Secondary Market Momentum: Industrial Assets as Institutional Goldmines

Why Secondary Markets Matter Now

Several macroeconomic trends are converging to elevate the importance of secondary markets:

• E-commerce expansion has fueled demand for last-mile distribution hubs in markets outside of the traditional Tier 1 metros.
• Rising construction costs and land scarcity in primary markets are pushing developers and investors to consider alternative geographies.
• Remote and hybrid work models are shifting population and consumer behavior, leading to demand in formerly overlooked logistics corridors.

Markets such as Nashville, Charlotte, and Kansas City are experiencing industrial rent growth that outpaces national averages, fueled by supply-demand imbalances, increased transportation efficiencies, and lower barriers to entry.

Excelsior’s Edge in Driving NOI Growth

At Excelsior Capital, we’ve long recognized the value in acquiring and optimizing industrial assets in high-growth, undercapitalized secondary markets. Our hands-on approach to asset management and focus on operational efficiency have allowed us to unlock hidden value and enhance Net Operating Income (NOI) across our portfolio.

Our typical playbook includes:

• Targeted acquisitions in strong secondary markets, focusing on assets with below-market rental rates.
• Active lease management and tenant engagement strategies to minimize vacancy and maximize rent escalations.
• CapEx discipline to ensure cost-effective improvements that increase long-term asset value.

Institutional Relevance

As institutions recalibrate their portfolio strategies in response to higher interest rates and uncertain equity markets, industrial assets in secondary markets present a compelling risk-adjusted return profile. They offer:

• Strong cash flow characteristics with less cap rate expansion risk.
• Attractive entry points relative to overvalued primary markets.
• Diversification benefits that enhance overall portfolio resilience.

With allocations to alternative assets continuing to grow, industrial properties in secondary markets offer both yield and durability—an increasingly rare combination.

Final Thoughts

The industrial sector remains a pillar of stability and growth, but where you invest matters more than ever. Secondary markets are no longer a footnote—they’re the front line for forward-thinking investors.

At Excelsior Capital, we are committed to uncovering value where others aren’t looking. Our experience and performance in secondary market industrial assets position us to help institutions capitalize on this next wave of opportunity.

For more thought leadership on institutional real estate, visit www.excelsiorgp.com.