Salt Lake City is third-ranked in a listing of “next big cities,” based upon real estate trends across the nation.
The “Emerging Trends in Real Estate 2018” report, released by PwC and the Urban Land Institute (ULI), puts the Utah capital behind only Seattle and Austin, Texas.
Salt Lake City is the smallest city ever to make the top 10 in the study, now in its 39th year. This year was the first time for Salt Lake City to be in the top 10.
The annual outlook for the real estate and land use industry is based on interviews and survey responses from more than 1,600 leading real estate experts, including investors, fund managers, developers, property companies, lenders, brokers, advisors and consultants.
“Salt Lake City (No. 3) and Fort Lauderdale (No. 6) jumped into the top 10 for the first time in the study’s history as investors look to replicate the level of success found in Denver and Miami with their competitive costs of living and high quality of life,” the report states.
“The ‘Crossroads to the West’ meets the criteria as investors look to replicate the level of success found in Denver, due to its low cost of doing business, which is 88 percent of the national average; a very young and educated workforce, 30 percent between the ages of 15–34 and is expected to grow in its talent pool of 8.7 percent over the next five years; and a sought-after quality of life.”
Leading themes found in the study are that highest-ranking markets are smaller and have young and educated workforces and robust and diverse economies.
The top 10 markets are (in order) Seattle; Austin, Texas; Salt Lake City, Raleigh/Durham, North Carolina; Dallas/Fort Worth; Fort Lauderdale, Florida; Los Angeles; San Jose; Nashville; and Boston.
“The growing interest in smaller cities by real estate investors is influenced by their relative affordability, coupled with a concentration of young, skilled workers,” said Mitch Roschelle, PwC partner and co-publisher of the report. “The diverse, robust economies of these smaller cities make them very desirable to investors.”
“The trend of smaller markets displacing larger ones as investment hubs is setting a new course for urban development that is reshaping cities across the nation,” said Patrick L. Phillips, ULI global chief executive officer. “These cities are positioning themselves as highly competitive, in terms of liveability, employment offerings, and recreational and cultural amenities.”
Trends identified in the report include:
• The “Gen Z” effect on retail and work space. “For brick and mortar stores to succeed, they will need to transform to meet the needs of the ‘gadgeteria’ ethos of this generation with omni-channel, social media worthy shopping experiences,” it said. “Workplace design will also be affected. Where millennials were all about collaborative, open workspaces, Gen Z appears to want more structure, suggesting a return to offices (with doors) and more personal office space.”
• A housing shortage. “With millennials and Gen Z numbering 150-plus million and the baby boomers remaining in their homes longer, the younger generations are already meeting a housing shortage, an opportunity for homebuilders willing to scale product to their preferences — smaller and more energy-efficient homes, townhouses, condos and ‘affordable’ starter homes.”
• Multifamily as a strong investment. “With a need for more affordable rental units for the millennials and Gen Z, multifamily housing prospects remain strong, especially in secondary markets like Pittsburgh, Salt Lake City and Fort Lauderdale.”
• Growing senior housing momentum. “A demand for more senior housing tops the list of all residential segments as present inventory does not meet the needs of this group that is projected to grow by 25 million in the next 15 years.”
Seattle, fourth-ranked last year, unseated Texas’ hold on the top spot. Austin was tops in the 2017 report and Dallas/Fort Worth was No. 1 in the 2016 study. Houston, first in in the 2015 report, fell to 60th this year due to disruption in the energy industry.
The Urban Land Institute, a nonprofit education and research institute, promotes the responsible use of land and creating and sustaining thriving communities worldwide. PwC is a network of assurance, advisory and tax service firms in 157 countries.