Hot take from PGIM: NYC / Cali / DC > Sunbelt
"A coming shift in the composition of U.S. economic growth has significant implications for relative real estate market performance. If we are moving toward an economy driven mostly by productivity, the outlook is brighter for some of the laggard markets of the last cycle."
"The markets whose relative returns are positively correlated with U.S. productivity growth are largely a group of markets that are both economies driven more by productivity growth and are also markets with higher rental rates, including New York, Boston, San Diego and San Francisco."
"As productivity growth increases, these higher cost markets benefit as tenants experience less cost pressures. Higher productivity growth enables tenants to afford the higher rents in these markets and boosts relative real estate returns."
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