The Importance of Location:
Our Strategic Approach

In real estate, the adage “location, location, location” isn’t just a cliché; it’s the cornerstone of successful investment. At Larson Capital Management (LCM), our disciplined approach to evaluating potential locations is integral to uncovering opportunities that deliver stable returns and offer significant value appreciation, even in challenging market conditions.

Market Dynamics and Supply Constraints

Our evaluation process begins with a deep dive into local market dynamics. Key factors such as population growth, job creation, and economic stability are critical indicators of a thriving market. Regions experiencing robust population and employment growth offer increased demand for housing and commercial spaces while also providing a buffer against economic volatility.

And in today’s climate, where stricter lending practices and investor hesitancy are prevalent, these dynamics become even more important.

We focus on high-growth secondary and tertiary markets. Unlike saturated urban giants with limited land availability and stiff regulatory environments, emerging areas often offer natural barriers to entry. For instance, we strategically focus on markets with strict zoning laws. These often impede new developments, but they also allow us to capture a value premium by acquiring projects at attractive prices before they appreciate in constrained markets. Limited new supply (whether due to zoning restrictions or high development costs) can be a catalyst for driving rental growth and property values upward.

Demand Drivers and Submarket Analysis

Beyond broad market conditions, we analyze micro-level demand drivers which can influence property performance. Proximity to amenities, such as green spaces, quality schools, and vibrant retail hubs, enhance a location’s appeal. High-quality transportation links, including access to public transit and major highways, also play a pivotal role. These factors are essential in supporting tenant attraction and retention, which in turn contribute to steady rental income and long-term asset stability.

Our due diligence doesn’t stop at the city level; we drill down to specific submarkets and neighborhoods. The reputation and desirability of a neighborhood can significantly impact investment potential. For example, our recent evaluation of projects in Charlotte, NC, Rochester, MN, and Nashville, TN, revealed that localized barriers to entry can result in lower acquisition costs relative to stabilized market values. Barriers to entry include limited infrastructure capacity and strict local regulations. In North Carolina, our Hambright Junction project exemplifies this approach, where a high barrier to new development has created an environment ripe for value appreciation.

A Data-Driven, Long-Term Outlook

At LCM, our investment philosophy is firmly rooted in a long-term perspective. We understand that real estate cycles require patience and foresight. By analyzing urban planning initiatives and long-term development plans, we can anticipate future changes that may enhance property values. Emerging trends, such as gentrification or planned infrastructure improvements, are factored into our investment decisions. This helps to ensure we are not just reacting to current conditions but proactively positioning ourselves for future growth.

In Rochester, for example, significant infrastructure investments from major institutions like the Mayo Clinic create favorable environments for multifamily developments. This, combined with the fact Rochester’s occupancy rates exceed 95%, leads to attractive value premiums.

Integrating Location with Operational Excellence

Location is not the only determinant of success; it must be paired with operational excellence. Our evaluation process includes comprehensive site visits, rigorous financial modeling, and thorough due diligence. This helps ensure every project aligns with our investment criteria. This multifaceted approach allows us to verify that a location’s potential is not just theoretical but is supported by tangible, data-driven insights. Even in markets like Dallas and St. Louis (where office market dynamics are evolving), our focus on occupancy trends and lease rates helps us identify opportunities that can weather market fluctuations and deliver consistent returns.

Positioning for Success

In real estate private equity, the location of an asset can be the difference between a mediocre investment and a standout success. Our comprehensive, data-driven approach to location evaluation ensures that we identify markets with the strongest potential for value creation. By scrutinizing broad economic indicators to micro-level neighborhood trends, we empower our investors to capitalize on opportunities that offer both growth and stability.

Our Commitment

Ultimately, the importance of location is underscored by our commitment to long-term, sustainable investment strategies. With careful due diligence and a clear focus on market fundamentals, we strive to transform challenges into opportunities to help ensure every investment is built on a foundation as solid as its location.

Explore our opportunities.

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Investment advisory services are provided by Larson Capital Management, LLC, an investment advisor registered with the Securities and Exchange Commission. All securities involve risk and may result in significant losses. Investing in private placements also requires long-term commitments. Risks and Limitations: the risks associated with making investment decisions based on targeted metrics is that they are targets. Commercial real estate investing is risky, and that means that the investment will not always play out according to expectations. Criteria and Assumptions: how a sponsor approaches the underwriting process (conservative, moderate, aggressive) may change the assumptions of the model which include targeted: cash yield, equity multiple, IRR, investment period and distribution rates.

For Accredited Investors Only. According to the SEC, an accredited investor, in the context of a natural person, includes anyone who earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year OR has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence).