For several years, the so-called 24-hour cities so popular with Millennials have been a hot commodity for real estate investors. These open 24/7 major metros, such as New York City, Los Angeles and San Francisco, drew younger, wealthier renters and home buyers whom are attracted to plentiful transportation, entertainment and food options open all day and all night.
However, those 24-hour cities are becoming a bit too pricey. Many people are now turning instead to “18-hour cities.” These cities have large populations, lively social and dining options, and appealing amenities for different generations. They just might not be as busy between midnight and 6 a.m. (airports and taxi services may shut down and fewer restaurants and bars are open into the early-morning hours). Cities that had previously largely shut down after 5 p.m. are seeing a dramatic increase in post-work options, particularly in downtown areas.
These cities are increasingly attractive because they can offer most of the modern amenities as the larger gateway cities and a more affordable cost of living. Developers are also seeing an opportunity to build new commercial space such as coffee shops and cocktail lounges. An increased demand for living close to work is resulting in more residential units in traditionally commercial zones, meaning more infrastructure. The younger professionals will choose proximity to creature comforts and a smaller living space over larger living quarters.
Investors are not only moving away from larger cities but larger employers as well. Job growth among firms with fewer than 50 employees is an ever-growing employment sector. As interest in working small rises and small businesses continue to drive economic growth, investors are taking notice. What’s emerging is a new type of workplace with more open floor plans and ample space for collaboration. Younger workers are driving less and prefer to walk to work, so cities are realizing that using prime space for parking garages may not be the best use.
What emerges are areas where the live/work/play trifecta is in play. Attracting older and younger residents alike, these smaller markets can offer more affordability for housing and business. For investors, there is an increasing interest in mixed-use residential and retail areas. Especially popular are “third-place” spots. In contrast to “first place” (home) and “second place” (work) social spaces, “third places” let people gather, hold meetings, or work for hours on end, while also being able to dine casually. Millennials are also generally much more focused on environmental issues. Several of the 18-hour cities are investing in green technology in public transportation and infrastructure.
However, it’s not just the younger crowd that’s drawn to 18-hour cities. So too are aging Baby Boomers. As the Boomers retire, they are attracted to the convenience, affordability, and smaller living spaces that come with urban living.
So just what are some of the hottest 18-hour cities to consider?
- Atlanta, Georgia
- Austin, Texas
- Boston, Massachusetts
- Charlotte, North Carolina
- Dallas/Ft. Worth, Texas
- Denver, Colorado
- Nashville, Tennessee
- Pittsburgh, Pennsylvania
- Portland, Oregon
- Raleigh-Durham, North Carolina
- Salt Lake City, Utah
- San Antonio, Texas
- San Diego, California
- Seattle, Washington
The new year offers savvy real estate investors a broad range of options and possibilities in 18-hour cities across the country. Comment below with your thoughts on 18-hour cities.