As we head into 2025, the commercial real estate (CRE) landscape is undergoing a seismic shift. Secondary markets, often overshadowed by the glitz of primary urban hubs, are stepping into the spotlight. This “suburban renaissance” is being fueled by a combination of economic, social, and technological factors, making these markets prime targets for investors.
Affordability and Cost Efficiency
One of the key drivers of this trend is affordability. Primary markets like New York, San Francisco, and Los Angeles have seen sky-high property costs, making them less attractive to both tenants and investors. Secondary markets, including cities like Nashville, Raleigh, and Boise, offer significantly lower costs for commercial properties while maintaining strong growth potential. Lower overhead translates to higher returns on investment, a factor that is increasingly appealing to CRE stakeholders.
Population Growth and Workforce Relocation
The pandemic-era exodus from large urban centers sparked a demographic shift that continues to shape suburban markets. Many workers, empowered by the rise of remote and hybrid work models, have chosen to settle in suburban or secondary cities, drawn by a lower cost of living and higher quality of life. In 2025, this trend is sustaining robust population growth in these areas, creating a dynamic labor pool that attracts businesses seeking to expand or relocate.
For example, cities like Austin, Salt Lake City, and Tampa have seen surging demand for office and retail spaces as their populations swell. This trend is expected to continue, driving the need for mixed-use developments that combine residential, office, and leisure spaces.
The Rise of Infrastructure and Connectivity
Secondary markets are no longer the disconnected outposts they were a decade ago. Improved infrastructure and advancements in technology have bridged the gap between suburban areas and major urban centers. Enhanced transportation networks, including new highways, commuter rail lines, and airport expansions, have made these markets more accessible to both businesses and consumers.
Moreover, high-speed internet and 5G connectivity ensure that companies can operate seamlessly, even in traditionally “less connected” locations. This has spurred demand for flex office spaces and coworking hubs in these regions.
Appealing to ESG-Minded Investors
Environmental, social, and governance (ESG) considerations are now central to CRE investment decisions, and secondary markets excel in this area. Suburban areas often have the space and resources to develop green buildings and incorporate sustainable practices in their projects. In addition, they offer opportunities to engage with local communities, contributing to social equity and fostering goodwill.
Investors keen on reducing their carbon footprint are drawn to suburban developments that prioritize sustainability, such as energy-efficient office parks or LEED-certified industrial warehouses.
Diversification and Risk Mitigation
Investing in secondary markets provides a level of diversification that mitigates risks associated with over-reliance on primary markets. These markets tend to be less volatile and more adaptable to changing economic conditions, providing a stable foundation for long-term investment strategies.
The suburban renaissance represents a paradigm shift in commercial real estate. As affordability, population growth, infrastructure improvements, and ESG considerations align, secondary markets are emerging as hotspots for 2025 investment. Whether you’re a seasoned investor or exploring CRE opportunities for the first time, these markets present a wealth of potential in the evolving landscape of modern real estate.
For forward-thinking investors, the suburbs are no longer just an alternative—they’re the future.
Contact the Gen3 team to build your next Suburban project!
