Investing in the Heartland: Part Three

NW Auto - Northwest Arkansas

The Challenge of Investing in Middle American Real Estates

Creating a robust platform for investors to explore real estate opportunities in the heartland has been a significant challenge for traditional real estate firms.

One major obstacle is the lack of effective networks in these regions. The key to successful real estate investments often lies in understanding local market dynamics and establishing strong professional connections. Large-scale real estate companies have built extensive and valuable relationships within major markets over decades and through billions of dollars in transactions. This relationship base gives them a substantial advantage in these areas. However, replicating these connections across diverse markets in mid-America is difficult, if not impossible, to achieve quickly. Consequently, in the heartland, these crucial relationships are mostly held by a fragmented array of local investment firms, many of which lack the capacity and structure needed to support widespread investment.

It's important to note that many of the most attractive inland markets are considerably smaller compared to major metropolitan areas. Additionally, the valuation disparity between coastal cities and inland regions means that traditional firms would need to acquire two to three times more properties to invest an equivalent amount of capital. This difference in market size and valuations necessitates that established firms develop five to ten times as many strong relationships to achieve a balanced portfolio.

Moreover, such a transition would require traditional firms to make significant adjustments to their capital structure. Much of their long-term competitive advantage has stemmed from low capital costs, achieved by focusing on high-grade properties in key markets. However, shifting their strategy to prioritize inland regions would undermine their established access to favorable capital, creating a contradiction in their approach.

Unable to make these changes quickly, conventional companies have instead adopted compromise strategies, taking gradual steps to penetrate the mid-America market. Some firms turn to mergers and acquisitions to diversify their holdings. However, after years of focusing predominantly on gateway markets, there is a scarcity of firms concentrating on mid-America, making this an impractical solution for achieving a balanced portfolio. Other companies attempt to leverage their existing tenant relationships, extending their reach into the heartland through established associations. While this approach can help geographically diversify their portfolio, it often results in overexposure to a limited number of firms and predominantly targets retail properties. For those eager to invest in the real estate opportunities of the Rise of the Rest phenomenon, a review of traditional real estate investment offerings can be underwhelming.

Tempus: Bridging the Gap

Tempus shines in the void left by major real estate investment firms. For years, Tempus has focused on investing in heartland markets. While other firms pursued the lofty growth of gateway markets, Tempus was busy cultivating the networks and relationships needed to deliver a top-tier real estate investment platform centered on mid-America. With its roots firmly planted in the heartland and an unwavering focus on this region since its inception, Tempus has built an institutional-grade platform that enables investors to capitalize on the heartland’s new moment of triumph.

If you are looking to capitalize on the real estate opportunities offered by the Rise of the Rest, or if you simply want to diversify your real estate investment portfolio to better align with the evolving American landscape, Tempus is here to assist. Discover how Tempus provides effective investment strategies by contacting us at 501-340-0457 or messaging us with the chat feature in the bottom right corner of this page.

Dan Andrews
CEO