Up and Coming Cities?
Any regions in the US you guys see as up and coming areas over the next decade? Was thinking southern fl with more people moving into Miami Dade county but wanted to learn about other markets. Specifically for resi and ind
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Tampa for sure
I'll tell you one thing, people buying the SE are over exposed to the SE and say so in the market. When securitizing people won't like exposure to it and it executes worse. Insurance costs are going through the roof in FL especially. I think the growth honestly slows down in the rent and leasing aspect, while pop booms.
Industrial- Savannah
MF/Resi- Huntsville, Raileigh-Durham, Nashville
I think Savannah, Raleigh, and Nash have a lot of inventory online already for the asset classes you mentioned for each and need demand to catch up.
Overall, I’m bullish on most of those cities that you listed though.
Huntsville is extremely over saturated with thousands of units coming online.
Re: Nashville I agree but for the downtown area. It’s been oversupplied for years at this point. It’ll absorb. No idea how long it’ll take. I was giving 3 months concessions on new deals back in 2017-2018 for an asset I was managing and development has only ramped up. Supply doubled downtown since than.
Raleigh has an insane pipeline. The majority of people that move to Raleigh-Durham are directly from school. Once you hit your late 20s, 30s you move to settle down in a house.
That’s to say, I think Raleigh-Durham is overhyped for multifamily. Rents are falling notably and the supply hasn’t even hit yet.
About 6 years late on Nashville. Massive supply coming online in the next 18 months and many upscale complexes cannot lease to save their ass. I'd say Greenville, SC is a good shout as it 's still small but growing a ton and is essentially an extended suburb of CLT.
Greenville is nice but man, if you want to see some pain, look at the GSP industrial market rn
It seems increasingly likely that the metros that are currently winning will continue to do so and take an increasing amount of market share than a new metro competing meaningfully without a catalyst that is yet unknown - think as Microsoft is to Seattle. The metros that continue to draw jobs are the ones that are best positioned to continue to grow. I think the weather/climate and tax regime are major inputs into these corporate decisions.
This is all to say, I think Austin and San Antonio are still metros of interest over the next decade. They are both still relatively small markets, are located in warm climates, have favorable tax regimes, and have other nuances going for them. For example, I do believe in the re-shoring and near-shorting trend over the next decade, which means Mexico is likely to benefit from increased trade with the United States, which means San Antonio is well positioned to handle increased industrial demand as that trade pair plays out.
It's a boring answer and one that I'm sure many (most) will argue isn't fit for the original question, but it's my best answer given the reality of how I expect things to play out. I also think to a lesser extent there are markets of major metros that could be of interest. For example, The Woodlands-Conroe market in North Houston is going to continue to develop out over the next decade and calling that area Houston is a bit of a stretch when it's over an hour north. It gets classified as Houston for statistical reasons but it's nearly it's own metro at this point.
I would asume that San Diego is also poised to benefit from the increase of US-Mexico trade, especially since its right next to the border
Freight from Mexico comes through Texas, California, Arizona, and New Mexico But about 75% of volume comes through Texas, maybe 10% - 15% through California, and the remaining through Arizona and New Mexico. So yes, these other States will benefit from this trend but not nearly to the extent Texas will. Also, I have serious skepticism that California as a State or San Diego as a region would ever be forward thinking enough politically to make business friendly decisions that would increase their market share disproportionately of these future flows. The opposite seems more likely. Hence, I think a lot of those south Texas and central Texas markets will be interesting for growth.
I'm a big believer that industrial rust belt cities, some of them at least, are going to see a major comeback in the next few decades, while the Southwest and Southeast are going to struggle big time.
On the plus side: places like Cleveland have excellent public infrastructure and aren't nearly as exposed to climate change as most of the country. You've got world class hospitals, public transit, a decent amount of housing stock/land to build on, decent education and a lot of in-place higher education, etc.
On the negative side: Florida and the Gulf Coast are going to see skyrocketing costs of living, as the rest of the country stops subsidizing people to live in a place that gets hit by hurricanes two or three times a year. The Southwest is going to run out of water - you can lower taxes all you want, but when you start paying through the nose just to shower in the morning, the region will become a lot less attractive.
