• Houston, TX, is the country’s most active city for real estate development over the past decade, followed by San Antonio, TX, and Austin, TX
  • The best-performing commercial real estate sector in terms of inventory expansion was self storage, which grew its square footage by 25% over the past decade
  • Fifteen out of the top 20 cities for real estate development are Sun Belt cities
  • Houston, TX, saw the highest number of building permits for single family homes, while New York City, NY, tops the charts for multifamily units

The U.S. real estate landscape has undergone a significant makeover during the past decade, with virtually all sectors experiencing massive expansions. Residential construction is thriving, with momentum increasing in the last few years, despite pandemic-induced headwinds and the subsequent inflation and supply chain issues. Commercial real estate development, which saw billions of square feet of new space coming online, is also readjusting to meet current demands. The industrial and the self storage realms in particular have experienced positive evolution over the past 10 years.

Self storage added 25% of its total stock between 2013 and 2022, more than any other major real estate segment

Despite all the challenges the commercial real estate market faced over the last decade, one sub-sector has seen investor sentiment remaining firmly positive, and that’s self storage. Driven by the booming levels of residential construction and new space requirements triggered by life events — for consumers and businesses alike — the self storage industry has expanded considerably in the last 10 years, more than any other real estate sector in terms of inventory growth.

In fact, more than 462M square feet of new storage space has been delivered in the last decade, representing a whopping 25% of the total existing inventory. The most active year of the decade was 2019, when almost 74M square feet of storage space was delivered.

Self storage construction activity leveled off in 2020, mainly because many markets had already been well supplied but also due to the uncertainty created by the health crisis. However, in certain areas where high demand met historically low inventories, such as New York City, for example, self storage construction activity kept up an intense pace both during the pandemic and in its aftermath.

Industrial construction was on a roll as well, with volumes growing consistently from one year to the next. Over 3.5B square feet (about half the area of Austin, Texas) of industrial space was built nationwide during the last 10 years, representing a significant 13% of the total inventory. Almost 496M square feet of new space was delivered in 2022 alone, which was the best year of the past decade for new construction in this sector.

Office construction, on the other hand, decelerated in 2022, with the industry in the process of regrouping and reevaluating itself to adapt to current working trends. Remote work, whether full- or part-time, has become the norm in many industries, including tech, banking, insurance and many others, and this has had a deep impact on the need for physical office space. Overall, 913M square feet of office space was delivered across the nation from 2013 to 2022. The most active year for office construction during those 10 years was 2018, with over 114M square feet of new space delivered, while 2022 saw the lowest levels of office construction of the entire decade.

Retail is the only commercial real estate sector where new construction saw a clear downward evolution from 2013 to 2022. This was not at all surprising considering the decisive shift toward online shopping that made brick-and-mortar retail space less sought-after.

Multifamily construction picks up the pace, with 47% more building permits issued compared to the previous decade

The residential market is seeing intense construction activity, albeit less robust than needed to meet the national housing deficit which Freddie Mac estimates at an additional 3.8 million units.

Nationally, more than 8.3M building permits were issued for single family homes and almost 5M for multifamily units in the last 10 years.

While the single-family market is lagging with fewer permits for new homes issued in the 10 years ended 2022 than in any decade since the 1990s, the multifamily sector is progressing toward an easing of the nation’s housing issues. In the past decade (2013-2022), the number of building permits for multifamily units increased by 47% compared to the previous decade (2003-2012) and by 37% compared to the 1993 to 2002 period.

Most active development markets of the decade: Sun Belt cities shine brighter than coastal hubs

Whereas real estate development is generally looking lively nationwide, some cities are certainly more active than others. To see which areas experienced the most notable changes in inventory expansions across the major real estate sectors, we conducted an in-depth analysis of new construction over the last ten years (2013 – 2022) in the 100 largest cities. We’ve considered building permits for single family homes and multifamily units, and new deliveries of square footage in the industrial, office, retail and self storage sectors.

