There’s a lot of talk about Tier a, tier b, tier c etc markets for commercial real estate. Lots of discussion around what markets are a,b,c,d etc. anyone who has been in the game for a while or knows what’s going on could you power rank the top 10 or so markets in your opinion? Sophomore in college just curious here.
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Like most tier lists, it is actually oddly subjective, both in how you would rank them and what tiers each market fits into. This is because while there is obviously overlap in what is a good real estate market from an investment perspective and what is a good real estate market from a jobs perspective, it isn’t exactly a 1:1 ranking.
Personally I always thought of Tier A as the true Gateway or Global cities - NYC & LA followed very closely by San Francisco, Chicago, Miami, and Boston. DC and Houston and Philly fit in there the next tier down. Dallas, Atlanta, Phoenix, etc. too, followed by a tier of smaller cities where real estate has boomed like Charlotte or Nashville or Tampa followed by an even lower tier of even smaller cities where real estate has been successful like Greenville, South Carolina.
Even this very vague ranking though will inevitably have someone come in and say “No shot X is lower than Y” and they won’t even be wrong in saying it. That doesn’t even factor in personal opinions that contrast with market size. For instance, would I chose to work in or invest in Chicago or Miami over Dallas or Atlanta? Not a chance.
As you’re looking to graduate and get your first job, the best thing you can do is find a city (often the closest) that you have a personal connection to - either a network you can reach out to or shared experiences like you’ve been going to those restaurants and rooting for those sports teams for 20 years. The second best thing you can do is go to the largest gateway market that agrees with you, because the concentration of employers is sky high and there’s a level of cachet you get if you work in real estate in one of these true global markets. The third best thing you can do is just go wherever you can get hired right now ;)
Great breakdown! Thank you. Where would Austin fit in here? Thinking tier 2/3 ish
I honestly don’t even want to get that granular. Austin is a great market. It isn’t a global market. It isn’t a tiny market. It gets a thumb up.
No shot DC is lower than Boston!
I think traditionally "gateway markets" were viewed as NYC, LA, SF, Chi, Boston, DC - in other words cities most foreign investors were interested in. That's why they were called gateway markets - foreign investors gateway to US real estate investing. Like weed being a gateway drug. All other major cities were considered secondary, with everything else behind that tertiary (i.e. topeka, ks).
Obviously a lot has changed since the pandemic so at this point it's a lot more muddled. Like SF and Chi for example...yikes - do we consider these gateway anymore lol? Is Miami a gateway market at this point? You can see how this becomes subjective real fast...
At this point i consider Austin, Phoenix, Nashville as top tier markets, but even so it can get more complicated - what asset class are we talking? For example Charleston is a top tier hotel market...but would it be considered that for any other asset class? Debate...
This is an excellent point. Different cities are different "tiers" (so stupid) in different asset classes. Austin and Dallas, for example, have absolutely been some of the hottest markets in which to build market rate multifamily housing over the last decade. I'd bet a place like Miami is near the top for condos. The Boston area has historically been a major life sciences market. I know that the DC area tends to attract a ton of growth in things like call centers and data storage (white box industrial?).
Maybe it's better to think about overall investment? I think the obvious candidates are easy to spot. NYC, LA, SF, Miami, Chicago. Everywhere else... you can make a case for like a dozen other cities, maybe more, and in a lot of cases they may very well be a "top tier" city, but who the hell cares?
Think this can also vary a bit by asset class as a lot of investors in the multifamily space look to where they can gain the most upside via job/population growth - so cities like Atlanta, Charlotte, Raleigh, Orlando, Tampa, Austin, Dallas and Phoenix have been Tier A markets during this last cycle. Now, the supply pipeline is hurting every single market I just mentioned but long-term growth prospects are very strong with net migration continuing in these areas and the lack of new supply starting in 2026 - which is why you continue to see big bets being made on real estate in these markets. Tier B markets, for me, would be Cincinnati, Columbus, Indianapolis and Kansas City. Less dynamic, but less supply-side pressure and they all currently have strong market fundamentals.
But I do agree that NYC, DC, Boston, Miami, SF, LA and Chicago will always be desirable as global gateway markets.
Houston I put in a class all by itself - so volatile based off the energy industry. Lot of investors won't touch it given the fluctuations, but you can make a lot of money with the right timing.
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