Baltimore and Ohio represent two of the most compelling secondary commercial real estate markets in the United States heading into 2026. Investors pursuing a baltimore commercial mortgage in these regions are finding cap rate premiums of 150 to 300 basis points above comparable assets in gateway cities, combined with strong population growth, diversified employment bases, and significantly lower cost per unit. Whether you are targeting multifamily, industrial, or medical office properties, these markets deliver the yield spreads and growth fundamentals that primary markets simply cannot match today.
Need Financing for This Project?
Stop searching bank by bank. Get matched with 6,000+ vetted lenders competing for your deal.
Why Are Investors Moving from Primary to Secondary Markets in 2026?
The shift from primary to secondary markets is not a temporary trend. It is a structural reallocation driven by several converging forces that have accelerated since 2024.
Cap rate compression in gateway cities has made it nearly impossible to generate meaningful cash-on-cash returns. Multifamily properties in New York, Los Angeles, and San Francisco trade at cap rates below 4.5%, leaving thin margins after debt service. Secondary markets like Baltimore and Ohio's major metros offer stabilized cap rates between 6.0% and 7.5%, translating directly into higher current income.
Remote and hybrid work patterns have permanently reshaped where people live and where businesses locate. Baltimore has seen a net migration increase of 12,400 residents from 2023 to 2025, many drawn by lower housing costs and proximity to Washington, D.C. Columbus, Ohio has experienced even more dramatic growth, adding over 45,000 residents during the same period, fueled by Intel's semiconductor campus and a thriving technology ecosystem.
Institutional investors have begun allocating capital to secondary markets at an unprecedented pace. According to CBRE's 2026 Investor Intentions Survey, 62% of institutional investors plan to increase secondary market exposure this year, up from 41% in 2023.
Lending conditions have also improved materially. Lenders who were cautious about smaller metros during the 2023 to 2024 rate adjustment period have returned with competitive terms. A baltimore commercial mortgage today can be structured at terms that rival what was available in primary markets just two years ago.
What Makes Baltimore a Strong Market for Commercial Real Estate Investment?
Baltimore offers a unique combination of affordability, institutional demand drivers, and geographic advantage that positions it as a top secondary market on the East Coast.
The city sits just 40 miles from Washington, D.C., benefiting from spillover demand from federal contractors, government employees, and knowledge workers who prefer Baltimore's lower cost of living. The MARC commuter rail connects Penn Station to D.C.'s Union Station in roughly one hour.
Baltimore's healthcare and education sectors provide a stable employment foundation. Johns Hopkins University and Hospital alone employ over 50,000 people in the metro area. The University of Maryland Medical System, MedStar Health, and biotech firms in the Science + Technology Park add thousands more high-paying jobs that support premium rental rates.
The Port of Baltimore generates strong demand for industrial and logistics space. Federal investment following the 2024 Francis Scott Key Bridge collapse has actually accelerated industrial development in Brooklyn, Curtis Bay, and Sparrows Point.
Key neighborhoods to watch include Port Covington, where Under Armour's mixed-use development attracts complementary investment; Canton and Fells Point, the premier waterfront multifamily submarkets; and Pigtown/Washington Village, where value-add investors achieve rent premiums of 20 to 30% after renovation.
Multifamily vacancy stands at just 4.2% as of Q4 2025, with asking rents growing 3.8% year over year. For investors considering a bridge loan for value-add acquisitions, Baltimore's rent growth profile supports aggressive renovation business plans.
How Do Ohio's Major Markets Compare for Commercial Mortgage Investors?
Ohio's three largest metros each offer distinct investment profiles. Understanding the differences is essential for effective capital allocation.
Columbus is the growth leader across the entire Midwest. The metro population has surged past 2.2 million, driven by Intel's $20 billion semiconductor facility in Licking County, projected to create 3,000 direct and 10,000 indirect jobs. Google, Amazon, and Meta have expanded their data center footprints here, while established strengths in insurance, retail, and healthcare continue diversifying the employment base.
Columbus multifamily cap rates average 6.5%, with Class A properties in the Short North and German Village trading closer to 5.8%. Industrial properties near Rickenbacker Logistics Park have vacancy below 3% and rental rates climbing 8 to 10% annually.
Cleveland offers the highest cap rates among Ohio metros, attracting yield-oriented investors. The Cleveland Clinic anchors the economy and drives demand for medical office and workforce housing in University Circle, Tremont, and Ohio City. Multifamily properties can be acquired for $85,000 to $120,000 per unit, compared to $300,000 or more in primary markets. This low basis enables double-digit cash-on-cash returns with conservative underwriting. A DSCR loan works particularly well here, as strong rent-to-price ratios easily support debt service.
Cincinnati combines corporate employment, logistics strength, and cultural revitalization. The Over-the-Rhine neighborhood has become one of the country's most successful urban redevelopment stories. Procter & Gamble, Kroger, and Fifth Third Bancorp provide a Fortune 500 employment base. Cincinnati's logistics infrastructure, anchored by DHL's Americas Hub and Amazon's $1.5 billion air hub, has made the metro a national leader in industrial real estate, with I-75 corridor cap rates ranging from 6.0% to 7.0%.