As it turns out, the Sun Belt region has been experiencing tremendous growth, with 15 of the top 20 cities with the highest volumes of real estate construction from 2013 to 2022 being Southern or Southwestern urban hotspots. Texas is now in a league of its own and boasts the top five best cities for real estate construction.

Texas takes it all, with Houston the top city for real estate construction

Long touted as a prime moving destination for Americans, particularly for those leaving the expensive West Coast, Houston, TX, has amped up its game to live up to the expectations. Space City’s real estate market is firing on all cylinders, pushing it ahead of every other major city across the U.S. in terms of inventory expansions. Supported by consistent demand coming from the huge influx of newcomers, a diversifying economy and a very strong job market, both residential and commercial construction are thriving.

The city of Houston registered the largest number of single family homes being permitted from 2013 to 2022, around 55,600 units, with 2021 and 2022 the best years of the decade for residential construction. Permits for almost 90K new apartments have been issued in Houston during the same timeframe.

The local self storage sector also experienced an impressive surge in new construction, answering the complex storage needs of Houston residents. About 5.7M square feet of storage space was added to the local inventory over the past ten years, with 2018 alone seeing a whopping 2.1M square feet of new space. Houston ranks first nationally for industrial construction as well, with almost 66M square feet of new industrial space erected over the past decade, and second for office space construction, seeing 27M square feet of new office space.

San Antonio, TX, scores the number two spot in our ranking, propelled by its lively industrial, single family and self storage construction sectors. Benefitting from an innovative economy that revolves around healthcare, tech and tourism, but also rooted in manufacturing and international trade, San Antonio added over 22.6M square feet of industrial space, 5.7M square feet of office space and 9.3 square feet of retail space over the past 10 years.

Local residential construction is aimed at responding to the steady inflow of new residents, with 34K single family homes and over 38K multifamily units permitted from 2013 to 2022. The best year for single family construction in San Antonio was 2021, seeing over 6,500 permits issued, while multifamily construction boomed last year, with nearly 9,500 units on the drawing board.

Austin, TX, was third nationally in terms of real estate development from 2013 to 2022. The tech-oriented city, which saw a host of companies and busy professionals relocating here over the past 10 years, had a particularly impressive apartment construction evolution. Almost 99K building permits for multifamily units were issued over the past decade in Austin, with only the likes of New York City and Los Angeles surpassing it. The best year of the decade for multifamily construction was 2022, when over 15K permits were registered. About 37K single family homes were also permitted over the past 10 years.

Self storage construction followed suit in Austin and added almost 4.3M square feet of space. Office construction mimicked the city’s economic growth and the city saw the addition of 25M square feet of new office space to its inventory between 2013 and 2022.

Fort Worth, TX, landing fourth in the ranking, narrowly outperformed neighboring Dallas in real estate development. Fort Worth saw its population increase by around 25% over the past decade, which propelled residential construction in the area – the city registered an impressive 50K building permits for single family homes over the past decade, second only to Houston. During the same time, almost 37K new apartments were also permitted in Fort Worth, as well as 3.2M sq. ft. of self storage space.

With an economy anchored by several key industries, including defense, energy, logistics, aviation and aerospace, Fort Worth also added significant amounts of commercial real estate: over 58.5M square feet of industrial space and 6.6M square feet of retail space.

Dallas, TX, completes the set of Texan cities that saw remarkable real estate development over the past decade. Big D recorded the most spectacular advances in industrial construction, with over 31M square feet of new space delivered from 2013 to 2022.

But multifamily is also shining in Dallas. The city experienced significant growth in its technology and startup sectors, with a number of innovative companies establishing headquarters or offices in the area, which in turn attracted young, skilled workers. This reverberated, as expected, in the residential sector, and almost 69K new apartments were permitted in Dallas over the past decade.

Three Floridian locations make it into the 20 best cities list for new construction

Florida is well represented in the top 20 best cities for real estate development with three star locations: Jacksonville, ranking 7th, Orlando in 11th position, and Tampa on 15th.

