ERA Focusing on 18-Hour Cities
ERA Real Estate CEO Charlie Young was recently chatting with a friend who floated an investment idea his way. Specifically, she asked him about investing in real estate in some college towns throughout the Southeastern U.S.
“Bingo!” was his succinct response, in part mirroring the strategy of the New Jersey-based franchised real estate giant.
Focusing on so-called 18-hour cities—urban places where street life doesn’t end after the workday—ERA has invested in markets including Houston, Louisville, Kentucky, Nashville, Tennessee, Raleigh, North Carolina, Silicone Valley all the way down to small but thriving college towns such as Missoula, Montana.
I’ve been to all of these places, and our own Nick Upton just returned from a work trip to Nashville where he saw a “crazy” amount of development underway—cranes in all directions, he reported.
Missoula is just delightful, with its scenic mountain views, big art scene, excellent restaurants, and a beautiful river cutting through a compact, redeveloping downtown. Louisville is a surprise for most first-time visitors who would likely be impressed by its architecture, riverfront parks and budding whiskey scene. Raleigh is one of the fastest growing cities in the country, fueled by the brain power of the nearby Research Triangle and a thriving arts scene. The same can be said for Houston, but on a much higher level—it's America’s fourth largest city (on track to overtake Chicago).
It’s interesting to hear the CEO of a major real estate firm explaining his focal areas, and I wondered what are the common threads in all of the places he mentioned. There are a few obvious ones.
First: compact downtown districts. While Houston is notoriously sprawl-y—to an obscene degree—its downtown is relatively compact, and soon to be getting even more so as evidenced by my recent visit for Franchise Expo South. So many cranes on the skyline!
Compact downtowns allow the creation of a critical mass of bodies on the street. More jobs, more condos and apartments, which leads to more business opportunities to serve visitors, residents and downtown workers. It’s a big part of why cities are a more efficient way to live compared with the cars-only suburbs—and a great opportunity for investment.
The second is less obvious, but almost as significant: a budding arts scene. Cities such as Louisville, Raleigh and Missoula (along with my own Northeast Minneapolis) are speckled with art galleries, which often take up residence in low-cost, abandoned buildings. These seeds germinate and can be the spark to revitalize whole neighborhoods—this has happened time and again.
Young said the company recently collaborated on a study with HGTV asking what people are looking for in their next home and neighborhood. The results were not surprising: everybody wants walkability and a lively downtown to explore in their free time.
After a week spent in the car, running errands and staring at a screen, who wants to get back on the interstate or sit through unending stoplights on the weekends? Of course, suburban shopping centers have plenty of raving fans, but the benefits of living in a compact, thriving, art-fueled urban environment outweigh the type of development that fueled growth throughout the '80s, '90s and early 2000s.
Is your business planning accordingly?