While the Big Six markets (New York; Washington, D.C.; Boston; Los Angeles; San Francisco; and Seattle) indicate that the economy is recovering, the most telling sign of a revival are when the secondary markets heat up. However, while these markets may be seeing rent growth and strength, new development isn’t the focus. Acquisition-rehabilitation deals, rather, are the hot topic in second-tier metros this year. We surveyed five industry insiders to see which "under-the-radar" markets are raising some eyebrows.

Curtis Walker, director of acquisitions for Atlanta-based Wood Partners, chose Denver as the up-and-coming market he wanted to explore. With lots of activity in the oil and gasoline industries, occupancy numbers in the Mile High City are adding value and opportunity in the Denver market, Walker says.

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“I’d say the market is evenly active in both sectors,” Walker says. “But not until really the last year or so. I mean, I think [Denver] is a fairly constrained market for a smaller market. It’s always expensive and difficult to build and the access to supplies and occupancies really justified the building comeback.”

Michael McRoberts, managing director and head of Prudential Mortgage Capital’s agency lending programs, says the upper Midwest, such as Michigan and Ohio, is seeing lots of job growth, pushing rents to rise.

“A lot of people are starting to rotate toward older assets, and the prices have gotten bid up so much on coastal assets,” McRoberts says. “It’s a shift. It’s not something we saw a few years ago. I’m not really that surprised by it. It’s good to see there’s population growth and properties are starting to perform better.”

Columbus, Ohio; Detroit; and Ann Arbor, Mich., are performing well and have piqued the interest of market officials.

“We’re seeing acq–rehab for our agency gateway program,” McRoberts says. “We’re starting to see more trades. People are buying.”

Ryan Severino, an economist for New York–based market research firm Reis, chose Portland, Ore., as his hottest secondary market.

Based on Reis projections, Portland is expected to have the highest effective-revenue growth of any nongateway market, Severino says.

“Moreover, not only are [Portland's] fundamentals projected to perform well, but the presence of the technology sector bodes well for the metro area," Severino says. "Technology is clearly one of the drivers of the U.S. economy, and in October Intel announced that it was planning a $3 billion capital investment for a massive expansion of its facilities in the metro area.”

Additionally, local industries are expected to drive demand in the housing market as the largest companies grow.

Global conglomerate Nike, which is based in Portland, is expected to expand, with a $125 million capital investment.

“Not to mention Portland’s position as the microbrew capital of the U.S.,” Severino says. “And it is good times ahead for Portland this year.”

Lili Dunn, chief investment officer at Greensboro, N.C.–based Bell Partners, is keeping her eye on the South Florida market.

“It has attractive demand and supply fundamentals, and rents are below their long-term trend and still accelerating,” she says. “Absorption is forecast to keep pace with supply, and both job growth and migration flows continue to strengthen.”

But new development isn’t prevalent in this market, either.

“We’re focused on acquiring quality assets in supply-constrained submarkets where we can generate attractive current cash returns and enhance value through our extensive operating platform,” says Dunn.

M. Patrick Carroll, founder and CEO of Atlanta-based Carroll Organization, chose Houston because of the success of the energy sector’s job growth. The firm recently acquired two 330-unit luxury developments in the market, bringing its total portfolio for the area to nearly 2,500 units, according to Carroll Organization's Web site.

Carroll also tipped his hat to the Atlanta market, where the firm recently purchased two communities comprising nearly 600 units.

“Atlanta is experiencing an overall economic rebound that’s giving multifamily a boost,” Carroll says.

Lindsay Machak is an Assistant Editor for Multifamily Executive. Connect with her @LMachak.