Jacksonville, FL, a hub for shipping and logistics and home to one of the busiest seaports in the United States, added important amounts of new industrial space to its inventory over the past decade, about 18.7M square feet. Residential construction also picked up steam as the city is trying to accommodate the housing needs of one of the nation’s boomtowns. Almost 37K permits for single family homes were issued here from 2013 to 2022, the fourth highest among the 100 biggest urban hubs. Approximately 28K multifamily units were permitted in Jacksonville over the same period.

Orlando, FL, the smallest city in terms of population among the top 20, manages to outperform the likes of NYC, Chicago and LA for real estate development. With its bustling economy rooted not only in tourism and services but also in advanced manufacturing, bio tech and aerospace, Orlando is a roaring success in commercial real estate construction. Almost 22M square feet of new industrial space and 8.8M square feet of new retail space were added to the local inventories over the past decade. Self storage construction in Orlando also thrived, delivering almost 3.3M square feet of new space from 2013 to 2022, with 2019 the best year of the past 10, seeing 935K square feet of new space. The decade also saw 9K building permits for single family homes and over 20K permits for new apartments.

Tampa, FL, is another city punching above its weight as it manages to walk alongside Los Angeles and New York City in terms of new construction. Tampa managed to land 15th place nationally for real estate development, registering significant volumes of new construction across the board, both commercial and residential. Tampa built over 10M square feet of industrial space, 3.7M of office space and almost 2.1M square feet of self storage space over the past decade. During the same period, building permits for more than 10K single family homes and 21.5K multifamily units were issued in Tampa.

The substantial attention that the South and Southwest have been getting from developers is the result of a combination of factors including consistent population growth, business-friendly environments with lower taxes, and availability of land, as well as major investments in infrastructure. Apart from Texas and Florida, other places in the region have benefited from massive transformations including Phoenix, AZ, Las Vegas, NV, and Denver, CO, which have all turned into hot zones on real estate radars.

Phoenix, AZ, a city that’s booming both in terms of economy and population, is ranking 6th in our list for real estate development overall. Its strongest sectors are residential, industrial and self storage construction. Phoenix managed to add almost 30M square feet of industrial space to its inventory between 2013 and 2022, which is the fourth-largest amount nationally.

With new residents pouring in, residential and self storage construction in Phoenix registered huge upticks as well. Almost 32,400 new single family homes and 49K apartments were permitted in Phoenix from 2013 to 2022, with 2021 the best year for single family construction and 2022 the most active for apartment construction.

Over 4.3M square feet of storage space was added to the local inventory over the past decade, helping the city rank 5th nationally for this indicator.

A veritable success story of economic diversification, Las Vegas, NV, ends a decade of strong real estate development in all the sectors we analyzed, ranking 8th on our list. The city of Las Vegas saw the delivery of over 25M square feet of industrial space and almost 2.5M square feet of new storage space. The construction of retail space also achieved a relatively high pace, which is only natural considering the city’s status as a prime tourism and entertainment destination: More than 5.7M square feet of retail was added to the local inventory over the past decade. As for residential construction, the city saw almost 19K new single-family homes permitted from 2013 to 2022, plus almost 5,600 apartments.

Denver, CO, registered building permits for a substantial 59K multifamily units and 18K single family units over the past decade, in line with its growing popularity as a top moving destination. The best years for single family building were mid-decade (2017 to 2019). Multifamily construction, however, had picked up pace by the end of the decade, with 2021 and 2022 seeing 8,450 and 7,000 apartment building permits, respectively. Commercial real estate construction is also doing well in Denver: 13.5M square feet of industrial, 11M square feet of office and 2.3M square feet of self storage space were delivered.

Oklahoma City, OK, rounds out the top 10 best cities for real estate development, following a decade of steady economic and population growth. Single family home construction performed exceptionally, with almost 33,200 building permits issued over the past decade, positioning Oklahoma City in the 6th spot nationally for this indicator. Commercial real estate development was active too. Oklahoma City saw the addition of 15.6M square feet of new industrial space, 4.3M square feet of retail space and 1.3M square feet of storage space over the past decade.

