Why Smart Money is Investing in “Cities of Aspiration”
Several trends are occurring as a result of the economic restructuring and impact of technology on virtually every type of business. One of the major trends is that increasingly middle class Americans are finding it difficult being able to afford living in “Superstar Cities” like San Francisco, New York City, Chicago, and Boston and are moving to markets that provide a better balance of low-cost housing and quality of life. These "Cities of Aspiration" aspire to be like "Superstar Cities" and included among them are Charlotte, San Antonio, Dallas, Austin, Phoenix, and Atlanta.
In addition, in order to attract businesses and new jobs, these cities are also providing a low-cost of doing business, pro-growth tax policy, and therefore, they are enjoying strong population and job growth. The population growth that these cities are experiencing provide added income tax base that enables the cities to further enhance their infrastructure and attract additional capital and population... These infrastructure improvements like new highways, new rail projects, etc. are helping to attract new companies and jobs to their city. Thus, many of these markets are creating a virtuous cycles of job, population, and wealth attraction.
As a real estate investor in several markets countrywide, I am experiencing these shifts first hand. Middle class New Yorkers moving to Charlotte and other cities in NC and SC to afford a decent sized home for their family. San Franciscans moving to Austin for new jobs and the unique culture ("Keep Austin Weird" is the city slogan). Folks from Los Angeles moving to Oklahoma City for a lower cost of living and better life for their family. Companies are moving to locations that offer a low cost of doing business and their workers are following them, resulting in enormous population shifts.
Based on these trends, the high-speed and national rail system currently being developed, and the fact that the worker of the future will be much more mobile, America in 2050 will look very different than it is today.
In a recent article in the Smithsonian, Joel Kotkin highlights the following shifts:
Increased Population. The population will grow by 100 million to 440 million by 2050.
More Diverse. Whites will no longer be in the majority. Immigrants will play a leading role in our economy.
Rise of “Superstar Cities”. “Superstar Cities” like San Francisco, Boston, Manhattan and western Los Angeles—places adapted to business and recreation for the elite and those who work for them.
Growth of “Cities of Aspiration”. The middle class will relocate to “Cities of Aspiration” such as Phoenix, Houston, Dallas, Atlanta and Charlotte, cities that are more spread out.
Growing Suburbia. Suburbia will continue to be a mainstay of American life. One in four will work from home full or part time. Internet, smart phones, video conferencing and other communication technologies will allow more people to work from home.
Growth of “Flyover Country”. Migration of technology companies, business services and manufacturing firms to the heartland is likely to accelerate.
Completion of Nationwide High-Speed Rail System. Will increase links between intercity, regional, and local rail networks and enhance mobility options for 440 million Americans.