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2016 Outlook: We see growth in secondary cities

As an opportunistic fund, we are consistently looking for growth opportunities across the United States. While we still maintain a presence in New York City, we are currently targeting 18-hour, or secondary cities, such as Pittsburgh, Nashville, Austin TX and Jacksonville among others cities which possess strong fundamentals, where assets are undervalued and substantial economic and population growth potential are present.

As data availability in 18-hour cities such as Pittsburgh, Nashville, and Austin has greatly improved in recent years, investors and fund managers have begun to turn to these markets alongside primary markets such as New York and Los Angeles. We believe that more capital is available than what these 24-hour cities can absorb, causing prices and cost in these markets to soar, where the same effect is happening much slower in 18-hour markets, creating opportunity. In addition, many 18-hour cities are attracting growth in forming stronger identities; the 'cool' factor has played a major role in the economic upswing cities such as Denver and San Diego are experiencing.

Due to growing cultural identities within many of these secondary cities, a product and result of young, growing urban populations, economic expansion across asset classes has been steady. While 18-hour cities may provoke concerns of risk or volatility during economic downturns, we have seen much more restraint in funding new development. We believe increased investor intelligence after the most recent economic bubble coupled with greater availability of data on 18-hour cities will be factors to mitigate risk as well.