Atlanta, GA, another Southern success story in terms of expansion of both its economy and population in recent years, ranks twelfth for real estate development between 2013 and 2022. Its best performing sectors were office, retail, multifamily and self storage construction. Atlanta saw the addition of 17.4M square feet of new office space over the past decade, with 2021 the best year by far (about 5.2M square feet of new office space were delivered that year alone). With companies like Micron Technologies, Remington and Anduril relocating to Atlanta or opening operations there, the uptick in office construction is hardly surprising. Mimicking its growing population, multifamily construction is booming as well – the past decade saw over 47K building permits for apartments.

Nashville, TN, performed well across the board regarding real estate development, adding 10M square feet of office space, 6.5M square feet of industrial space and 1.7M square feet of self storage space over the past decade. The housing inventory in Nashville expanded significantly as well: Almost 19K building permits for single family homes and 33K permits for multifamily units were issued from 2013 to 2022.

Coastal megalopolises NYC & Los Angeles excel in multifamily construction

New York City and Los Angeles rank 14th and 17th respectively in the list, each holding strong to their “real estate hotspot” reputations.

The Big Apple is constantly reinventing itself and shines across the board, except, understandably, in single family home construction. New York City bested every other city in the nation in terms of new apartments. In an effort to respond to the growing need for housing, building permits were issued for more than 238,220 multifamily units over the last decade.

The last decade has also seen NYC’s commercial real estate sector booming, with 18M square feet of retail space and 9.6M square feet of storage space entering the market.

Self storage, a sector with a historically low inventory in New York City, but one sorely needed due to factors such as the small living spaces and a dynamic population that moves frequently, has seen amplified construction efforts over the past decade. 2022 in fact stood out as the best performing year during that period in terms of new self storage deliveries, with roughly 1.3M square feet of new space added to the local stock.

In an effort to bridge the housing gap that’s been historically tormenting Los Angeles, CA, the city has been supporting residential construction. In fact, with over 116K permits issued for new apartments, LA is second only to NYC in terms of new multifamily development. Unlike NYC, though, the single family market has also been going strong in LA as the city registered about 22K building permits for single family homes over the past decade, the 8th highest number in the country.

Self storage, which generally mirrors residential construction trends, has picked up steam in Los Angeles in recent years, with roughly 755K square feet of storage space entering the market over the last decade.

Chicago leads the pack of Midwestern cities with massive real estate development over the past decade

Chicago, IL, in the 16th spot, is the first Midwestern city to make it into the 20 best cities list, having registered important advancements in office, multifamily and self storage construction. Over 21M square feet of office space was delivered in Chicago over the past decade, and the most active year for the sector was 2019, when 4.3M square feet of office space were constructed.

Residential construction thrived in the multifamily sector, with almost 59K permits for apartments issued between 2013 and 2022, the 7th highest number nationally. The most active year of the decade was 2016, with 8,500 permits, but 2022 also registered a significant amount of multifamily construction, seeing 6,700 building permits for apartments issued. Chicago ranks 7th nationally for the self storage sector construction as well, having added 4.1M square feet of new space over the past decade.

Omaha, NE, is a comparatively small city that plays in the big league when it comes to real estate construction. Ranking 18th overall for real estate development, the city performed well in both commercial and residential real estate sectors. Omaha added 7.9M square feet of industrial space, 4.1M square feet of office space and 1.2M square feet of self storage space over the past decade. In terms of residential construction, the single family and multifamily sectors registered about the same number of building permits – just over 14K.

Indianapolis, IN, ranking 19th, had a great decade for industrial construction, with 15.7M square feet of new space delivered – and 2022 was the best by far, with over 3M square feet of space added. The self storage sector in Indianapolis managed to deliver 1.9M square feet of new storage space. Single family and multifamily sectors both saw just over 9K building permits each from 2013 to 2022.