Long term, having major population density in water-poor areas isn't sustainable. As climate change catches up to some of these regions, costs of living, be it in terms of insurance cost or taxes, are going to rise significantly, and erode a lot of the advantages that they currently have over places with colder weather
While I agree that water is going to be a growing resource constraint for most of these growth metros, how do we square that with metros like Los Angeles? Humans are rather adaptable and it seems are able to solve for these issues sufficiently over time. I have serious doubts the cost of water is going to dissuade any Company from bringing more jobs to these metros. Perhaps in 50 - 100 years, but certainly not in the next 10 years.
Also, how do you weigh that against climate? For example, how do you maintain housing affordability when you can't meaningfully move forward construction for 1/3 of the year due to weather? The same could be said for other infrastructure demands such as roads, bridges, and etc.
Curious what your thoughts are.
I'm not sure how you solve for the issue. There is a limited amount of potable water. Multiple groups want to use it. If you're downstream, you're fucked.
If water costs double, then it isn't a question of "do companies want to bring people to these metros?" but "how affordable is it for workers to come?"
I mean... you do understand that construction takes place in winter, all the time? This isn't an issue, at all. Excavation can be more expensive in winter, sure. And pouring winterized concrete is more expensive than pouring regular concrete in the summer. But these are marginal costs, and can be completely avoided by timing construction appropriately. Other than those two there is literally no difference except the discomfort of the laborers... but the same can be said for building in the summer in Texas.
This is a non-issue.
EDIT: I should point out that we are already starting to see some of these impacts when it comes to water rates. Phoenix is raising rates in a manner that implies a 48% increase in costs (assuming today's usage remains the same). North Texas is going to see an increase of 11%. These kinds of increases are going to be the new normal, and that adds up.
Agree with rust belt / midwest cities to an extent due to affordability. Many people have good jobs/careers but aren't making finance money and I think a lot of them will return to midwestern cities to regain some sense of affordability as they begin to start their familes after how squeezed they've gotten even in places like Austin or Denver.
I've had the exact same thoughts regarding the midwest and its insulation and even benefit from climate change (theoretically milder winters?). Phoenix is a ticking time bomb for when they run out of water and they can't move west into CA - that only leaves the greenlands of the east. On the othe side of the coin, the east coast will continue to be hit by rising seas and increased flooding (particularly Boston/NYC/obv Miami). That's going to create significant demand for places that are unaffected by lack of water, hurricanes, and rising seas. Texas and the Southeast will continue to be insanely hot. The big issue is what timeline are we talking about? I don't think its a terrible idea to start buying up land in rural OH/IN/MN/WI and sitting on it now.
I think NYC will be fine. The value of property here is so high, and people who live here generally understand the need for tax dollars to pay for public works projects, that we'll be able to pay for some level of protection from rising sea levels.
If you live in Miami or Houston, where one of the major selling points is that you don't pay a lot in income taxes, then those kinds of protective measures strip away one of the major reasons to live there.
I grew up in the Midwest and have settled back down here. Winters are already noticeably warmer than when I was growing up. November has more days north of 40-50 degrees than not these days, December is mild, and March has warmed up considerably. Shit we hit 70 degrees in mid-November this year. And we just don't really get snow anymore, and when we do it doesn't stick because it's too warm. You will obviously still get stretches of very cold temperatures. But the week to week weather is much better than 25 years ago. It's wild.
Ozymandia we need to meet in person one day. I was literally thinking exactly what you wrote. We think alike.
I kept reading everyone thinking the SE - and thought to myself ‘wow I’m glad I’m thinking the Midwest’. Many people are paying attention that the Midwest will boom - but many are still overlooking it which will hopefully create opportunity.
I’m a bit biased since I’ll be working in this geography but I’d say DFW and North Texas overall. Has great infrastructure, schools, and has capacity to take in a lot more people. It’s been strong in deal volume the last few years despite high interest rates. Just a fun city with low col, no state income tax and a lot of new jobs moving to the area.
This isn't true (the low COL part). Texas is actually fairly expensive despite the no state income tax, because of the huge consumption tax and property tax rates.
California has high income taxes because homeowners essentially pay no property tax.
