona
  12. Bloomington, Illinois
  13. Las Cruces, New Mexico
  14. Bloomington, Indiana
  15. Norman, Oklahoma
  16. McMinnville, Oregon
  17. Topeka, Kansas
  18. El Centro, California
  19. Yuba City, California
  20. Kalamazoo, Michigan

This report also shows the five trends that are driving people away from primary and secondary markets. Graceada Partners has already shown the trend of workers and businesses moving towards a new economic paradigm shift in their Rise of the Outpost Economy report.

Lack of multifamily affordability in secondary markets and industrial growth within TCMs are two of the trends highlighted by the report. These trends highlight some of the opportunities in undervalued Third City Markets.

“More and more, growing tertiary markets are catching the interest of investors as a way to strategically diversify their investments,” said Ryan Swehla, co-CEO of Graceada Partners. “Major markets have increasing housing and development costs with little room to keep expanding, which makes these areas largely unattainable for many workers with lower incomes.”

Additionally, the report notes increased industrial development interest in TCMs with the Amazon warehouse halo effect. As secondary markets become increasingly institutionalized, TCMs – especially those ranked in the report – represent the next frontier of opportunity.


About Graceada Partners

Graceada Partners is a vertically integrated real estate private equity firm focused on institutionalizing secondary & tertiary markets from within – a combination of entrenched market knowledge and institutional expertise. Founded in 2008, the firm has $0.5 billion AUM and employs a team of 50+ professionals to source, capitalize, manage, renovate, lease and sell properties.

The firm’s leadership team has decades of combined experience adding value to over $10 billion in assets across office, retail, multifamily and industrial properties. Born in 2008 in the heart of the Global Financial Crisis, Graceada Partners is a seasoned expert with looming economic uncertainties, which has allowed the firm to turn market dislocation into successful investments.

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SOURCE Graceada Partners