Columbus, OH, rounds out the top 20, having registered significant volumes of commercial real estate construction: 7M square feet of new office space, 4.2M square feet of retail space and 1.5M square feet of self storage space were added to the local inventories over the past decade. Multifamily construction was on a roll as well, with almost 37K building permits for new apartments issued from 2013 to 2022.

Real estate development is highly dependent on economic and demographic conditions, not to mention health-related factors which fluctuated significantly over the last decade. But, overall, it was a decade of sustained growth across all sectors. It will be interesting to note whether the process of urbanization continues in light of the recent changes we’re seeing in the way we work and conduct business.

We’ve included below a ranking of the 100 largest US cities based on the biggest progress achieved in terms of real estate construction over the last 10 years.

A Decade of Real Estate Growth in the 100 Largest US Cities: Inventory Expansions from 2013 to 2022

RankCitySingle Family PermitsMultifamily PermitsOffice (sq.ft.)Industrial (sq.ft.)Retail (sq.ft.)Self Storage (sq.ft.)
1Houston, TX55,60189,44827,047,93965,862,16212,017,5155,699,859
2San Antonio, TX33,97838,5268,403,61422,637,2099,318,5935,680,803
3Austin, TX37,02998,76425,070,42114,273,5594,797,8254,269,678
4Fort Worth, TX50,59136,6865,174,89458,509,8096,585,6233,168,710
5Dallas, TX17,33268,9279,806,79031,373,2903,974,5683,136,995
6Phoenix, AZ32,35949,0194,269,91829,644,5882,626,1414,350,216
7Jacksonville, FL36,97627,8032,162,48318,693,0423,862,8662,582,305
8Las Vegas, NV18,9385,5563,200,07725,203,5515,748,5762,469,741
9Denver, CO17,92558,75111,046,88013,479,4133,331,6722,326,633
10Oklahoma City, OK33,1923,3934,178,20415,591,3714,261,2911,312,051
11Orlando, FL9,16220,4255,397,57221,971,7188,840,0203,266,369
12Atlanta, GA8,47047,12617,446,95714,391,7734,878,5422,979,644
13Nashville, TN18,83232,77110,176,0366,502,3892,518,6711,706,261
14New York City, NY3,634238,22073,468,13518,882,09518,081,3669,634,663
15Tampa, FL10,32421,5043,738,56210,192,7203,169,9262,097,615
16Chicago, IL4,54858,79021,274,01210,774,6613,661,8214,118,882
17Los Angeles, CA21,596116,58213,880,3235,356,8552,095,569754,679
18Omaha, NE14,26914,1714,177,2187,881,6082,901,5721,221,034
19Indianapolis, IN9,2349,2912,404,05215,707,9952,579,0781,868,326
20Columbus, OH6,93236,9526,937,5907,534,2834,229,6451,517,811
21El Paso, TX19,6807,3661,314,0316,804,4694,361,729954,043
22Durham, NC16,61617,3734,360,5785,905,205904,7551,778,567
23San Diego, CA7,66140,3997,947,3398,424,6171,371,8721,315,352
24Mesa, AZ19,9389,540791,7819,703,4141,008,7181,386,786
25Portland, OR7,49636,1725,806,2177,815,9291,101,2192,447,801
25Gilbert, AZ14,5064,1641,543,6723,973,8302,287,6911,281,714
25Miami, FL95945,7637,644,76417,003,3859,081,5674,664,082
28Henderson, NV21,5209,412810,8988,123,7211,425,899993,216
29Sacramento, CA9,66310,5603,887,0799,122,5262,083,314960,432
30Raleigh, NC13,66331,1065,575,3991,013,6831,565,2931,618,571
31Philadelphia, PA8,48851,3397,143,4532,765,5701,128,2802,474,268
32Aurora, CO14,0789,445944,79217,746,0811,021,2861,017,175
32Lubbock, TX14,3939,387540,5442,704,4143,004,9421,558,364
34Chandler, AZ6,9549,4404,657,5629,160,8641,613,1801,089,992
34Seattle, WA5,88885,42922,736,9443,639,1222,023,0351,311,601
36Tulsa, OK4,7323,7832,380,35413,949,7302,141,3711,252,681
37Kansas City, MO7,74915,7823,932,96813,146,407341,0261,505,488
38Tucson, AZ7,3988,0231,449,1935,911,5582,740,754849,266
38Plano, TX3,4399,13011,820,8322,372,8322,137,1381,396,800