Cali tax burden is 46th lowest (13.5%), Texas 6th lowest (8.6%). Tax foundation dot org. 2022 numbers.
Please don't participate in the conversation if you don't actually know what you're talking about. That is not what that says (which, I suspect, is why you didn't actually include a link), and if you're too dense to understand why then at least please sit down, shut up, and let the adults talk.
Ah, my mistake. I was just trying to help. Thanks for the kind words dickhead!
I've lived in both and can tell you it is significantly cheaper to live in Texas all things considered. The property tax rates are higher, but your property values are way lower giving you essentially a lower tax bill than you would have for a comparable sized/quality/located house in California.
You’re definitely right about property taxes but from the perspective of a young professional I feel that I would care more about income tax in my early to mid 20s since home ownership is a decade down the line. Could see that being a factor for people who’ve put in a few years though. Coming from NYC though, Dallas seems like a bargain in terms of col.
Multi:
Knoxville, TN
San Antonio, TX
Indianapolis, IN
Bullish on SA as well
Nashville, Raleigh, Charlotte, Austin
San Francisco, Seattle and Portland will over perform in the next 5 years.
Charlotte, NC. Lots of development already happening down towards south end into some of the junkier areas that only has industrial or flex space. Seeing lots of the classic midrises. What’s shocking is to see high rises getting stood up throughout south end too. My guess is that developers will start to target the surrounding neighborhoods especially wesley heights where dirt is still cheap and new development is driving crime away and making it safer. Will probably resemble a smaller Atlanta over the next several years.
Isn’t clt grossly oversupplied?
Depends on the type of housing. The classic midrise is overdone and built so cheaply most of the young corporate types are opting for the nicer ones like museum tower for uptown or renting houses in other parts around rhe inner belt. The thing is high crime and lack of affordable housing in the outskirts of charlotte. Some people are supposedly going to be repurposing some class B/C motels and stuff for cheaper housing options. Risk is obviously with whether or not youll collect rent but there’s a lack of affordable housing in clt across most neighborhoods. I consider myself pretty high income and even some apartments Ive looked at in the city has me scratching my head about who is able to afford comfortably.
Northern Virginia, Ventura and Oxnard, Midwest / Great Lakes area college towns, and Rockies region cities. In the Rockies I think Idaho, Wyoming, Montana will grow much faster than Colorado or Utah.
I also think there’s a lot of room to grow on the central coast of California. The cities between LA and the Bay Area are wonderfully charming and I predict as people move farther out of LA and SF the sprawl will Tokyo-ify the region as those metro areas become multiple large cities. Already happening just look at San Jose being larger than SF by population. Hell it’s ironic by 2040 or whenever they finish building the SF to LA bullet train id bet there will be a 4th major city in central California.
I see Idaho , MT, and Wyo growing a lot as well. I think Utah will continue to grow as well with all the new jobs and developments going on there.
My concern always with these inter-mountain regions is outside of Denver/SLC, do you have enough employment drivers to sustain large population centers. I love this area, but job opportunities are middling at best. I think these are/will continue to be lifestyle areas, but do I see Bozeman being a half a million person city 25 years from now? I'd bet against that.
Bath is rapidly on its way to becoming a tier 1 city (think Cambridge/Atrium Underwriters/JPM UKDI)
You say "up-and-coming" and then suggest Miami, a tier 1 market? Others have said markets like Nashville, Charlotte, Austin...which are way past up-and-coming, imo. When I think up-and-coming I think smaller, under the radar markets. I also think of suburban pockets within larger MSAs.
Colorado Springs / South Denver)...people moving out of Denver to cheaper pastures,
Boise ID...West coast tech continues it's WFH out-migration and Boise benefits.
Columbus, OH...good growth but starting to get overbuilt. Low COL
Cincinnati OH, Slower growth but underbuilt, Low COL
Northeast Atlanta (Sugar hill, Gainsville, Cumming...hehe)...typical urban flight.
The golden triangle of north Dallas (Plano-Frisco-McKinney). Best demos in the county
West Orlando (Minneola)...Multi works well here being halfway between downtown orlando and the Villages.
