Dallas/Fort Worth Identified As a Top Market for Growth in 2024
December 12, 2023
December 12, 2023
The recently released 2024 Emerging Trends in Real Estate report, jointly produced by PwC and the Urban Land Institute, has identified the Sun Belt as the area in the United States with the strongest growth potential for residential real estate. Thousands of surveys and hundreds of interviews were conducted to provide an in-depth real estate outlook for the U.S. and Canada, with this year's report highlighting several cities as hotbeds for development.
The report named Nashville, Phoenix, Dallas/Fort Worth, Atlanta, Austin, San Diego, Boston, San Antonio, Raleigh/Durham, and Seattle as the top markets to watch as we enter 2024.
Anita Kramer, senior vice president of ULI’s Center for Real Estate Economics and Capital Markets, stated that "It's clear that the real estate industry is entering a new era of thinking, building and operating" due to the emergence of hybrid-work models, the strength of the retail sector, and the growth of Sun Belt markets.
However, the report showed slightly lower ratings for development and investment prospects across the board, reflecting "a certain degree of caution." Ratings among top cities are tighter, indicating a sense that there is less difference among market prospects compared to previous years. The report's theme, "The Great Reset," reflects how the industry can no longer rely on past benchmarks to determine the future of the market.
The report highlights the impact of the pandemic on remote work and migration patterns. John Burns Research & Consulting estimates that the suburbs captured 87% of net growth between 2015 to 2022, 5% more than 2015 to 2019, as remote and hybrid workers shift out of big cities and forgo the typical office. Since 2021, home prices have risen by double-digit percentages in some of the most popular suburbs of Tampa, Phoenix, and Atlanta. Meanwhile, fully remote workers are making even bigger moves, often to warmer environments. The report notes that "COVID migrants have added even more fuel to the interregional migration to the Sun Belt that started well before," solidifying overall interest in those Southern states.
Looking ahead, these migration patterns indicate a major market impact. More homes will be needed in suburbs and smaller cities, and employees will need retail closer to their homes rather than near downtown offices. The need for office buildings will decline, as will their appeal to investors. Sales of office buildings have declined more than twice as much as other property types. While there is a general call to repurpose high-vacancy office buildings, some industry leaders say demolishing them to repurpose the land is more economical.
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