Industrial Real Estate Strategy 2025: Why New Blueprint Partners Focuses on Secondary Markets

New research from Louisiana State University and Duke University examines how America's secondary markets may shape industrial real estate growth over the next decade. The findings align with patterns New Blueprint Partners has observed in markets like Wisconsin's Fox Valley region.

The data reveals distinct characteristics of high-performing secondary markets: metropolitan areas with skilled workforce availability, competitive operating costs, and established industrial infrastructure consistently demonstrate strong fundamentals. For example, regions with college graduate populations above 35% and housing costs below $225 per square foot have maintained industrial rent growth between 2-3% annually while keeping occupancy rates above 90%.

New Blueprint Partners' recent activity in the Fox Valley region illustrates these market dynamics. The region's manufacturing workforce of 22,000 skilled workers has supported industrial employment growth of 3.2% year-over-year, exceeding the national average of 1.8%. NBP's acquisition of a 190,000-square-foot industrial complex in Oshkosh at $44.65 per square foot represents a significant discount to replacement costs, which exceed $100 per square foot in primary markets.

The Benefits of Investing in Secondary Markets

Investing in secondary markets offers several advantages, including portfolio diversification, lower competition, and business-friendly policies. These markets often provide opportunities to mitigate risk by spreading investments across varied geographies.

Furthermore, secondary markets generally present lower barriers to entry, enabling investors to allocate capital more effectively. With fewer competitors vying for properties, investors can secure assets at favorable prices, enhancing potential returns. Additionally, many secondary markets benefit from economic incentives such as tax breaks, grants, and expedited permitting processes, creating an attractive environment for businesses and investors alike.

Research from the recent study highlights regions like Savannah, Georgia, which exhibit strong growth potential by attracting displaced talent from highly saturated urban markets. These migration trends bolster the labor pool in secondary regions, making them increasingly viable for long-term investment.

Financing Options for Secondary Markets

One of the keys to unlocking the potential of secondary markets is understanding available financing options. Commercial property loans, LP management, and build-to-suit industrial development financing are all viable paths. Working with experienced commercial real estate financing advisors can streamline the process and help identify the best solutions tailored to a specific market.

Growth Potential of Secondary Markets

The growth potential in secondary markets is supported by robust job markets and thriving major industries. Cities like Rochester, New York, and Savannah, Georgia, exemplify how these factors drive industrial demand. Beyond economic metrics, secondary markets also offer a high quality of life, which appeals to workers and businesses alike.

Flexible office solutions and mixed-use developments are gaining traction in these regions, adapting to post-pandemic needs and supporting sustained growth. These trends position secondary markets as fertile grounds for long-term investment.

Local Partnerships and Market Navigation

Success in secondary markets often hinges on building strong local partnerships. Collaborating with local developers, real estate agents, and business associations provides invaluable insights into market dynamics and regulatory landscapes.

Engaging with community organizations also fosters goodwill, enhancing the investor’s ability to execute projects efficiently. By tapping into local expertise, New Blueprint Partners has consistently navigated complex regulatory environments and identified under-the-radar opportunities.

Risks in Secondary Market Investments

While secondary markets present numerous opportunities, investors must also consider the risks. Tenant demand can be less predictable, and limited transportation infrastructure may hinder distribution capabilities. Additionally, repositioning older industrial facilities often involves unforeseen challenges that can impact returns.

Thorough due diligence and careful market analysis are essential to mitigating these risks. By understanding potential drawbacks, investors can develop proactive strategies to safeguard their investments.

Strategies for Identifying Opportunities

Evaluating a city's growth potential is a critical step in identifying viable opportunities. Key indicators include population growth, industrial expansion, and infrastructure development. Researching local markets can uncover competitively priced properties and provide a clearer picture of market trajectories.

Understanding a secondary market’s unique identity further aids in crafting tailored investment strategies. For instance, New Blueprint Partners prioritizes regions with a strong talent pool and access to efficient transportation networks, ensuring long-term asset value.

Recent findings suggest that smaller urban centers like Dayton, Ohio, and Greenville, South Carolina, are poised to attract significant industrial investment, as these cities exhibit both strong educational infrastructure and affordable operational costs.

Tax Implications of Investments

Property taxes play a significant role in determining the profitability of investments in secondary markets. Rates can vary widely between municipalities, and potential future increases may affect long-term returns. Investors should thoroughly research tax policies and anticipate potential shifts to ensure financial stability.

Types of Industrial Properties

Certain types of industrial properties are particularly well-suited to secondary markets. These include logistics and distribution centers, light and heavy manufacturing buildings, and cold storage facilities. These asset classes align with the needs of businesses seeking operational efficiency and lower costs compared to primary markets.

Additionally, the study highlights the importance of adapting to emerging technologies like automation and AI to enhance the value and functionality of industrial properties in these regions.

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New Blueprint Partners continues acquiring strategic assets in markets demonstrating these characteristics. By aligning academic research with hands-on market experience, NBP identifies regions poised for industrial growth, balancing educational resources, infrastructure, and operational advantages.

The data suggests industrial real estate’s next chapter of growth may emerge from strategically positioned secondary markets. For investors, understanding and leveraging these market dynamics will be key to capitalizing on their full potential.