More important than finding out where the highest-growth metros are today is knowing where they will be tomorrow. The housing market has been a strong barometer of which metros will attract developers. Household growth hot spots attract all types of development from office park to retail to strip malls.
Among the recent positive economic barometers that started the new year was this: Housing construction is at its highest level in four years, partly attributable to growing confidence among home builders. Clients like Lennar have been actively buying up vacant tracks of land, driving demand for Phase I environmental site assessments while land prices were still low—and are now starting to break down in the most promising metros. Where exactly are those metros?
Houston and Atlanta top the list of metros leading projected household growth through 2017, according to the latest forecast data from the market research firm, Pitney Bowes Software. Houston alone is looking to add more than 140,000 new households over the next five years with Atlanta a distant second at a forecast of 110,000. Washington, DC rounds out the top three.
The majority of the metros expected to grow most rapidly over the near term were also hot spots over the past decade, with some exceptions. While Houston and Atlanta maintained their top spots, former magnets for developers like Las Vegas, Chicago and Orlando are being replaced by others like Washington, DC, New York City and Austin, TX that are moving up the ranking. Other areas poised to see strong household growth are Dallas, Phoenix, Riverside-San Bernardino, San Antonio, Austin and Fort Worth.
Considering that this household forecast data is relied upon by retailers, corporations and multifamily housing developers to make strategic growth decisions, it is likely that these metros will attract a fair amount of Phase I ESA demand over the next five years, particularly for consultants who serve the developer sector. Already, nine of these ten metros experienced quarter-on-quarter growth in Phase I ESA volume of 29% or more in 4Q12 (with the exception of Atlanta). If the forecast is right, these metros will continue to dominate developers’ collective attention over the next five years.