A 24-hour city is a densely populated urban hub where work, commerce, and culture happen around the clock. What makes these cities such hubs of nonstop activity? Let's take a look at what defines 24-hour cities and why they're so attractive to investors.
The cities that don't sleep
There are big cities, and there are certainly bustling cities, but what in particular makes a city earn the 24-hour city moniker? In his presentation on 24-hour cities at the 9th RED Business Forum in Athens, Greece, in 2014, Hugh F. Kelly, PhD, CRE, stated a city must fulfill at least four of the following measurable criteria:
- More than 13% of road traffic occurs between 9 p.m. and 5 a.m.
- More than 25 round-the-clock drug stores within a 10-mile radius of the city center
- A population density of 9,000 or more per square mile
- More than 38% of commuters don't use a car to travel to work
- A crime rate less than 6,000 per 100,000
- A Regional Distinctiveness Rank (an established research measure) higher than 20
In the U.S., cities that fit this definition are the following:
- Las Vegas
- New York
- San Francisco
- Washington, D.C.
While New York is undoubtedly the city most people think of when it comes to a 24-hour economy, it's far outpaced worldwide by other mega-cities like Tokyo, Cairo, London, and Paris, to name just a few.
24-hour vs. 18-hour cities
24-hour cities are among the first-tier cities, noted for their highly developed urban areas, strong economies, and many desirable attractions, including a vibrant cultural and recreational scene. Real estate is at a premium there because there's so much demand for housing and commercial space, which is why investors always have their eyes on these big cities.
Based on economic development, including strong housing and employment growth, there are other destinations known as 18-hour cities that are aiming to join the 24-hour city list. The Urban Land Institute describes 18-hour cities as small to mid-sized cities where the urban population growth is above average and the cost of both living and doing business is low. These cities are actively developing metropolitan areas, making them also highly desirable for investors.
The growing category of 18-hour cities with good job growth and housing opportunities includes the following:
- Boise, Idaho
- Charleston, South Carolina
- Charlotte, North Carolina
- Columbia, South Carolina
- Dallas/Ft. Worth and Austin, Texas
- Nashville, Tennessee
- Portland, Oregon
While 18-hour cities are considered second-tier cities because of their populations (usually under a million people), they are like their 24-hour siblings in that they have a lot to offer residents. Millennials especially are drawn to 18-hour cities because of job growth and a host of recreational opportunities.
The advantages of investing in 24-hour cities
Investors seek out opportunity, and there is plenty of it in 24-hour cities. Here is just some of the big-city allure that attracts residents and employers alike:
- An expansive business district.
- Restaurant, bar, and nightlife options that don't close down at midnight.
- A vibrant arts scene with many cultural institutions.
- A large public transportation system.
- Professional sports teams.
- Public space for recreation.
- A wide variety of hospitality options, including five-star hotels.
Properties might come at a premium in 24-hour cities -- but so do the returns. Currently, the average rent of a 1-bedroom apartment in New York City is $2,350. This is down 22% from last year because of the pandemic, which saw many residents retreating from big cities. Even so, this figure is much higher than the average U.S. rent, which was $1,617 in 2020. In simple terms, because there is so much going on in a big city like New York or Chicago, there will always be a demand for real estate.
24-hour cities during the pandemic
Unfortunately, much of the hustle and bustle that attracts consumers and investors to 24-hour cities was put on lockdown during the COVID-19 pandemic. Office space emptied out, and many residents escaped to the suburbs and smaller towns where they could more easily socially distance themselves.
Despite a dismal 2020, experts say the trend of younger generations wanting to live in the big cities will continue. The vaccine will help people get back to work and back to having fun -- all of which is good news for investors.
The bottom line
Even though the lights on Broadway have dimmed and office buildings are eerily empty, the coronavirus does not spell the end of New York or other 24-hour cities. The coronavirus vaccine, plus improved methods of air ventilation in commercial buildings, will revive big cities and returns for investors.