18 hour city

• LINK_POOL:
  • Real estate
  • Investment opportunities
  • Population growth
  • Cost of living
  • Commercial real estate
  • Capitalization rate
  • Return on investment
  • Diversification
  • Asset classes
  • Urban development
  • Infrastructure
  • Economic growth
  • Metropolitan area
  • Housing affordability
  • Market trends
• RELATED_TERM: 24-Hour City
• TERM_CATEGORY: Real Estate Investment

What Is 18-Hour City?

An 18-Hour City is a mid-sized metropolitan area characterized by a vibrant economy, attractive amenities, and a lower cost of living and business compared to larger urban centers, often referred to as "24-hour cities." These cities typically offer public services, entertainment, and job opportunities that are comparable to major hubs, but do not operate on a constant 24-hour cycle. The concept of an 18-Hour City falls under the broader category of Real Estate Investment, specifically focusing on urban development and market potential. They are seen as attractive alternatives for residents seeking a balance between urban dynamism and livability, and for investors looking for growth potential outside of the most expensive primary markets.⁶¹

History and Origin

The term "18-Hour City" was jointly coined in 2015 by the non-profit Urban Land Institute (ULI) and consulting firm PwC.⁶⁰ It emerged from their annual survey of real estate markets, "Emerging Trends in Real Estate," to describe cities identified as attractive investment opportunities due to their affordability and potential for future growth.⁵⁹ The label evokes the idea that while these cities are bustling and active for a significant portion of the day, their pace winds down more than larger, continuously active "24-hour cities."⁵⁸,⁵⁷ This concept gained prominence as a significant market trend in commercial real estate, highlighting the shift of residents and businesses to more affordable yet dynamic urban environments.⁵⁶ The Urban Land Institute continues to publish its "Emerging Trends in Real Estate" report annually, providing insights into real estate investment and development trends, with its 2024 report focusing on a "Great Reset" in the industry.⁵⁵,⁵⁴,⁵³

Key Takeaways

• An 18-Hour City is a mid-sized urban area with a thriving economy, growing population, and diverse amenities, but generally lower costs than larger "24-hour cities.",⁵²
• These cities are characterized by strong population growth, expanding job markets, and a quality of life that attracts both residents and businesses.,⁵¹
• They are viewed as appealing for real estate and commercial investment opportunities due to their potential for above-average returns and lower entry costs compared to primary markets.⁵⁰,⁴⁹
• While offering robust economic opportunities, they maintain a more relaxed pace and reduced congestion than major metropolises.⁴⁸
• Examples include cities like Austin, Nashville, Charlotte, Denver, and Raleigh.⁴⁷,⁴⁶

Formula and Calculation

The concept of an 18-Hour City does not involve a specific financial formula or calculation in the traditional sense. It is a qualitative designation based on a combination of urban characteristics and economic indicators. However, real estate investors evaluate these cities using various metrics that contribute to their appeal:

• Capitalization Rate (Cap Rate): This metric helps estimate the potential return on investment for income-producing properties. While not unique to 18-Hour Cities, these markets often feature favorable cap rates. $$\text{Cap Rate} = \frac{\text{Net Operating Income}}{\text{Current Market Value}}$$
• Population Growth Rate: A key indicator, often measured as an annual percentage change, reflecting the influx of new residents.,⁴⁵
• Job Growth Rate: Measures the annual percentage increase in employment within the city, indicating economic vitality.⁴⁴,⁴³
• Vacancy Rates: Low real estate vacancy rates across residential and commercial real estate sectors suggest strong demand.

Interpreting the 18-Hour City

An 18-Hour City signifies a dynamic urban environment that balances the extensive amenities and job opportunities of a major metropolitan area with a more manageable pace and lower costs. Investors interpret the "18-hour" designation as an indication of significant growth potential without the saturation and prohibitive expenses often found in "24-hour cities."⁴²,⁴¹ These cities attract a diverse demographic, including millennials and young professionals, drawn by career prospects and a high quality of life.⁴⁰,³⁹

From an urban planning perspective, the emergence of 18-Hour Cities highlights a shift towards sustainable urban development that prioritizes livability alongside economic growth.³⁸ The presence of well-developed infrastructure, public transportation, and diverse lifestyle offerings further supports their appeal.³⁷

Hypothetical Example

Imagine a real estate developer, "Urban Growth Ventures," is looking for new investment opportunities. They analyze various cities based on the characteristics of an 18-Hour City.

Urban Growth Ventures identifies "Midville," a city with a population of 700,000, as a potential 18-Hour City. Over the past five years, Midville has seen an average annual population growth of 2.5%, significantly higher than the national average. Its job market has expanded with new tech companies opening offices, leading to a 3% annual increase in employment. The cost of living in Midville is 30% lower than in nearby major cities, making housing affordability attractive to young professionals.

