Look, most people think location is everything in commercial real estate. They're wrong.
Location matters. But what matters MORE is understanding why certain locations print money while others drain your bank account.
I've seen investors drop millions in "hot markets" and lose everything. And I've watched others buy in overlooked cities and 10x their money in five years.
The difference? They knew what to look for.
Austin, Miami, Phoenix. You hear these names everywhere. Tech companies moving in. Population growth. Everyone wants a piece.
Here's the issue. When everyone knows about an opportunity, it's not an opportunity anymore. It's a gamble. You're paying tomorrow's prices for today's property.
That doesn't mean these markets are bad. It means you need to be smarter about HOW you buy there. You can't just throw money at any building and expect returns.
Stop asking "where should I buy?" Start asking "what problem am I solving?"
Every commercial property either solves a problem or creates one. Industrial warehouses near major ports solve logistics problems. Office buildings in dead downtown areas create vacancy problems.
The best markets right now are where demand is screaming and supply is sleeping.
Let me give you real examples.
Secondary Markets with Primary Growth
Places like Nashville, Raleigh, and Boise aren't getting the headlines anymore. Good. That means prices haven't gone stupid yet. These cities still have strong job growth, reasonable regulations, and businesses that need space.
The key here is finding submarkets. Don't just buy "in Nashville." Find the specific neighborhoods where companies are actually leasing space. Look at vacancy rates under 5%. That's your signal.
Industrial in the Midwest
Everyone wants coastal real estate. Fine. Let them overpay.
The Midwest has something better. It has distribution centers that Amazon, Walmart, and every major retailer desperately needs. Columbus, Indianapolis, Kansas City. These aren't sexy. They're profitable.
You know what's sexy? Cash flow. Industrial properties in these areas are producing actual returns while your friends are bragging about their "potential upside" in overpriced markets.
Sunbelt Suburbs
Here's what nobody tells you about the Sunbelt boom. The real money isn't in downtown anything. It's in the suburbs.
Places like Frisco, Texas or Alpharetta, Georgia. Families are moving there. They need shopping centers. They need medical offices. They need storage facilities.
Buy where people are going, not where they already are.
Stop getting lost in 47 different metrics. Focus on these three.
Population Growth
If people aren't moving there, businesses won't either. Simple. Look for markets with 1.5% or higher annual population growth over the last five years.
Job Diversity
One industry towns are dangerous. If the main employer leaves, your property value crashes. Find markets with at least three strong sectors. Tech, healthcare, and education is a winning combination.
Replacement Cost
This is the big one. If you can buy a building for less than it would cost to build it new, you're getting a deal. Markets where replacement costs are 20-30% higher than current prices are goldmines.
If someone handed me a million dollars right now and said "buy commercial real estate," here's exactly what I'd do.
I'd skip the coasts entirely. Too expensive. Too much competition.
I'd look at tertiary markets in the Southeast and Southwest. Places like Chattanooga, Tennessee or Fort Myers, Florida. Not the primary cities, the ones right next to them.
I'd focus on industrial or medical office. Both have tailwinds that'll last decades. E-commerce isn't slowing down. Boomers aren't getting younger.
And I'd buy cash flowing properties. Not development deals. Not value-add projects that "could" work. Buildings with tenants paying rent TODAY.
They chase appreciation. They buy in expensive markets hoping prices go up.
Hope is not a strategy.
Buy for cash flow first. If appreciation happens, great. That's a bonus. But your returns should come from rent checks, not prayers that someone will pay more later.
I've made this mistake. It's expensive. Learn from my stupidity.
Before you buy anything anywhere, answer this question: What is my edge?
Maybe you know healthcare. Buy medical office buildings. Maybe you understand logistics. Buy warehouses. Maybe you have connections in a specific city. Use them.
Your edge isn't "I can find good deals." Everyone thinks that. Your edge is specific knowledge that others don't have.
The best place to buy commercial real estate in the US isn't a place. It's a strategy.
Find markets with strong fundamentals. Look for properties that solve real problems. Buy with cash flow in mind. Use your specific knowledge as an advantage.
And remember, the worst deals happen when you're in a hurry. Take your time. Do the work. The right property in the right market will wait for you.
The wrong property in the hot market will cost you everything.
Choose wisely.
Arun Ghosh
Hutfin