In Insights

By Steve Bergsman

Atlanta-based Portman Holdings has been developing projects in the cities of Atlanta, Charlotte, Denver and San Diego. The company was also part of one of the final teams vying for a redevelopment project in Miami. John Portman IV, vice president of capital markets for the company, calls some of these markets Tier 1.5 cities. In Portman’s view, Tier 1 cities are the big three, New York City, San Francisco and Washington, D.C., but there are a new group of cities that he calls “emerging hubs of diversifying economies.”

The new term Tier 1.5 is needed, he contends, because Tier 1 and Tier 2 are too far apart. Tier 1.5 economies are increasingly diversified, and one can make a strong case to institutional investors that their capital will earn good returns and their investments will trade in a profitable manner. Tier 2 cities are close but not necessarily build-and-hold markets.

True Tier 1.5 cities include such metros as Chicago, Houston, Los Angeles and Miami. The Tier 2 appellation is not universal to everything else, but only to those “emerging hub” cities such as Austin, Charlotte, Dallas, Denver, Phoenix, San Diego and Seattle. These are the cities that Portman likes.

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