Top Real Estate Markets to Watch in 2025
Top Real Estate Markets to Watch in 2025
The Urban Land Institute has released its Emerging Trends in Real Estate 2025, co-produced with PwC and I’m diving into the top 10 real estate markets for 2025. Based on insights from industry leaders, this ranking showcases movers and shakers in the commercial real estate world.
Whether you're eyeing new investment opportunities or observing the latest market trends, here's my take on these markets, infused with insights from my recent podcast.
Market Movers
1. New Orleans, Louisiana
New Orleans rose by an impressive 25 spots to rank 42nd among 81 markets in the Emerging Trends report, reflecting renewed investor interest in the city’s potential despite longstanding challenges. Known for its tourism and cultural allure, the city also has strengths in its port and rail infrastructure.
Strengths:
Tourism and Culture: Tourism generated $9 billion in 2022, supporting nearly 40% of the city’s operating budget.
Port Infrastructure: Port NOLA reported a 19% increase in container shipping volumes in FY24. Investments exceeding $500 million aim to enhance port capacity.
Cost of Doing Business: Relative cost is just 90% of the national average.
Challenges:
Boom-and-Bust Economy: Heavy reliance on volatile industries like tourism and energy.
Climate Risks: Insurance premiums in Louisiana are 42% higher than the national average due to climate-related risks.
Population Trends: Projected net outmigration of 34,000 residents by 2029.
Investor Insights: If you're considering New Orleans, look to sectors tied to its strengths—boutique hotels, short-term rentals, or tourism-related retail. Industrial opportunities may also emerge, given the city's well-developed port and rail infrastructure. Be cautious about insurance costs tied to climate risks.
2. Charleston, South Carolina
Charleston continues its upward trajectory, with a robust 2.9% employment growth rate, nearly double the national average. With its charm, deep historical roots, and tourism appeal, Charleston shines as both a business and leisure destination.
Strengths:
Population and Employment Growth: Gained 200,000 residents over the last decade, with employment growing at 2.9% CAGR since 2014.
Port of Charleston: Investments of $2 billion have made it the deepest harbor on the East Coast, bolstering industrial and logistics sectors.
Tourism Impact: Attracts 15 million visitors annually, contributing $12.8 billion to the economy.
Challenges:
Affordability: Median home prices surged to $520,000, over seven times the median income.
Economic Sensitivity: Tourism’s vulnerability to economic downturns remains a concern.
Investor Insights: Opportunities lie in manufacturing and logistics assets, particularly those tied to aerospace and EV production. Industrial real estate remains strong, fueled by the deepened Charleston port (now the deepest on the East Coast).
3. Columbus, Ohio
Dubbed "The Silicon Heartland," Columbus earned its spot among the top movers, driven by affordability and a diversified economy.
Strengths:
Population Growth: Fastest-growing city in 2023 with a 1.1% annual increase. The metro population is now the 15th largest in the U.S..
Business-Friendly Costs: Business costs are 98% of the national average, far more affordable than coastal cities.
Economic Diversification: A robust economy spans technology, education, and manufacturing, with significant contributions from Fortune 500 companies.
Challenges:
Moderating Migration: Projected net migration will stabilize at 13,000 annually over the next decade.
Investor Insights: Look to capitalize on migration patterns and tech-related developments sparked by the Chips Act. Columbus stands out for being largely insulated from climate risks, another plus for long-term investment.
4. Detroit, Michigan
Detroit's story is one of resilience. Once synonymous with urban decline, the Motor City has risen 22 spots in the rankings, bolstered by a renewed downtown spearheaded by major investments from Dan Gilbert and others.
Strengths:
Affordable Market: Median home prices at $280,700, 33% below the national average, and business costs at 96% of the national average.
Downtown Revitalization: Driven by Dan Gilbert’s investment in over 130 buildings, boosting local economic prospects.
Sector Strengths: Self-storage, industrial, and medical office assets comprise over 70% of the market’s value.
Challenges:
Vacancy and Population Decline: 17% of land remains vacant, and significant population losses over six decades impact growth potential.
Long-Term Headwinds: Automotive transition to electric vehicles has bypassed many regional manufacturers.
Investor Insights: Detroit’s abundance of undervalued properties creates unique opportunities for patient investors. Focus on industrial, self-storage, and medical office spaces, which dominate the local market.
5. Manhattan, New York
Manhattan has rebounded strongly in the Emerging Trends rankings, climbing 20 spots to #11 for 2025. Known as a global financial and cultural hub, the borough demonstrates resilience as it recovers from pandemic-induced challenges.
Strengths
Economic Recovery: Job growth in Manhattan has exceeded national averages for three of the past four quarters, driven by education, health services, and leisure/hospitality sectors.
Tourism Revival: Tourism spending hit $48 billion in 2023, surpassing pre-pandemic levels. Domestic travel has nearly recovered, and international arrivals are only 14% below pre-pandemic norms.
Apartment Demand: Renewed immigration and a slowdown in domestic outmigration have boosted the residential market, with high demand for apartments in central neighborhoods.