The developer notes that Midville's downtown area has undergone revitalization, with new restaurants, cultural venues, and mixed-use developments emerging. While not operating around the clock like a 24-hour city, many businesses, including eateries and entertainment spots, remain open until late evening. The average capitalization rate for multifamily properties in Midville is 6.5%, offering a more attractive return on investment compared to the 4% seen in primary markets. Based on these indicators, Urban Growth Ventures decides to invest in a new residential complex in Midville, anticipating continued growth and strong demand.

Practical Applications

The concept of an 18-Hour City has significant practical applications across various financial and urban planning sectors:

• Real Estate Investment: Investors, particularly in commercial real estate, actively target 18-Hour Cities for their potential for higher yields and lower entry costs compared to primary markets.³⁶ This includes investments in multifamily housing, retail, office spaces, and industrial properties due to strong demand driven by population and job growth.³⁵ Platforms focusing on real estate crowdfunding also direct capital toward these secondary markets, seeking to capitalize on overlooked opportunities.³⁴,³³
• Urban Planning and Development: City planners and developers leverage the characteristics of 18-Hour Cities to guide urban growth strategies. They focus on creating mixed-use communities, enhancing infrastructure and public transit, and fostering cultural and entertainment amenities to attract residents and businesses.³²,³¹
• Economic Development: Local governments and economic development agencies in these cities promote their attributes—such as a skilled workforce, lower business costs, and quality of life—to attract corporations and startups., Th³⁰i²⁹s focus contributes to sustainable economic growth and job creation.
• ²⁸ Portfolio Diversification: For investors seeking to diversify their real estate portfolios, 18-Hour Cities offer an alternative to potentially overheated primary markets. By investing in a range of asset classes within these growing urban centers, investors can potentially mitigate risk and enhance overall returns. The allure of these cities for investors has led to increased activity in the real estate secondary market, where investors can buy stakes in real estate funds. Bis²⁷now, a commercial real estate news platform, frequently covers capital markets news and trends, including those impacting secondary markets.,,,
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  25}#²⁴#²³ Limitations and Criticisms

While 18-Hour Cities present compelling investment opportunities, they also come with limitations and potential criticisms. The primary assumption when investing in an 18-Hour City is that its market and property values will continue to expand, eventually resembling the elevated values seen in larger 24-Hour Cities. However, there is no guarantee that this will occur. A city's growth could slow or even stagnate, making it challenging to achieve the desired return on investment.,

C²²r²¹itics also point out that the loosely defined nature of an 18-Hour City can lead to broad interpretations, and not all mid-sized cities will experience the same trajectory of economic growth. Factors such as unforeseen economic downturns, shifts in demographic trends, or inadequate infrastructure development could hinder their progress. Rapid urban development in these cities can also strain existing infrastructure and lead to increased traffic congestion, potentially impacting the quality of life for residents and deterring future population growth. Fur²⁰thermore, unlike major financial hubs, these cities may not have the same depth of established businesses and specialized services, which could limit certain types of large-scale commercial real estate investment.

##¹⁹ 18-Hour City vs. 24-Hour City

The distinction between an 18-Hour City and a 24-Hour City primarily lies in their scale, pace, and economic maturity.

While 24-Hour Cities are recognized global financial hubs with extensive infrastructure, 18-Hour Cities represent a "next generation" of urban centers that offer a more balanced lifestyle and often more accessible investment opportunities for those seeking growth outside the most competitive markets.

##¹⁰ FAQs

What defines an 18-Hour City?

An 18-Hour City is a mid-sized urban area characterized by robust economic growth, a growing population, and vibrant cultural and recreational amenities that operate beyond traditional business hours but not continuously 24/7. These cities typically offer a lower cost of living and doing business compared to larger metropolitan areas.,

##⁹# Why are 18-Hour Cities attractive to investors?
Investors are drawn to 18-Hour Cities because they offer the potential for strong return on investment and capital appreciation at more affordable price points than 24-Hour Cities. They benefit from strong job markets, inward migration, and a demand for both residential and commercial real estate, often with favorable capitalization rates.,

#⁸#⁷# Are all mid-sized cities considered 18-Hour Cities?
No, not all mid-sized cities qualify as 18-Hour Cities. The designation typically applies to those demonstrating specific characteristics such as higher-than-average population growth, expanding job opportunities, developed infrastructure, and a vibrant quality of life that attracts new residents and businesses.,

##⁶# What are some examples of 18-Hour Cities?
Common examples of cities often cited as 18-Hour Cities in the United States include Austin, Nashville, Charlotte, Denver, Portland, and Raleigh.,, T⁵h⁴e³se cities exemplify the blend of economic vitality, cultural richness, and relative affordability that defines the concept.

What are the risks of investing in an 18-Hour City?

While promising, investing in an 18-Hour City carries risks. There's no guarantee that these cities will continue their rapid growth trajectory or achieve the property values seen in 24-Hour Cities. Economic downturns, oversupply of development, or a slowdown in population and job growth could impact investment opportunities and returns.,[^1²^](https://smartasset.com/investing/how-to-profit-from-investing-in-18-hour-cities)