Is It Raleigh? Nashville? Experts Identify Which Market Could Be the 'Next Austin'

From coast to coast – mostly in the Sunbelt, of course – markets strive to become “the next Austin,” namely markets that are prime to soar, according to a definition by CBRE in a recent report. 

 Such a market would have professional services, which include technology and other high-value niches as well as the city’s increased relevance for advanced services nationwide.

Raleigh is one, CBRE said, “benefiting from world-class research universities and a diverse tech industry mix that ranges from life sciences to advanced manufacturing.”

And indeed Markerr ran its demographic profile numbers and found Raleigh to be most similar to Austin.

Galen Faurot-Pigeon, Research Analyst at Markerr, tellsGlobeSt.com Markerr examined the characteristics of Austin since 2011 and found markets that bore the most similarities on the population size, the percentage of employees that are highly skilled tech workers, and the percent of the workforce that is salaried.

Faurot-Pigeon said Provo-Orem, Utah; Kansas City, and Madison could also fit the bill.

Colorado’s Front Range has also evolved significantly, but it’s tough to check so many boxes. CBRE points to Dallas, San Diego, and Boston as markets on the cusp, given their economic prowess.

Joe Santaularia, Senior Vice President and Managing Partner, Bradford Commercial Real Estate Services/CORFAC International, tells GlobeSt.com that DFW over the past decade has moved a conveyor-belt of white-collar professionals at about 300 to 500 per day.

DFW has been the recipient of both executives and supply chain operations/opportunities, he said, with the medical device industry also mulling landing operations in DFW as it has become a premiere logistics market for the US due to its centralized location on the interstate thoroughfares and economically priced bulk logistics space.

Philadelphia is another city with world-class research institutions that is actively growing its innovation ecosystem to attract business, stimulate innovation, and drive the regional economy, according to Erik F. Williams, Partner and Chair of the Real Estate Practice at Saul Ewing. 

“There have also been robust efforts by government, non-profit, and private sector organizations to establish STEM training programs in the schools that have bolstered talent supply lines in the region and develop underutilized real estate into special innovation districts to cluster talent and resources and encourage collaboration and innovation. For example, the City is home to three planned innovation districts,” he said.

Additionally, “Pennovation” is a distinctive blend of offices, labs, and production space developed by the University of Pennsylvania to link the intellectual and entrepreneurial initiatives necessary for advancing knowledge and generating economic development, according to Williams.

In further support of Philadelphia becoming an established leader in precision medicine and life sciences sectors, Southeastern Pennsylvania was just selected as a Regional Technology and Innovation Hub(Tech Hub) for life sciences. Philly was awarded this designation through a nationally competitive program, which Congress created under the CHIPS and Science Act to create high-tech jobs in cities across the nation.

Leon Camarda, Executive Vice President and General Manager of Project Management Advisors, tells GlobeSt.com that Tampa has many of the same drivers for substantial growth that powered Austin to the country’s fastest-growing city, including a low cost of living and a favorable tax environment.

“There is a focus on higher education, with the University of South Florida and the University of Tampa in the region, and a commitment to innovation, with universities collaborating with local hospitals and businesses to facilitate research, grants, and job placement,” Camarda said.

“This has helped build a strong environment for young professionals and a diverse economic ecosystem that includes industries such as finance, healthcare, technology, and life sciences.”

He said Tampa’s mild climate, recreational opportunities, access to cultural amenities, and walkable areas also make it worthy.

David Bevirt, Executive Vice President of Corporate Leasing and Strategy for Strategic Property Partners, agrees on Tampa’s calling.

“Tampa has seen incredible economic and population growth over the past few years and is competing with the country’s top second-tier cities,” Bevirt tells GlobeSt.com.

“Hundreds of people are moving to Florida every day and a large percentage of them are choosing Tampa — not just for the beautiful weather, but for the pro-business climate, strong talent pool, and quality of life.

“Downtown Tampa has transformed over the past decade, embracing its waterfront with the award-winning Tampa Riverwalk, adding brand-new quality housing and trophy offices, and investing in its cultural and art scene. Tampa is exactly the kind of balanced urban experience people are seeking today.”

Heather Wallace, Managing Director of Client Services at Bozzuto Management Company, tells GlobeSt.com that Orange County, Calif., is emerging.

“With more than 850,000 units delivering in the next year nationally, Bozzuto is bullish on Orange County as one of our expansion markets,” Wallace said. “This submarket has delivered most of its supply and will perform better than most on occupancy and rents.”

Tourmaline Capital Partners’ CEO, Brandon Huffman, tells GlobeSt.com that Phoenix, Miami, and Dallas are exhibiting undercurrents of “extreme strength for the best assets in the best locations.”

He said this narrow segment of the market belies the national narrative of higher vacancy and declining rents, and its strength is poised to increase as there will be negligible near-term supply and as tenants increasingly focus on best-in-class work environments.

JLL’s research manager, Jacob Rowden, tells GlobeSt.com that he believes the closest peer to Austin – which falls slightly earlier on a similar trajectory – is Nashville.

“The cities are both lower-cost markets, which have seen large population growth through domestic migration, and both urban cores had a reputation as tourist destinations,” according to Rowden. “Nashville similarly has a prominent university in Vanderbilt University, which is helping produce highly skilled talent.”