Challenges
Affordability: With the cost of living at 120% of the national average, Manhattan struggles to retain middle-income workers.
Office Sector Headwinds: Hybrid work trends have left office vacancy rates elevated. While financial services tenants are driving some leasing activity, full recovery in the office market remains elusive.
Climate Risks: Manhattan’s coastal location increases vulnerability to flooding and extreme weather, necessitating investments in climate-resilient infrastructure.
Investor Insights: Manhattan's recovering apartment demand creates promising opportunities in multifamily development, particularly in centrally located or luxury segments. Additionally, as tourism spending rebounds, investments in hotels, retail, and entertainment properties could yield significant returns.
Top 5 Markets To Watch
5. Nashville, Tennessee
Despite dropping from its #1 position after three years, Nashville remains a strong market due to its growth in employment and tourism. The city benefits from its "Music City" allure, attracting 15 million visitors annually. Nashville's position in the Emerging Trends rankings is supported by:
Economic Growth: Employment expanded at a 2.9% compound annual growth rate (CAGR) since 2014, almost three times the national average.
Business-Friendly Environment: The city’s cost of doing business is 99% of the national average, and Tennessee imposes no state income tax, making it attractive for both companies and residents.
Challenges: Rising home prices (median nearing $500,000) and cost of living at 110% of the national average are emerging barriers.
Investor Insights: Tourism-dependent properties such as short-term rentals and hotels, as well as industrial and multifamily developments, remain lucrative. Nashville’s affordability challenges might affect future growth, but its diversified economy ensures sustained investor interest.
4. Tampa-St. Petersburg, Florida
Tampa’s economy is a standout among Florida's metro areas, known for its sunny weather, financial sector strength, and no state income tax. However, climate risks and rising insurance costs pose significant challenges:
Economic Growth: Tampa's job growth has outpaced the national average, with population growing at 1.5% annually over the past decade.
Diversity and Business Potential: It ranks as the fourth most diverse job market among 390 MSAs.
Affordability Challenges: Housing costs jumped 66% from 2020 to 2024. Rising homeowner’s insurance rates are another hurdle, with Tampa now among the top 10 highest nationally.
Investor Insights: The metro area’s financial services and logistics sectors present growth opportunities. Port-related industrial developments, particularly in logistics, could remain strong. However, high housing costs and storm risks warrant cautious long-term planning.
3. Houston, Texas
Houston entered the top five for the first time in a decade due to diversification beyond its traditional oil and gas industry:
Economic Drivers: The Texas Medical Center, the world’s largest, employs over 120,000 people across 50 million square feet of space. The Port of Houston, the largest in the U.S. by tonnage, accounts for nearly 20% of Texas’s GDP.
Population Growth: As the fifth-largest MSA in the U.S., Houston has seen a 1.4% annual population increase, fueled by affordable living costs, which are 28% below the national metro average.
Zoning and Development: Houston’s lack of zoning laws encourages flexible real estate development.
Investor Insights: Opportunities abound in industrial, medical, and logistics-related real estate. Houston’s affordability and infrastructure make it a prime choice for developers and investors seeking growth-friendly markets.
2. Miami, Florida
Miami continues to thrive, driven by tourism, international arrivals, and its critical port infrastructure:
Tourism and Logistics: PortMiami is the world’s second-busiest cruise port. Miami also serves as a gateway for goods flowing to and from the Caribbean and Latin America, with industrial logistics experiencing 3.5% rent growth annually through 2028.
Housing Market Boom: Housing prices surged 80% since 2020, exacerbating affordability issues with Miami’s cost of living at 122% of the national average.
Climate Risks: Miami faces significant challenges from its subtropical location, including hurricane risks and rising sea levels.
Investor Insights: Despite domestic outmigration, international demand bolsters the market. Industrial real estate remains strong, but rising costs and climate risks demand cautious consideration.
1. Dallas-Fort Worth, Texas
Dallas-Fort Worth tops the list for its unrivaled combination of affordability, economic diversity, and population growth:
Economic and Population Growth: The region saw a 6.1% population increase from 2020 to 2023. With 23 Fortune 500 companies, DFW boasts a diverse economic base across healthcare, tech, energy, and logistics.
Affordability: Median home prices of $382,000 remain below the national average, and Texas’s lack of state income tax enhances its appeal.
Challenges: Climate risks such as extreme heat and fire are becoming concerns.
Investor Insights: DFW’s size and economic diversity make it a resilient market for commercial real estate investments, particularly in industrial, multifamily, and logistics.
Key Takeaways
Emerging Trends for 2025 highlight the resilience of Sun Belt markets, the growing importance of ports, and the challenges posed by climate and affordability:
Diverse Economies: Cities with diversified job markets (e.g., Houston, DFW) attract steady investment.
Port Infrastructure: Coastal and port cities (Miami, Tampa) benefit from global trade and logistics.
Climate Risks: Rising insurance costs and climate-related disruptions are key risks for southern markets.
Investors should balance opportunities with risks, focusing on markets aligned with their strategic goals. Let’s discuss which market aligns best with your investment plans!