What Financing Options Are Available for Secondary Market Properties?
Secondary markets offer access to the full spectrum of commercial mortgage products, and borrowers are often surprised by how competitive the terms can be. The optimal choice depends on your property type, business plan, and investment timeline.
For stabilized multifamily, agency financing through Fannie Mae and Freddie Mac offers the lowest rates (5.50% to 6.25%), highest leverage (up to 80% LTV), and non-recourse terms. Both agencies have expanded their small balance programs to serve the $1 million to $7.5 million loan range common in secondary markets.
Value-add properties require bridge loans from debt funds and specialty lenders, typically at 7.50% to 9.50% with 12 to 36 month terms. The key is demonstrating a clear stabilization path with supportable rent projections.
For commercial properties beyond multifamily, CMBS conduit loans provide competitive fixed-rate terms at 65% to 75% LTV with 5 to 10 year terms. Use our commercial mortgage calculator to model different scenarios.
Owner-occupied properties qualify for SBA 504 loans with up to 90% financing at below-market fixed rates, ideal for medical practices, manufacturing facilities, and professional offices.
How Do Cap Rates in Baltimore and Ohio Compare to Primary Markets?
Cap rate spreads between primary and secondary markets have widened since 2024, creating one of the most attractive entry points in the past decade.
A multifamily investor purchasing in Baltimore at a 6.2% cap rate versus 4.1% in New York gains 210 basis points of additional yield. On a $5 million acquisition, that spread means roughly $105,000 in additional annual net operating income.
Secondary markets also offer stronger cap rate stability during downturns. During the 2020 correction, Baltimore multifamily cap rates expanded by just 30 basis points, compared to 60 to 90 in several primary markets. This resilience stems from tenants spending a lower percentage of income on rent.
Investors pursuing acquisition loans should focus on the spread between cap rates and loan constants. In most Baltimore and Ohio submarkets, this spread remains positive, meaning properties generate positive leverage from day one. For deeper LTV analysis, see our report on 2026 commercial real estate loan LTV benchmarks.
What Property Types Are Performing Best in These Secondary Markets?
Not all property types benefit equally from the secondary market surge. Understanding which sectors are outperforming in 2026 helps investors allocate capital more effectively and secure more favorable financing terms.
Industrial and Logistics properties lead in both Baltimore and Ohio. E-commerce growth, nearshoring, and supply chain restructuring have created insatiable demand for modern warehouse space. Baltimore's port infrastructure provides a natural advantage for last-mile logistics, while Ohio's central location and highway connectivity (I-70, I-71, I-75, I-77) make it a premier distribution corridor. Cap rates range from 6.5% to 8.0%, compared to 4.5% to 5.5% in primary logistics hubs.
Medical Office thrives in secondary markets with major healthcare systems. Johns Hopkins in Baltimore and the Cleveland Clinic create steady, recession-resistant demand. Medical office tenants sign 7 to 15 year leases, invest heavily in improvements, and rarely relocate. Cap rates range from 6.5% to 8.0%.
Multifamily remains the core holding for most portfolios. Value-add investors target 1970s and 1980s vintage garden-style apartments in Baltimore County, Franklin County (Columbus), and Cuyahoga County (Cleveland), where $15,000 to $25,000 renovations drive rent increases of $200 to $350 per month. Our guide on multifamily commercial loan LTV ratios provides context on current underwriting standards.
Self-Storage performs well where population growth and housing transitions create organic demand, with occupancy above 90% and rate increases of 5 to 8% annually across both regions.
What Are the Key Risk Factors When Investing in Secondary Markets?
Secondary markets offer compelling returns, but they are not without risks. Prudent investors must carefully evaluate several factors that differ meaningfully from primary market due diligence.
Liquidity Risk is the most significant factor. Secondary market properties take longer to sell and attract fewer buyers. Mitigate this by focusing on institutional-quality properties, maintaining adequate reserves, and structuring financing with prepayment flexibility.
Employment Concentration can create vulnerability if a single employer dominates a submarket. Always analyze the top 10 employers and assess relocation or layoff risk.
Insurance Costs have risen 25% to 40% in many secondary markets since 2024. Baltimore properties face flood risk in low-lying areas, while Ohio properties may experience severe weather. Budget conservatively with 8 to 12% annual escalations.
Regulatory and Tax Differences vary significantly. Baltimore City's property tax rate is roughly double surrounding counties. Ohio's reassessment cycles can produce unexpected increases for recently renovated properties.
Property Condition requires more scrutiny in secondary markets. Older building stock, deferred maintenance, and environmental contamination from legacy industrial uses are more common. Budget 1 to 2% of acquisition cost for property condition assessments, and always complete Phase I Environmental Site Assessments.
How Can Investors Secure Competitive Financing in Secondary Markets?
Securing the best possible financing terms in secondary markets requires a strategic approach that differs from the process in gateway cities.
Build Local Lender Relationships. Regional and community banks often provide the most competitive terms for deals under $10 million. They understand local micro-markets and offer flexible structures like interest-only periods and relationship pricing.
