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A common question in the real estate forecasting business is: what city will be the next Austin? The reality is Austin’s emergence into a top-tier market was decades in the making, supported by the University of Texas, Michael Dell, and maybe even Willie Nelson.

Austin’s evolution can be visualized by looking at the growing prominence of professional services—which includes technology and other high-value niches—within the market (the location quotient depicted in the vertical axis below), and the city’s increased relevance for advanced services nationwide (depicted on the horizontal axis). Austin’s upward sloping path is the most dramatic, but other cities deserve a close look. 

Raleigh, North Carolina, is charting a course somewhat similar to Austin’s, benefiting from world-class research universities and a diverse tech industry mix that ranges from life sciences to advanced manufacturing. It is likely that Raleigh will continue to trend in the same direction as Austin. The economies of other markets, such as Colorado’s Front Range and college towns like Madison, Wisconsin, have also evolved significantly. The Front Range has the labor force and infrastructure to emulate Austin’s growth, but Madison lacks the scale to become a more important market. 

Among larger markets, Dallas is an increasingly important professional services center nationally, although it is only one of many key sectors in the diverse local economy. Conversely, Chicago has seen a relative decline in professional services.

Life sciences has long powered San Diego’s evolution as a professional services hub. However, it has been eclipsed over the past decade by Boston, which has harnessed its unparalleled research institutions. San Francisco is an interesting case study. It thrived during much of the 1990s but then regressed, reaching a nadir in 2004.  San Francisco then revived robustly as its tech sector discovered “the next new thing,” suggesting reason for optimism for a currently beleaguered city.