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ULI/PwC Report Names A New City Top Real Estate Market In The Nation — Which Is It?

Dallas skyline at night

Dallas is back on top as the best city in the United States for real estate, according to a report released Oct. 10 by PwC U.S. and the Urban Land Institute. 

The city had fallen to No. 5 last year, but its young workforce and high business startup activity propelled it back to No. 1, according to the 2019 Emerging Trends in Real Estate report from PwC and the Urban Land Institute.

“It’s instructive that in light of how much development has gone on in Dallas during this recovery that it is still a No. 1 investment destination,” PwC U.S. real estate leader Byron Carlock Jr. said. “It points to a lot of things that Dallas is doing right — leadership, investment in infrastructure, urbanism and exurbanism.”

Dallas-Fort Worth added 146,000 new residents last year, outpacing every other metro in the nation, according to U.S. census data.

“One of the things that really impressed everyone [about Dallas] was the generosity of the private sector in helping to meet public goals,” Carlock said.

Some of the examples include private funding of Klyde Warren Park, Santiago Calatrava-designed bridges across the Trinity River and a $50M gift from Annette Simmons to help fund development of a large urban park along the Trinity.

The top markets to watch according to PwC/ULI's Emerging Trends in Real Estate 2019

Brooklyn, New York (No. 2), and Orlando (No. 4) and Tampa (No. 10), both in Florida, made it into the top 10 for the first time in the report’s 40-year history. Investors find Brooklyn attractive for its urban, industrial appeal and the trend of finding a “last mile” for e-commerce delivery.

Orlando and Tampa/St. Petersburg are attractive to real estate investors for their demographic growth, friendly business climate and attractive cost structure. 

The other cities in the top 10 were Raleigh-Durham, North Carolina (No. 3), Nashville, Tennessee (No. 5), Austin, Texas (No. 6), Boston (No. 7), Denver (No. 8) and Charlotte, North Carolina (No. 9).

Klyde Warren Park, Dallas

The survey reported on a variety of trends:

Office and multifamily amenities on steroids: New office buildings and multifamily assets are going well beyond the fitness center and recreational areas to include child and pet care, bike storage and even a “curated garden” growing fresh fruits and vegetables.

Retail space being repurposedThe rumors of retail’s demise may have been exaggerated. With low prices, it is a good time to look at retail space to repurpose to accommodate alternative uses such as urgent care medical facilities, health and fitness providers, restaurants, financial services and entertainment venues.

18-hour suburbs attracting millennialsThe generation that drove the urbanization trend and 18-hour cities may finally be ready to move to the suburbs. As the oldest millennials reach their mid-30s, they are looking to buy homes that meet the right criteria with urban amenities such as walkable neighborhoods in proximity to shopping and entertainment along with green space and good schools. 

Disrupters in real estate: From package delivery to bike-sharing to ride-hailing services, everything from lobbies to sidewalks to roads are more congested. This business-to-consumer activity is one of the forces behind “amenity creep” and an issue residential and commercial property investors need to watch closely. 

ESG practices becoming important to investors: Sensitivity to environmental, social and governance issues has increased for U.S. real estate regardless of the direction of national policy. Funds with an ESG investment plan in place could see an advantage in attracting capital, especially from institutional and international investors as well as public REITs.

Last-mile industrial development deeded to meet e-commerce demands: With the expansion of e-commerce far from over, the need for facilities to accommodate a denser distribution network is acute and will only increase over time, especially infill opportunities, providing last-mile break-bulk sites.

Easing into the future: The challenge to real estate markets is a prospective slowdown in demand, varying across geography and property types. But slower growth does not mean there won’t be opportunities. Functional obsolescence in all kinds of space, the need for affordable housing and responses to technologies will all require new investment and development.

The report is based on a survey of 2,400 corporate executives along with personal interviews.