The term “18-Hour City” describes a mid-sized urban area with the potential to become a major metropolis in the ranks of New York, San Francisco, Chicago, and similar “24-Hour Cities”. Some real estate investors see opportunities to earn above-average returns by acquiring properties in 6pm cities, where prices are still moderate but, due to their strong labor markets and attractive quality of life as well than other characteristics, future growth prospects are good. You may want to speak to a financial adviser if you are looking for real estate or alternative investment opportunities.
6 p.m. city background
The non-profit Urban Land Institute and consulting firm PwC jointly coined the term in 2015 to describe cities identified as attractive real estate markets from an annual real estate market survey. The label evokes the concept that these affordable cities were a bit less crowded than larger, more established markets like New York, Boston and Chicago, where business happens around the clock.
In addition to being less crowded than larger cities, 18-hour cities stood out from other mid-sized markets in what seemed like their potential to become as big a day as 24-hour cities, with consequent increases in property values. Since then, the concept of 6pm cities as viable investment opportunities has become widely known in the real estate industry.
There is no standard, industry-wide definition of what constitutes a 6 p.m. city. Generally, they are considered second-tier urban areas which, due to sustained immigration, are likely to become major markets over time. Specific qualities include:
Strong population growth compared to other cities
Low cost of living compared to major metropolitan areas
Well-developed infrastructure including public transport
Jobs and wages are growing faster than in most cities
Other characteristics sometimes attributed to 6pm towns include stable local government, the presence of major employers as anchors, and a high capitalization rate, which is a number used by real estate investors to estimate the future profitability of a business. a real estate investment.
18 hour cities in 2022
The list of 6pm cities identified by ULI and PwC changes more or less annually. Typically, there are about 10 cities on the list. In 2022, three cities that were previously identified as 6pm cities were moved to a new category, Supernovas, as they had overtaken their 6pm counterparts. These are Austin, Nashville and Raleigh/Durham. Other 6 p.m. cities in 2022 include:
Of these, Fort Lauderdale was added earlier this year. The seven 6pm cities all have active downtown areas and suburban areas with urban characteristics.
Investing in 6 p.m. cities
Investors looking for above-average returns are investing in the 6 p.m. urban real estate markets in a variety of ways. Housing is a major priority, as these markets typically have relatively low housing prices compared to 24-hour cities, but also have high demand for housing due to population growth. Commercial real estate, including multifamily, retail, office, and industrial, also offers opportunities due to the strong economy in these cities.
Some investors participate through real estate crowdfunding sites, such as Crowdstreet, which focuses on commercial properties in mid-sized markets, including some of the 6 p.m. cities. Investors can also purchase individual properties, such as single-family residences. It’s easier in mid-sized markets like 6pm cities, where property values haven’t risen as much as in places like San Francisco and New York.
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Risks of Investing in 6pm Cities
The assumption when investing in a 18 hour city is that the market and its real estate values will rise to resemble the high values seen in major 24 hour cities. However, there is no guarantee that this will happen. A city may stop growing or grow more slowly, making it difficult to achieve desired returns.
Another thing to keep in mind is that these cities don’t have the dedicated businesses like New York does. So if any of these cities take a hit, it could be hard to recover as NYC almost always bounces back stronger than before. This makes these alternate cities an opportunistic but risky endeavor that could really pay off or you might struggle with for a while.
However, the generally lower cost of living in 6pm cities, combined with good labor markets and an attractive quality of life, looks likely to attract the attention of real estate investors for the foreseeable future.
Eighteen-hour cities that are a little less busy than the big metropolises where the pace continues unabated around the clock have become a priority for many real estate investors looking to enter the ground floor of the next generation of large metros. These cities typically sport medium-sized but rapidly growing populations, strong economies with expanding labor markets, good infrastructure and quality of life, and significantly lower property prices and cost of living than those of large cities.
Tips for investing
If you want to explore investing in 6pm cities, a financial advisor can help you understand your options. Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three financial advisors who serve your area, and you can interview your matching advisors for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.
Eighteen-hour cities are already becoming more expensive as investors avoid inflated values in large metros and raise prices in smaller markets. The price increases were spurred in part by the work-from-home trend initiated during the pandemic, which allowed more people earning salaries in big cities to live in smaller towns where their money went further. Check out our guide on how to calculate cash flow from your real estate investments to ensure you have a sustainable plan in these small markets.
If you’re ready to invest, you should line up all your ducks. Start by using our investment calculator to see what your potential investment could be worth over the next 10 or 20 years to see if there’s enough opportunity to move forward.
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