Prepare Institutional-Quality Packages. A professional loan package with detailed projections, market analysis, and clear business plan articulation dramatically improves your negotiating position. Lenders in secondary markets see fewer polished packages, so quality stands out.
Understand Leverage Options. Baltimore stabilized multifamily supports 75 to 80% LTV through agency programs. Ohio industrial properties with strong tenants achieve 70 to 75% through CMBS or bank portfolio loans. Value-add deals max at 70% of cost through bridge programs.
Lock Rates Strategically. In the volatile 2024 to 2026 rate environment, lock favorable terms promptly. Most lenders offer 30 to 90 day locks, with longer options for a modest premium.
Ready to explore financing for a Baltimore or Ohio commercial property? Contact our team for a complimentary deal analysis and customized term sheet.
What Do Successful Secondary Market Investments Look Like in Practice?
Real-world examples illustrate how investors are capitalizing on the secondary market opportunity in Baltimore and Ohio.
Baltimore Value-Add Multifamily. An investor acquired a 96-unit garden-style complex in Parkville, Baltimore County, for $9.8 million ($102,000 per unit) at a 6.8% cap rate. The property was 88% occupied with rents averaging $1,050 per month. Using a $7.5 million bridge loan at 8.25%, the investor renovated units at $18,000 each. Post-renovation rents increased to $1,375, occupancy reached 96% within 14 months, and the investor refinanced into a 10-year Fannie Mae loan at 5.85%, extracting $1.2 million in equity while achieving a 14.2% cash-on-cash return.
Columbus Industrial Acquisition. A private equity fund acquired a 185,000 square foot warehouse near Rickenbacker International Airport for $14.8 million ($80 per square foot) at a 7.2% cap rate. Fully leased to two NNN tenants with 6 and 8 years remaining, the fund secured a $10.4 million CMBS loan at 6.15% fixed for 10 years, projecting an 11.3% levered IRR.
Cleveland Medical Office Portfolio. A healthcare REIT assembled three medical office buildings totaling 78,000 square feet near Cleveland Clinic's main campus for $11.2 million ($144 per square foot) at a blended 7.5% cap rate. Tenants on leases averaging 9 years remaining. A single $7.8 million bank portfolio loan at 6.40% for 7 years yielded a 1.51x DSCR and 9.8% cash-on-cash return.
These examples demonstrate that secondary markets deliver institutional-quality returns at a fraction of primary market costs. Reach out to Clearhouse Lending to discuss your investment goals and access competitive commercial mortgage options for Baltimore and Ohio markets.
What Are the Most Common Questions About Baltimore and Ohio Commercial Mortgages?
What is the typical interest rate for a baltimore commercial mortgage in 2026?
Interest rates for a baltimore commercial mortgage in 2026 vary by loan type. Stabilized multifamily accesses agency financing at 5.50% to 6.25%. CMBS conduit loans fall between 6.00% and 6.75%. Bridge loans range from 7.50% to 9.50%. Bank portfolio loans sit at 6.25% to 7.25%. Your actual rate depends on DSCR, LTV, property condition, sponsor experience, and market conditions at rate lock. Working with a correspondent lender who sources quotes from multiple providers ensures competitive pricing.
How do secondary market cap rates compare to primary markets for multifamily?
Baltimore multifamily trades at approximately 6.2% cap rates, Columbus at 6.5%, Cleveland at 7.1%, and Cincinnati at 6.8%. New York City multifamily trades at roughly 4.1% and Los Angeles at 4.3%. This 150 to 300 basis point spread translates into higher cash-on-cash returns and greater margin of safety. Secondary market cap rates have also been more stable during downturns, as lower rent-to-income ratios give tenants a larger financial cushion.
What are the minimum requirements to qualify for a commercial mortgage in Baltimore or Ohio?
General thresholds include a minimum DSCR of 1.20x to 1.30x, maximum LTV of 65% to 80% depending on the program, credit score of 680 or higher, net worth at least equal to the loan amount, and post-closing liquidity of 6 to 12 months of debt service. Borrowers with limited CRE experience may face lower LTV caps or need an experienced key principal. Contact our team to identify programs matching your borrower profile.
Which Ohio metro is the best for commercial real estate investment in 2026?
Each metro serves a different strategy. Columbus suits growth-oriented investors seeking population expansion and appreciation driven by Intel and technology sector growth. Cleveland is optimal for yield-focused investors, offering the highest cap rates and lowest cost-per-unit entry points. Cincinnati provides the most balanced profile with Fortune 500 tenants, strong logistics, and a revitalized urban core. Sophisticated investors hold properties across all three for diversification.
What due diligence should I perform before investing in a secondary market?
Secondary market due diligence requires extra attention beyond standard protocols. Analyze population and employment trends over five years to confirm sustained momentum. Evaluate the supply pipeline, as new construction can quickly soften rents in smaller markets. Verify property tax rates and reassessment schedules. Complete environmental assessments near legacy industrial sites. Obtain insurance quotes early, as costs have risen 25% to 40% since 2024. Engage local property management to validate rental assumptions with on-the-ground intelligence.