Five Top CRE Investment Markets

Which cities offer the best opportunities for investors? The answers have shifted in the past year, according to PWC and the Urban Land Institute’s latest report on emerging trends in real estate in 2025. It is based on interviews and survey responses from almost 2,000 industry experts.

This year, the top five markets for their overall real estate prospects were Dallas/Fort Worth (DFW), Miami, Houston, Tampa/St. Petersburg, and Nashville. Others in the top 10 were Orlando, Atlanta, Boston, Salt Lake City, and Phoenix.

Ranked by their homebuilding prospects, the top five were Tampa/St. Petersburg, Fort Lauderdale, Inland Empire, DFW, and Atlanta.

However, there have been significant changes in the rankings over the past year. For 2024, respondents gave lower scores to 74 of the 80 metro areas included. This year, half the markets had higher ratings, and the other 50% had lower ones. “The average market moved up or down 12 positions from last year to this, and a fifth of markets moved by more than 20 positions…Movement is even evident among the favorites at the very top of the ratings. Seven of the top 20 markets in 2024 did not repeat this year,” the report noted. It attributed this volatility to industry actors becoming “discerning” and adjusting their positions as conditions change.

Overall “real estate prospects” scores were calculated based on respondents’ ratings of the markets they knew best by several criteria, including investment potential and development opportunities. The report found that this year’s average score across all markets was 2.75 on a five-point scale – virtually unchanged from the 2024 survey, but lower than scores recorded in 2023 and 2022.

One major factor affecting the ratings was affordability. Cities that received lower scores from the experts this year than last were marked by poor and worsening housing affordability, the report found, especially on the West Coast. “Several of these markets were in the top 20 markets in the 2024 survey, and all are now suffering from significant domestic outmigration.”

The report found housing affordability may even be weighing down “Supernova markets” like Austin, Boise, Jacksonville, Nashville, and Raleigh/Durham, which have undergone some of the nation’s largest rent increases and home price appreciation.

The “Super Sun Belt markets” including all four top-ranked markets — remained leaders of the pack. Eight of these 13 markets are in Florida and Texas. However, other metro areas that have seen at least 10% population growth are also among the most preferred and propelled some Snow Belt markets into the highest-rated category. New York stood out in this group, rising from 31st place last year to 11th in this year’s ratings.

In addition, some of the biggest gains were recorded in smaller markets in the “Affordable West” and “Boutique Markets” located mainly in the Midwest and South. The report found Albuquerque, Des Moines, Knoxville and Omaha were among the biggest gainers.

DFW owed its top ranking to many factors. It is the fourth largest metro in the U.S. with “solid annualized returns of 7.9% and 8.8% respectively.” Since 2020, total employment has grown 11.2%. The area has a diverse economic base including banking, commerce, insurance, telecommunications, technology, energy, healthcare and logistics, and is home to 23 Fortune 500 companies. At the same time, it has remained relatively affordable, the report said, even though prices have risen. The absence of a state income tax in Texas also helps.

Miami also owes its high ranking to multiple factors: tourism, its role as a cruise port as well as a major cargo port, and a strong industrial sector with same-store rent growth among the highest in the nation. Housing affordability is poor due to an 80% increase in home prices since the start of the pandemic and a 400-basis point rise in mortgage rates, along with a high cost of living, which has driven net outmigration. However, high international in-migration has helped offset the drain and up to 1% population growth is anticipated for the next five years. These strengths have helped the real estate market’s resilience. The report noted the metro’s vulnerability to climate risk (as recent hurricanes have demonstrated) but expected Miami to continue to attract new businesses. Houston joined the report’s top 10 metros this year for the first time. Its appeal is based on its long-standing oil and gas industry, now supplemented by green energy, health care, technology and aerospace, along with the Port of Houston – one of the largest authorities in the world. The metro hosts 26 Fortune 500 companies. It has the nation’s fifth largest population, which is predicted to grow 1.4% a year for the next decade and is highly diverse, along with a lower cost of living. The absence of zoning regulations makes it development-friendly, the report said.

Tampa-St. Petersburg’s economy is built on its climate, year-round sports, and booming economy. Like Texas, residents pay no state income tax. The metro attracts both workers and retirees. Its population has grown rapidly and job growth has nearly doubled compared with the national pace. White-collar jobs predominate, especially in financial services. The real estate market is strong, yielding 10-year annualized total returns of 8.6% on real estate investment capital, with future outsized returns predicted. However, home affordability has eroded, the cost of living is high, and homeowners’ insurance is among the highest in the nation.

Nashville, the Music City, has also seen rapid population growth and a sharp increase in the price of real estate which has posted annualized total returns of 9.4% over the past decade. Located in Tennessee – another state with no income tax and a low corporate tax rate – its economy is based on tourism as well as “an outsized share of manufacturing jobs,” many in the automotive industry. However, migration to the metro is expected to slow in the next decade, while higher home prices and a relatively high cost of living will impact the city. Until then, investors appear confident in the city’s favorable demographics and business climate, the report said.