18-Hour City

What is '18-Hour City'

​What is an '18-Hour City'

A second-tier city with above-average urban population growth that offers a lower cost of living and lower cost of doing business than first-tier cities. In real estate investing, 18-hour cities are seen as viable investment alternatives to the "big six" markets of Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C.

BREAKING DOWN '18-Hour City'

The term ‘18-hour city’ refers to a secondary real estate market that offer services, amenities and job opportunities on a scale with the big six markets but does not operate on a 24-hour basis. These cities typically feature widespread urban development, a solid public transportation infrastructure, a strong economy and moderately priced housing.

Employers are drawn to 18-hour cities because doing business is less expensive in these markets and this, in turn, attracts large numbers of job seekers. Cities such as Charlotte, Denver and Portland, for example, have become targets for Millennials whose goal is launching or advancing their career. 18-hour cities are often characterized by the availability of recreation and entertainment opportunities that extend beyond what the typical suburban city affords.

For real estate investors, 18-hour cities have emerged as a more affordable investment option compared to larger markets. These cities are attractive because they typically feature lower cap rate compression, meaning property values tend to remain stable rather than spiking up or down significantly. One potential downside, however, is the increased degree of risk associated with 18-hour city investments because they do not have the established track record of primary market cities.