Twenty years ago, Emerging Trends identified the distinction between nine-to-five downtown markets and 24-hour urban markets as the key to superior investment performance. That has proved to be exceptionally prescient, as shown by capital flows, occupancy rates, and relative pricing changes since then. The “24-hour city” concept has become part of the common lexicon of the real estate industry and of city planners. That trend is expanding and looks to be increasing in influence. No longer is it accepted that only the great coastal cities can be alive around the clock and on weekends. Downtown transformations have combined the key ingredients of housing, retail, dining, and walk-to-work offices to regenerate urban cores, spurring investment and development and raising the quality of life for a roster of cities. So let’s call these reemergent downtowns “18-hour markets.” Though they quiet down noticeably in the wee hours, deep into the evening the mix of shops, restaurants, and entertainment truly generates excitement. This is catalyzed by walk-to-work housing that encourages employers in the knowledge and talent industries to keep their offices downtown. The 18-hour city is emerging across the country. A Nashville developer, for instance, notes that “national players are coming in, drawn by our job growth. The urban core is competing again.” “Under the radar, downtowns like Greenville and Charleston have become diverse, following the 24-hour model,” says a prominent Southeast broker. “They are alive in the evenings.” Take a look at our 2015 Emerging Trends rankings:
- Raleigh-Durham, Charlotte, and Denver are newly placed in the top ten overall scores.
- Charlotte is rated in the top ten for investment—as is Brooklyn, New York. And, they are also listed as best places for development in 2015.
With homebuilding coming back, at long last, we find Charlotte, Raleigh-Durham, and Denver joined by Portland and Atlanta among the ten most promising markets. What do most of these 18-hour markets have in common? An ambition expressed in tangible efforts to strengthen their centers as live/work/play environments. Seeing is believing, and belief in the value proposition for markets getting out of the nine-to-five doldrums has taken root. The trending cities are not Manhattan, and probably don’t want to be. But that is their polestar, the model that has demonstrated that the right urban mix bolsters occupancy, that density raises values, and that vibrancy attracts investment capital. Investing requires a deep knowledge of these local markets. Buyers have more markets to consider now that the 18-hour centers are putting the elements in place to ratchet up their investment capital flows. To see full report, see here: http://on.uli.org/1s7WoGk