40Albuquerque, NM9,0204,121694,6445,655,6422,221,4261,031,070
41Wichita, KS6,4673,6371,986,2115,048,1142,694,539840,839
42Reno, NV11,21315,220509,21514,284,387515,3901,028,596
43Washington, DC2,76850,73417,545,3191,005,8082,618,8101,508,021
44Irvine, CA13,20918,2984,578,693222,503203,5211,895,954
45Scottsdale, AZ6,3627,5173,705,7102,106,7701,304,3951,281,755
46San Jose, CA2,97120,5815,847,1432,978,6212,212,8021,238,509
47Lincoln, NE9,35111,4531,179,1571,540,9543,145,417739,138
48Irving, TX5,0607,5775,355,81916,094,372814,254521,007
49North Las Vegas, NV13,5414,157117,04912,626,911400,292958,832
50Arlington, TX6,0277,928535,2079,476,4311,214,6901,083,086
50Fresno, CA10,5523,569771,1246,118,7941,384,024302,297
52Richmond, VA2,9897,0802,424,3515,037,5421,111,6431,395,622
53Corpus Christi, TX10,8921,569751,4851,569,1171,684,243656,934
54Greensboro, NC5,4257,040987,3873,240,685872,9401,161,099
55Louisville, KY9381,2891,700,66117,314,908326,0632,730,998
56Virginia Beach, VA5,7916,405675,4412,147,1551,576,764915,685
56Saint Louis, MO1,0695,9272,009,4362,529,1081,926,2291,589,475
58Winston-Salem, NC9,5332,294924,3441,823,4411,095,066397,840
59Boise City, ID6,7646,7741,943,3122,050,993574,700895,487
60Bakersfield, CA13,8791,687335,1864,164,532190,731488,921
61Spokane, WA3,2423,220920,5703,096,1902,443,778665,770
62Baltimore City, MD1,0827,4153,049,2155,943,0171,124,110991,243
63Chesapeake, VA9,7241,656423,1921,807,977843,170429,441
63Cincinnati, OH1,2985,8263,189,2402,345,360711,0621,438,044
65Minneapolis, MN1,19329,3806,731,7621,710,7391,140,774865,560
66Milwaukee, WI2743,3344,670,7002,017,2561,092,8071,510,252
67St Paul, MN6179,6521,443,6673,178,9431,167,5201,376,565
68Saint Petersburg, FL3,5479,660726,6051,623,9561,028,948974,612
69Glendale, AZ2,6692,344178,50711,534,753972,092497,471
70Pittsburgh, PA1,2244,9275,977,878695,528565,8361,127,731
71Buffalo, NY3551,8503,622,2003,278,1011,204,563484,745
72Tacoma, WA1,7998,55494,2678,110,532503,636874,138
72Des Moines, IA2,1885,324785,1343,953,394553,237605,320
74Anchorage, AK7,1692,125542,884732,975607,221120,371
74Cleveland, OH1,1143741,929,7091,391,6821,506,120483,942
76Rochester, NY3722,0511,179,0033,980,4901,172,762596,220
77Riverside, CA1,9142,94853,37817,149,061548,673213,560
78Jersey City, NJ5,13022,551103,4162,282,9382,435761,246
79Norfolk, VA3,6795,86845,3811,416,1591,222,418345,374
80San Francisco, CA46133,67513,609,573862,303922,584328,866
81Baton Rouge, LA2,695531570,9371,708,525765,925627,709
81New Orleans, LA5,2415,70254,00047,000125,0781,285,359
83Madison, WI3,27317,2021,922,889990,81149,900619,399
83Moreno Valley, CA2,80490252,50018,667,465136,460109,145
85Columbus, GA3,6673,395388,324346,239991,368433,647
86Garland, TX2,4123,92368,5113,429,540528,157645,095
87Boston, MA45335,79212,452,005355,858920,369202,987
88Oakland, CA1,32115,3071,535,0721,813,101581,658220,413
89Detroit, MI3035,9381,790,0846,666,464516,127150,540
90Long Beach, CA1,1424,627915,1033,220,593701,385123,560
91San Bernardino, CA652249201,48314,082,644247,83791,465
92Hialeah, FL1,0273,822102,1016,364,198397,640355,051
93Fremont, CA2,1116,526258,1504,508,328203,75168,600
94Chula Vista, CA2,8838,18666,855112,780369,913617,995
95Santa Clarita, CA4,2541,13091,3711,337,909113,077144,238
96Newark, NJ597,2881,779,5432,333,850150,250496,643
97Oxnard, CA7083,11242,1883,374,872282,83490,271
98Toledo, OH2211,093163,585617,443468,779604,560
99Modesto, CA25911439,5662,029,552398,412260,095
100Worcester, MA240747197,903853,014206,109402,536
StorageCafe analysis of data from the U.S. Census Bureau, Yardi Matrix and Commercial Edge

