How US city trends compare with the rest of the world in terms of economy, real estate and populations.
Speed of US recovery sees its investors back in driving seat
The US economy is in its fifth year of recovery – having moved out of recession it grew at a faster-than-world-average rate in 2014 and significantly out-paced the European Union (see fig. 1).
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As a consequence, real estate investment and development became fundable in many US locations where it had remained moribund since 2008.
Economic recovery and the tapering of quantitative easing have seen a pick up in the dollar exchange rate against a basket of world currencies, notably the euro (see fig. 2). This has put US companies back in the driving seat when it comes to making overseas investments, both in new set-ups, scale-ups and start-ups, and in real estate purchase and leasing.
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US cities are some of the biggest markets for property owners
Global investors and occupiers are now more focused on the US as a region as it looks relatively sheltered from some of the headwinds blowing across the rest of the world. It may have remained longer in recession and seen its real estate markets fall significantly after 2007, but both the economic and real estate recovery have been marked.
US cities did not have the highest levels of cross-border inward investment in real estate during 2014 – that honour belongs to London and Paris – but they do have among the highest levels of overall investment (see fig. 3).
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This is because the size of the domestic real estate market is the largest in the world. New York tops the league at $44.8 billion in big deals in 2014, while Los Angeles and San Francisco were the fourth and fifth most invested world cities at $23.2 billion and $21.5 billion respectively.
Most of these big deals were indigenous: US property owners selling to US property buyers. This makes the US cities some of the biggest world markets but with far less reliance on global players than other world cities.
San Francisco and Miami set for double-digit population growth
The rate of economic growth in US cities over the past five years has generally not been as rapid as in many of the other cities that we look at, but they may have more wind left in their sails as a result.
US cities generally represent stable, ‘old world’ rates of economic growth, but have also been suppressed of late by the broader economic malaise experienced through the rest of the country. The out-performer has been San Francisco, which has led the US tech-based economic recovery.
Most notable is the forecast rate of population growth that San Francisco and Miami are set to see in the next 15 years, which approach those forecast for Shanghai and London (see fig. 4).
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Meanwhile, Chicago, Los Angeles and New York, with a metro population of 43 million between them, are set to show slower population growth, but already have critical mass to easily compete on the economic stage of world metropolises.
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