The 18-Hour City: What is it and Why it’s Important to Real Estate Investment
Real estate investors are paying closer attention to the rise of the 18-hour city and for good reason. But before we get into the whys, let’s first explain the what’s; in other words, what are 18-hour cities? Well, as the name sort of suggests, 18-hour cities falls between the larger, 24-hour cities (the cities where you could order Chinese food at 3AM in the morning) and smaller cities that operate on the more traditional 9-5 business hours schedule. 18-hour cities essentially combine the best of both worlds. However, that’s just a surface definition of an 18-hour city, as there are many more important aspects of the 18-hour city and they are what are relevant to real estate investors.
For example, at the core of the 18-hour city is downtown revitalization. When downtown real estate is upgraded to include modern housing, improved infrastructures and better shopping and entertainment options, it begins to attract a more affluent demographic. This demographic is looking for areas that are similar to the 24-hour city, but with a lower cost of living and a lower cost of doing business; the 18-hour city is viewed as a city that can provide good business and employment opportunities, a comfortable living environment, and attractive recreational and cultural amenities. And this is what puts the 18-hour city on the real estate investor’s roadmap. In fact, according to Realty Times, “These under-the-radar cities are rapidly on the rise and offer great opportunities for homeowner investment. Among the fastest risers, a diverse and vibrant economy attracted to the urban core offers stable employment for residents. Cities such as Raleigh-Durham, Charlotte, and Denver are among the top ten overall scores listed by Emerging Trends, and other diversifying economies such as Greenville and Charleston are developing rapidly”. In a similar statement, Nreionline said that “The leading trend is the emergence of the 18-hour city. The concept of the 24-hour city isn’t new,but one of the things we’re seeing from investors is an appetite for some non-traditional cities. We’ve looked at those cities to figure out what they have in common—markets like Boston, Raleigh-Durham, N.C., and Charlotte, N.C. What they have in common is urban population growth well above the average for the country.”
In short, 18-hour cities, also called secondary cities or second-tier cities, are definitely an emerging trend for 2016. Eight of the top ten cities identified by respondents of The Emerging Trends in Real Estate 2016 report named 18-hour cities as the most favorable for investment and development in 2016, citing the better opportunities and potential for larger yield that they offer as opposed to traditional gateway cities.
So what’s one of the top 18-hour cities to watch for real estate investment? Denver. The Urban Land Institute’s Emerging Trends report, ranked Denver No. 6 as a U.S. market to watch. But it’s not just Denver you should be looking at. There are plenty of other 18-hour cities too such as Philadelphia, Atlanta, and Phoenix. The bottom line is that if you’re looking to invest in real estate, make sure you look at the 18-hour cities market too. While gateway cities such as Chicago, Los Angeles, and New York have drawn big investors for years, these markets are extremely pricey and often difficult to invest in. As a result, more and more investors are looking at the second cities; the up-and-coming 18-hour cities. How about you? What do you think? Come checkout the Estateya market or visit our feed and tell us!