Bellevue WA...simply because Seattle sucks
For industrial, Laredo and El Paso, Texas...Companies are nearshoring manufacturing from China to Mexica, and there are limits to how far a truck can travel from the border once in the US, so demand from warehouse near the border is high. Good luck getting your IC on board with the strategy though, haha
Also like Savanna GA for industrial.
Agreed with CO Springs. They're seeing strong rent growth but sill relatively affordable compared to Denver (~20% MF rent discount). Great quality of life, strong employment base with healthcare & military, city is also friendly to new development especially when compared to Denver/Boulder/Ft Collins.
Las Vegas, NV
NWA - Northwest Arkansas / Bentonville/Fayetteville
Mark my words this will be the next Austin/Nashville/Asheville
Home of University of Arkansas, Walmart, beautiful landscapes and incredible weather. 2 hours to Tulsa (another contender) and Branson (Vegas for rednecks).
Lots of high income jobs with Walmart HQ and Walmart suppliers and UofA as well as a great rental market for students, vacationers, and young families.
Arkansas politics are suspect, and there is a heavy right wing religious tilt, but no significant differences from Nashville in that regard.
Nashville's mayor is fairly liberal FYI
The answer in my mind is any city that is built around a Tier-one research university. So really any Big10/SEC/ACC city should grow much faster than the national average.
El Paso - low taxes, good culture, low crime (despite being close to Juarez and what u see in the news). I think this is a sleeper pick for growth as Austin/Dallas/Houston oversaturate.
Baltimore - this one feels so obvious. Yes crime is bad and parts of it are a dump, but it has good infrastructure, is relatively affordable (partially bc of the crime) and is a strong port city with desirable Northeastern history and culture. Betting on Baltimore now is like betting on Boston two decades ago - and homes that were $50,000 back then are $1m+ now. It’s a question of when, not if, Baltimore is gentrified and becomes a hotspot.
El Paso could be a good one due to trade picking up on the Texas/Mexico borders with El Paso being one of the two main entries (Juarez). I can't recall but I heard either El Paso / Juarez or Laredo is a step ahead of the other in terms of institutional investment into industrial product b/c of the Mexico trade. I think it was El Paso.
Plus, El Paso gives more of that western weather (desert like Arizona + some mountains) that a lot of people seem to like in comparison to muggy climates like Austin / Houston.
Agree with Baltimore. I think Philadelphia is on the up and up as well.
Also think the DMV area has room to run. Northern VA is already hot and hopefully DC figures out the crime in the next few years
Living in Baltimore now and very much hope that crime gets resolved. I grew up in Baltimore too.
Crime is seriously the one thing holding the city back. It's why people consistently vote against construction of new highways and public transportation. It's why people don't want to come back into the city even when new development abounds.
If the city can clean up crime, it will thrive. If it cannot, it will almost certainly continue to suffer.
thoughts on Oklahoma City anyone?
I think you gotta be careful picking just any city because it's a decent place and good COL. Most of the cities that have blown up had something special that gave them a catalyst. For instance, Denver = lots of people want to live there because of the mountains/outdoors. Austin = Top public university, early starts from tech companies such as Dell and AMD (and the city made big pushes to get tech there over decades), Miami = obvious, Texas cities in general = great business environments, several good universities, large population centers, and borders Mexico which has seen a big influx in trade, large port city with Houston, etc.
I don't know much about OKC. Does it have anything that could serve as such a catalyst? I'm truly curious to know
how about the 134 story development proposal as a catalyst in OKC:
https://www.constructiondive.com/news/skyscraper-oklahoma-city/703335/&…;
Toledo & Akron
+1 for Toledo. them is good people
Not an up-and-coming city but I'm very bullish on the DC metro area. While COVID definitely set a lot of DC up-and-coming neighborhoods (Shaw, Anacostia, etc) back due to crime concerns, I believe the future outlook for DC's metro is extremely positive for a number of factors.
1) A lack of supply. Compared to other markets (Charlotte, Austin, etc) that were super popular during COVID-19, D.C. proper has basically had no new construction projects in recent months I was told on a recent call. While Maryland and Nova have had projects come online, its undeniable that DC proper is the heart of the metro area and provides the best transportation and QOL. Crime concerns have been a big issue with Shaw and Adams Morgan, but I believe this is cyclical and will eventually subside.
