Published on September 15, 2021 by Equiton Capital Inc.
Real estate professionals are increasingly interested in 18-hour cities, especially given the data from South of the Border. A recent U.S study of 18-hour cities discovered that economic and social growth led to a significant increase in property value. Eighteen-hour markets emerged as superior performers in the residential sector, with returns exceeding those in 24-hour cities.
What is an 18-hour city? Real estate investors like Equiton use the term 18-hour city to describe a mid-size city with attractive amenities, higher than expected population growth, and a lower cost of living and doing business than the bigger urban areas. The phrase 18-hour city is a new catchphrase in the commercial real estate world. Real estate investing contains a lot of moving parts, investors need to consider the asset class, purchase price, cash flow potential, and many other factors. Picking a geographic market is one of the most important considerations.
Characteristics Of An 18-Hour City
• Growing population, particularly with millennials
• Job growth, with a focus in the tech sector
• Established transit with a high percentage of residents using the service
• A vibrant, densely populated downtown area
• Low crime rate
• 24-hour conveniences
Hamilton is a premier example of an 18-hour city and one of the reasons Equiton acquired 125 Wellington Street North. Hamilton currently has one of the largest immigrant populations in Canada, drawing in professionals and students not only from abroad but also from nearby cities. Hamilton has an abundance of small businesses bolstered by McMaster University, Hamilton General Hospital and Mohawk College.
Much like Hamilton, Kitchener is also an 18-hour city which is why this past April, Equiton announced its acquisition of a multi-family residential property in Kitchener located at 100, 120 & 170 Old Carriage Drive. We capitalized on our industry expertise of investing in and buying income-producing properties in an emergent 18-hour city with the tech jobs and schools to lure bright young minds from the GTA. Kitchener has a growing downtown, excellent schools, plenty of job opportunities and amenity options that have investors and first-time homeowners migrating west. Kitchener is Ontario’s fourth-largest city and has earned a reputation as one of the largest tech economies in Ontario, attracting young talent while offering a lower cost of living than Toronto. Recent changes in the real estate market due to the pandemic are adding new energy to the phenomenon of 18-hour cities in Canada. Remote working is making it possible for homeowners to look at moving to these types of communities.
How Are 18-Hour Cities Established?
Eighteen-hour cities are created in two ways. One is gradual with the evolution of rural population into urban centres. The second way is faster with a reverse population shift in which people seek the savings and space of suburban living and can grow their own identity and create a fun culture. In Ontario, a change occurred with only 31 percent of millennials saying that they still prefer to live downtown while those that would rather live in a suburban area is already at 35 percent. Those who would like to buy a home in a town, or a small city are at 23 percent, while those who’d opt for a rural area are at 11 percent. This is based on research done by Ipsos for the Ontario Real Estate Association (OREA).
Economic Influences Of 18-Hour Cities
The economic influences and shifts caused by the pandemic mean investors need to consider diversification as a high priority. Equiton believes that’s what makes real estate investment opportunities in 18-hour cities so enticing, you can find great deals in high-quality locations like Hamilton and Kitchener and make an investment amount that suits your portfolio. As markets recover their foothold, we believe there will be an acceleration of 18-hour cities that were already attracting people.