While the real estate recovery has taken hold in many of the country's largest cities, many perceived second and third tier markets are emerging as major destinations for office and industrial tenants. Some of them are being fueled by growth in natural resource production while others are growing thanks to business-friendly policies or low costs of living for workforces.
Sioux Falls, SD
Located in the southeastern part of the state, Sioux Falls is already a major destination for credit card processors due to the state's industry-friendly banking laws. The northern end of the community holds a business park with call centers for such major financial institutions as Citibank, HSBC and Wells Fargo. However, Sioux Falls has a business friendly tax climate with no corporate income tax and no personal income tax. This is fueling growth in many sectors. Sioux Falls is also a major regional center that is home to a new Sanford health campus that is being developed to rival the Cleveland Clinic and Mayo Clinic as well as the largest shopping mall between Minneapolis and Denver.
Vernal, UT
While Vernal is an emerging destination on its own merits, it's also a symbol of a larger trend in the United States -- energy boom towns. With the discovery of new oil and gas fields coupled with new technologies that extend the life of existing fields, communities from Rock Springs, WY to Elk City, OK are experiencing growth. As these communities emerge, the primary demand will be for industrial space to support oilfield and gas field operations. However, over time, some will emerge as regional centers with significant population growth. After all, Houston, Dallas and Los Angeles were all oil towns at one point in their history. Midland, TX and Casper, WY are excellent examples of this since they have all grown large enough to support industries above and beyond energy, and Williston, ND is in the process of attracting major tenants.
Chattanooga, TN
Once made famous by a song about a train, Chattanooga's emergence comes from another form of transportation -- Volkswagen cars. The recent opening of the first US-based VW plant added approximately 11,500 jobs to the market -- only 2,000 of which are with VW. Other companies, including Alstom Power, have already followed suit.
Elko, NV
Long known as a regional ranching center and home of the Cowboy Poetry Festival, Elko is growing thanks to gold mining. At the same time, it also enjoys favorable tax treatment like the rest of the state of Nevada and a location on Interstate 80 that makes it within a day's drive of San Francisco, Reno, Sacramento and Salt Lake City. As with many of the energy boom towns, Elko's growth is largely industrial at this point but its growing population should fuel additional office development as well.
Omaha, NE
Home to Warren Buffett and his Berkshire Hathaway company, Omaha is a sleeper city for office growth. Without attracting a great deal of attention to itself, it has built a highly educated workforce that spans multiple fields of industry. At the same time, it enjoys a low cost of living, low occupancy costs for office tenants, and a central location at the intersection of Interstates 80 and 29. The city is also well served by rail, befitting the headquarters of Union Pacific, the country's largest railroad.
