Real Estate Investments in 18-hour Cities: Do 18-hour cities offer better investments than 24-hour cities?

Abstract: With the rise of the millennial generation, a new roster of cities has sprung to life – the 18-hour cities. They can be defined as a vibrant second-tier city where there’s a big potential for employment and economic growth and at the same time they offer a lower cost of living and doing business than in 24-hour gateway cities like New York City or San Francisco. They have been named the hottest places for real estate investments by industry literature which poses the question if 18-hour cities really offer better investments than 24-hour cities. This paper uses a statistical analysis framework complemented with qualitative interviews of industry professionals based in 18-hour markets to test this notion. From the statistical analysis, it has been found that 18-hour cities offer higher yields than the 24-hour markets but the cash return cannot be said do differ between the two. Furthermore, the interviews with industry professionals indicate that the 18-hour markets have major future growth prospects because of their job growth, population growth and the large in-migration of high-skilled labor gravitating towards these amenity-rich areas where they can receive the highest reward-for-skill