Expert opinions:

Mark Stapp, Fred E. Taylor Professor of Real Estate, W. P. Carey School of Business

What factors contribute to the regional differences in real estate development in the United States?

Employment and migration patterns which are the result of lifestyle choices, tax rates (personal and business), overall cost of living and doing business. Employment typically drives population growth (or decline) and in some areas retirement migration is a factor — for example in Florida (#1) and AZ (#2). There is not as much retirement population growth in Texas but very high population growth due to employment.

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Will the present economic circumstances, such as inflation and supply chain challenges, have a significant impact on the real estate industry in the upcoming years?

They will persist. Real estate is a lagging activity. Much of what you see in terms of construction activity is the result of decisions made before interest rate hikes. Those hikes caused a slowdown in underwriting new projects and the impact of those decisions will be a tight supply market in 18 to 24 months. Real estate is essentially a service subject to demand. If demand due to economic activities continues and growth in supply is delayed, prices for that space will be pushed upwards.

In the near future, which real estate sectors are projected to experience the most growth?

It depends on the region and the economy. Barring systemic economic shocks, credit markets will stabilize, rates will become normalized and underwriting will again pick-up. Single- and multi-family, including built-to-rent, will pick up due to a long period of underbuilding in the country. A similar situation holds true for affordable housing, industrial space and bioscience and medical office space, due to onshoring and nearshoring, data centers, mobile home parks and mini-storage.

Norm Miller, PhD │ Ernest Hahn Chair and Emeritus Professor of Real-Estate Burnham-Moores Center for Real Estate
University of San Diego, Knauss School of Business

What factors contribute to the regional differences in real estate development in the United States?

We have had for decades, and continue to have, a general migration of the population to the south and west of the US.  In fact, in the New England states, populations will soon be declining.  Our population growth rate without immigration is approaching .1% that is 1/10th of 1% per year, the lowest ever. Most of the population increase is coming from elderly whites and Hispanics. Immigration as a source of labor has been reduced in the past six years and it is not evenly distributed.

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We see domestic net migration hotspots including Austin, Jacksonville, Raleigh, Phoenix, Tampa, San Antonio, Charlotte, Tucson, Riverside, Oklahoma City and Denver, with Las Vegas (a prior hot spot) moving out of the top ten, but still strong along with Nashville and Orlando. On a relative basis, Boise is doing great. Higher tax rates in California have hurt that state, while they have helped Texas, Nevada and Washington. High property taxes also hurt New Jersey and the city of Chicago.

