• Market Resistance. Fluctuations in the local real estate market, whether inflation or deflation, can impact both the equity and occupancy of a property. If an entire portfolio is concentrated within a single market, the overall portfolio is vulnerable to the conditions of that specific local market. Diversifying holdings across multiple markets allows owners to utilize the stability of certain markets to leverage equity and occupancy, providing the flexibility to pursue opportunities in less stable markets with higher risk.

• Occupancy Buoyancy. Occupancy of a property can face obstacles such as reviews, reputation, or necessary building repairs. When a single property experiences low occupancy, it becomes challenging to improve that occupancy when dealing with a solitary asset. However, having multiple properties allows more stable occupancy buildings to support underperforming properties until they are either optimized or exchanged. This strategy provides a level of resilience and strategic flexibility in managing the overall portfolio.

• Tax Advantages. Owners who diversify their holdings across various marketplaces can capitalize on distinct tax opportunities in different municipalities. This approach allows each segment of the portfolio to benefit from the maximum advantages available in its local market. In contrast, a single property is limited to fulfilling one purpose at a time, while diversified holdings provide the flexibility to optimize tax benefits based on the unique conditions of each market.