The chamber of commerce spirit can be counted on to get the provincial juices flowing—where does my city (metro, town) fit in the pecking order of investment choice? Locals look at the year-end surveys to see where their market ranks. And darn if it looks pretty much the same every year. One way or another the vast amount of capital flows head into the familiar 24-hour cities, which I identified nearly 20 years ago in Emerging Trends. The order may change from year to year, but institutional capital wants to be in New York, Washington, DC and San Francisco first and foremost. And Los Angeles, Boston, and Seattle will always be perennial favorites too. These are the places where the nation's economic engines concentrate and most commerce gets done. It is where tenant demand is strongest, driving NOI growth and real estate values. In downturns, these markets tend to hold value better and recover more quickly. That's been true again in the most recent cycle, and these places are where the smart money invests to buy and own. They are the real estate blue chips.

Now, notably Houston has moved into the top ranks over the past few years, propelled by the nation's renewed energy dominance. This market has always lived off oil and gas, despite its recent diversification—increasingly important Gulf port, medical center, and expanding universities. As long as the energy business fires Houston will do well, especially for developers who can tap into this hot growth center where zoning laws do not matter or really exist. While Atlanta, Phoenix, and even Dallas deal with chronic suburban agglomeration oversupply, Houston has managed for now to attract enough new demand to keep up with prodigious new supply. And its ratings recognize the accomplishment

But despite the start of a light rail network and the emergence of nascent 24-hour districts, including in downtown, Houston remains a totally car-dependent place without a real core—Exxon, its most important employer, is moving its base into an old-school suburban campus. Hunh? Builders continue to grow out subdivisions to the horizon. Investors figure they can ride the energy wave and time a market exit, if necessary. Merchant builders execute on build to core, but hold isn't part of their equation—they want to flip as soon as possible and not get caught in any down draft. The market just does not look like it has a lot of staying power past the next energy sector dip or dive.