The previous decade has undoubtedly been a challenging one. In 2010, the world was recovering from a major financial crisis. By 2020, we found ourselves at the start of a different type of global crisis — the COVID-19 pandemic. The world has seen massive upheaval during this time, but data shows population growth across many U.S. cities.
The commercial real estate sector has also thrived during the past decade. Keen to see if there’s any correlation between the two trends, 42Floors analyzed office construction data in the fastest-growing American cities between 2010 and 2020. In this brief overview, we’ll take a look at their findings across the top ten urban centers:
1. Irvine, CA
With a massive 45% increase in residents over the past decade, Irvine took the number one spot in terms of population growth across the entire country. Despite this considerable boost, it recorded only an 11% increase in new office development seeing completion over the same period. The additional 4.22 million square feet of Irvine office space saw it rank as the 28th fastest-growing city in this regard.
2. Orlando, FL
With a population increase of 29%, Orlando was the second fastest-growing city in the country over the last decade. However, while more people live in “The City Beautiful,” office space in Orlando only grew by 7%, ranking 41st of all the cities studied. Having said that, 32 new office buildings were completed during the decade, adding 2,318,088 square feet of new space to the market. While the numbers are small, this does hint at the growing investment appeal of smaller cities.
3. Gilbert, AZ
With a 29% increase in residents between 2010 and 2020, Gilbert ranks as the third fastest-growing city. In addition to this impressive stat, it takes the top spot in terms of office expansion, with an admirable 49% boost. Office space in Gilbert grew from 3.2 million square feet to 4.8 million over the decade. This comes as part of a strategy by the local administration to invest in the city’s infrastructure, safety and quality of life amenities to make it a more attractive place to live and do business.
4. Durham, NC
Taking the #4 spot in terms of population growth with an increase of 24%, Durham also saw its office space grow by 18%. Despite this, its commercial property pipeline yield only ranked 36th among the cities studied. With an additional 3,063,671 square feet of Durham office space and 27 new buildings, the local inventory rose to a little over 20 million square feet.
5. Fort Worth, TX
Fort Worth’s population grew by 24% between 2010 and 2020, ranking it the fifth fastest-growing city. Additionally, the commercial real estate sector saw a healthy 19% expansion, boasting a total of 31,850,000 square feet of Fort Worth office space by the end of 2020. The American Airlines headquarters campus accounted for 36% of the total office pipeline yield — an impressive 1.8 million square feet LEED Gold-certified complex that stretches across several buildings over 124 acres.
6. Henderson, NV
With a 23% increase in population, this municipality in southeast Las Vegas Valley has grown by close to 60,000 people over the last decade. Just 16 miles from downtown Las Vegas, the master-planned communities that the city is known for have been a massive draw for those looking for affordable housing options close to good schools, parks and job opportunities. However, this didn’t leave much room for office space in Henderson, which grew by only 8% (417,000 square feet).
7. Austin, TX
Austin is the largest city in the report and ranks as the seventh fastest-growing area with a population rise of 22% and an impressive 28% office market expansion. At the close of 2020, there were 76,554,796 square feet of Austin office space, an increase of almost 17 million square feet that saw it boast the fifth-largest pipeline yield.
8. Seattle, WA
The largest urban center in the Pacific Northwest, Seattle’s population grew by 21% over the last decade. In addition, with a whopping 31% increase in Seattle office space, the city’s commercial sector rose by 18,609,321 square feet across 85 buildings to a total of 78,485,054 square feet at the end of the decade. This saw it rank third in terms of the largest office pipeline yields.
9. Charlotte, NC
Recording a 20% increase in population, Charlotte ranks as the ninth fastest-growing city by population. In addition, it takes the #12 spot for new commercial property completed, with a 15% expansion and 8,456,383 square feet of Charlotte office space added. By the close of 2020, the city boasted 828 commercial buildings encompassing a total square footage of 66,492,711.
10. Denver, CO
Last in the top ten, Denver experienced a population increase of 19% over the last decade. During the same period, office space in Denver saw a 15% growth, bringing the city to 16th position on the list of largest urban office markets at the close of 2020. Steady growth over both vectors was witnessed in the city as well as within the surrounding metro area.
Analyzing the top ten fastest-growing U.S. cities reveals a fascinating mix of suburban areas that have been absorbed into their urban cores; emerging principal markets; and small towns that have caught the eye of both investors and residents alike.
Office development across these rapidly expanding cities is also varied. Some towns have invested heavily in attracting companies, while others seem to have been swallowed as nearby urban cores expanded business outwards. Meanwhile, others have witnessed slow commercial growth, despite rapidly increasing populations.
Indeed, over the last decade, notable office construction booms have been seen in unexpected markets, compared to the traditional urban cores of LA or NYC, for example. This doesn’t necessarily come as a surprise. As space in such areas becomes limited and prices rise exponentially, cautious investors seek more affordable alternatives.