Overly burdensome affordable housing requirements have hurt the profitability of developing in California and some other markets, which will only restrict supply and make the problem worse in the long run. There are well managed cities out there, such as Denver and Cincinnati, but this is an exception, and many cities face pension liabilities that will be impossible to meet in the next decade.

Will the present economic circumstances, such as inflation and supply chain challenges, have a significant impact on the real estate industry in the upcoming years?

Supply chain problems, while much better now than a year ago, will linger for some time. Most of the problem is now labor shortages more than material shortages. This will not change anytime soon unless we give more priority to skilled labor. Inflation will come down slowly as fuel prices decline and should be much improved by the end of 2024. This will allow interest rates to decline, but higher interest rates and tighter underwriting right now with more equity required is driving up the cost of capital. This will lower commercial real estate values for a while, and until sellers accept the reality, we will see low volumes in 2023. The lower new supply rates in 2023 and 2024 will mean higher-than-average rents in 2024 and beyond for a while.

In the near future, which real estate sectors are projected to experience the most growth?

My favorite sectors are data storage centers (cloud servers), multifamily, self-storage, micro-fulfillment centers, and select office conversion and retail conversion.

Doug Ressler, Business Intelligence Manager, Yardi Matrix

Doug Ressler, Business Intelligence Manager, Yardi Matrix
Doug Ressler, Business Intelligence Manager, Yardi Matrix

Which asset classes do you think will perform best in 2023?

In the face of the recent headwinds felt across the real estate sector, industrial, multifamily and self storage remained the most preferred commercial assets. In the first quarter of 2023, institutional and cross-border investors were net buyers, while private investors and REITs were net sellers.

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What is the current outlook for the self storage market?

The self storage sector is currently performing well with new supply at healthy levels and demand stabilizing after the pandemic-induced spike. Street rates are still down year-over-year but the drop is moderating as the prime moving season kicks in. In fact, the average rent for a standard unit is slightly up from the previous month and now sits at $127 per month.

What are the potential road bumps the self storage sector faces in the near future?

Although the self storage sector is currently in good shape, there are some potential risks on the horizon. The impact of the tightening financing conditions and still elevated construction costs will most likely be felt in the next few years. We may see a decrease in construction starts, which in turn could cause a slowdown in the delivery of new self storage facilities in 2024 and 2025. While this is a possibility, it is important to note that the industry has weathered recessions before and has proven to be a resilient sector.


This analysis was done by StorageCafe, an online platform that provides storage unit listings across the nation.

We analyzed new construction data for the country’s 100 largest cities in terms of population. We eliminated the following cities due to a lack of data: Charlotte, NC, Memphis, TN, Anaheim, CA, San Juan, PR, Lexington, KY, Stockton, CA, Santa Ana, CA, Fort Wayne, IN, Laredo, TX, Arlington, VA, Enterprise, NV, Spring Valley, NV, Huntsville, AL, Fayetteville, NC, Fontana, CA, Honolulu, HI, and Yonkers, NY.

The period for which we analyzed data was January 2013 to December 2022.

Construction activity was quantified and evaluated based on square footage in the case of commercial assets (industrial, office, retail and self storage) and on building permits in the case of residential units. We analyzed unit count data from U.S. Census building permit records and we deemed it a relevant indicator of the housing market activity that allowed us to visualize the market's evolution in relation to household formation.

At a national level, 94% of the single family permits and 72% of the multifamily permits translate into completions.

The overall ranking of the cities in terms of real estate market activity was calculated as an average of the individual rankings for each of the following metrics:

Fair use and distribution

This study serves as a resource for the general public on issues of common interest and should not be regarded as investment advice. The data is true to the best of our knowledge but may change if amendments to it are made. We agree to the distribution of this content but we do require a mention in return for attribution purposes.


Maria Gatea is a real estate and lifestyle editor for Yardi with a background in Journalism and Communication. After covering business and finance-related topics as a freelance writer for 15 years, she is now focusing on researching and writing about the real estate industry. You may contact Maria via email.

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