A recent report from StorageCafe titled “Top Cities for Real Estate Development: Sunbelt Cities Dominate Growth Olympics for Nearly Half a Century” revealed that the real estate construction industry in the United States has experienced significant growth since 1980. However, not all cities have seen equal levels of development, with some surging ahead in what can be described as a “construction Olympics.”
The report focused on the top 20 cities for real estate development and found that southern and southwestern cities dominated this list. Houston, TX took first place, followed by Phoenix, AZ and San Antonio,TX.
Author Maria Gatea explained that this research was conducted to gain insight into the current state of real estate development in response to population growth and economic changes across the country. The methodology involved analyzing construction activity from 1980 to 2023 across various property types such as single-family homes, multifamily buildings,and commercial properties like industrial spaces, offices,and retail stores. The top 100 largest U.S.cities were then ranked based on their level of activity over four decades.
Gatea noted that studying trends over time provides valuable perspective on present challenges and opportunities within different sectors.This information can help identify areas with potential for future growthand determine which industries are best positioned for further development.
The report also highlighted significant changes within specific sectors since the early days of construction boom back inthe ’80s when office buildingsand shopping malls were at their peak.However,in recent years,residential properties,suchas single-family homesand multifamily units have become more prominent.The report estimatedthat despite approximately41 million new single-family units being built between1980-2023,the housing deficitinthe U.S.is still around3.2 millionunits.New York Citywas identified asthe leaderinmultifamily building permits issuedoverthepast43 years,followedby Los AngelesandHouston.
Another trend observed is an increase indemandfor self-storage facilities, particularly in densely populated urban areas where living spaces are smaller. Gatea stated that the current decade has seen a significant rise in self-storage deliveries, with over 64 million square feet of new space being added each year.
Industrial construction has also experienced a massive boost, with approximately half of the country’s industrial inventory built after 1980. The report noted that this decade alone has seen an unprecedented amountof industrial construction activity due to increased demand for logistics hubs and manufacturing facilities across the country.
Gatea explainedthat these trends have several implications for future development:
1) Housing continues to be a top priority as population growth and economic changes drive demand. While progress is being made with nearly one million homes permitted annually since 2020, there is still much work to be done in making housing more affordable and accessible.
2) Consumer habitsand business operations play a significant rolein driving growth within specific sectors such as self-storageandindustrial properties.As urban areas become more crowded,and people opt for transient living arrangements,self-storagespaceshave emergedas essential solutionsfor both individualsand businesses alike.E-commerce sales have also contributedtothe increase indemandfor industrial spaces,suchas logistics centersandsupply chain fulfillment warehouses.
3)The future of real estate liesin creating adaptable spaces.Traditional retail storesare declining,but opportunities are emerging through mixed-use developments that combine residential,live-work,and commercial units.Moreover,the shift towards hybrid work models means traditional office spaces will needto adaptto accommodate changing needs.Gateapredicts an increasingdemandfor flexiblespaceswill continue,given shifting consumer behaviorsand business practices.Developers who anticipate these changes willbe well-positionedforsuccessinthe industry moving forward.