2) Economic power and corporate relocations. The amount of corporations moving to Nova is insane and on par with southern states (just don't seem to hear too much about it). Boeing was a recent DMV relocation that reflects how DMV can compete for corporations with the likes of Chicago. Also, Maryland is turning into a hub of biotech that rivals Boston and San Fran (tax credits, Johns Hopkins, NIH). DC itself will always be a hub for consulting, government, lobbying, attracting young talent from top-tier universities across the country for the chance to be close to the seat of federal power. One key issues in DC has been the constant brain drain of Gtown and other university students to New York, but I believe that trend has been shifting in recent talks with some friends I have that recently graduated from Gtown.
While Nova and Maryland are attractive for later-age professionals, young professionals will still gravitate towards DC proper or Rosslyn imo
Gary, Indiana
Call me crazy but there is a case to be made for Gary. 35 min drive / 1 hr train to Chicago, (plus an airport). Can walk to Lake Michigan beaches, short drive from dunes and tons of wild life. Extremely low COL compared to Chicagoland area as well.
Well... the whole "buy low" scenario works there. I don't know about selling high.
Tbh, I've never been there. I've just seen youtube videos viral picture threads of the rundown buildings and crack houses.
San Antonio, TX
Tampa, FL
I go back and forth on San Antonio. I feel like the only reason it picked up steam was the "Austin got too expensive, let's draft off it with a value play in San Antonio". I don't think San Antonio has enough of the cool vibe to attract a lot of tech companies, and finance/energy companies will always resort to Dallas or Houston. What's there to really drive the growth over the next decade besides the draft off Austin? Yes, I know San Antonio is a bigger city already but it's drivers don't really scream growth like Austin or DFW. Also, rents/housing has actually gotten cheaper this year in Austin due to it being over supplied the last few years, so what's the draw to San Antonio unless Austin gets hot again, in which case I'd wish I bought in Austin today over San Antonio. The one thing I can think of is if San Antonio beats Austin on the industrial play because it's closer to the Mexico border.
This is one of the weirdest threads I've seen in the RE forum.
"Who can pick the most obscure F tier city and claim it is up and coming?"
Or "I think an up and coming city is Austin/Miami/Nashville...might be early here, but I think there's good future growth prospects"
Does buying the dip in San Francisco count?
Do we have a survey feature for this thread?
San Fran
Coastal cities will always reign supreme- long term outlook but there is a lot of opportunity in deep northern coastal California.
I dont disagree. Name one city in deep northern Cali for institutional multi family
San Diego
Ozzy read my mind here. As the effects of climate change ramp up, the Midwest will be king.
As for costal metros (Seattle, NYC, SF) - it’s still probably too early to call at this point. We’ll have a better idea of what real sea level rise will be as our general IPCC warming scenarios start to really branch off from each other this decade (assuming they didn’t miss something). Hopefully I can look back at this post a few years from now and have a better (and hopefully more positive) answer on that.
FL is already getting hammered by insurance costs, and that will certainly continue. I wouldn’t be shocked if we saw high risk areas become complete insurance deserts over the next few decades, which will jack up the cost of living.
Areas with climates that can “take the blow” will most likely fair best. Bonus points for having lots of existing infrastructure to build on. Additional city investment in adaptation and mitigation measures now (desalination, disaster prep, etc.) will pay dividends in the future.
I expect the “hot markets” of today will be in pretty rough shape. America already has a pretty severe ground-water problem. Efficiency improvements can help mitigate this problem, but if you’re in a city that’s aquifer dependent, and you haven’t mitigated the issue now… you’ll still have to deal with increased costs, and a potential end to new developments. (Certain areas in phoenix have already implemented development halts because of this). A halt in development might result in a short term increase in value, but the underlying cause will send COL soaring over the long term.
Yes, 100 years from now people may actually want to live in the Midwest. Patient capital is king.
SF climate stands to benefit from climate change imo… studies over the last 40 years show drastic decrease to fog levels in the historically more affordable outer sunset /Richmond neighborhoods. As an already temperate city, the city could withstand some additional warming
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