Move over, New York, Chicago, and San Francisco! It is time for cities like Nashville, Minneapolis, and Denver to shine in the real estate market.
These so-called 18-hour cities don’t offer the same frenetic place as their round-the-clock counterparts, but for many would-be renters and homebuyers, that’s precisely the point. Millennials especially are looking for places to live and play, and cities like Kansas City, Portland, and Charleston are allowing them to do just that. And depending on the industry, they’ll be able not only to live and play, but also to work, as more industries are recognizing the great value of setting up shop in outer regions.
Investment Opportunities Are Growing in Secondary Cities
It used to be that renters and homebuyers were turned away by big-city real estate prices, but now many are purposely looking toward these smaller cities to settle down. Here are three reasons for this trend:
1 – It is more about the amenities than the location. Part of the reason so many millennials are flocking to these secondary cities is that they bridge the gap between metropolitan living and the suburbs in which many of them grew up. For those whose jobs still take them to the bigger cities, a longer commute is a small price to pay if it means they can have easy access to restaurants, shopping, and recreation back home.
“Location, location, location” is quickly becoming “amenities, amenities, amenities” in the real estate world. Millennial home buyers are looking for safe, walkable towns and neighborhoods that offer city-like amenities without the city-like issues.
2 – Business is booming in 18-hour cities. With economies exploding in secondary cities, perhaps millennials won’t have a longer commute to work after all. Just as the cost of living is lower outside of major cities, so is the cost of doing business. According to the 2018 Emerging Trends in Real Estate report from PwC and the Urban Land Institute, IHS Markit reports that business costs are 16% lower in secondary cities than they are in primary cities.
Case in point: Amazon announced in late 2018 that its two secondary headquarters would be in Long Island City, NY and Arlington, VA. Long Island City has already seen real estate prices jump—and the offices haven’t even been built yet.
As professionals flock to cities like Pittsburgh and Columbus, savvy real estate investors will be waiting with real estate opportunities.
3 – Secondary city dwellers are putting down roots. SFR investors could especially win big in the 18-hour city real estate game when it comes to the staying power of their tenants. Millennials especially are looking to settle down in towns where they can afford homes with room to grow as they start their families, unlike in the major cities where renters are often maxed out at the top of their housing budgets.
In these 18-hour cities, renters find they have more breathing room—literally and figuratively. These renters will be more apt to renew their leases instead of jumping around year after year to more affordable places.
While big-city living still has its allure for some, many are seeking out the amenities and more affordable living options of secondary cities. If you are looking into expanding your real estate portfolio, this could be the opportunity you’ve been waiting for.
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