by Jennifer Popovec

You never know when a dark horse is going to score big. This past June, at the Belmont Stakes in upstate New York, underdog Da’ Tara outran favorite Big Brown, stealing the horse’s chance to be the first in 30 years to claim the coveted triple crown. Now, the real estate market is proving to have a few dark horses of its own.

Developer identified six markets that are hot spots for development based on Moody’s Economy.com forecasts for cities with the highest projected job growth over the next 12 months and low unemployment rates—both of which point to high demand for employees and a competitive situation for employers. Interestingly, none of these markets are major metros. Instead, the markets that are primed for the biggest job gains are small, off-the-beaten path markets that rarely show up on any developer’s hit list.

“Most larger cities will not experience the same rapid job growth as a smaller area that is growing in population and attracting new businesses to the area,” says Nathan Topper, an economist with Economy.com of West Chester, Pa. That’s why we’re calling these cities dark horse markets. They might not be well known, but these cities could turn out to be winners for the developers who are smart enough—and gutsy enough—to bet on them.

Billings, Mont.

Growth industries
»Mining, manufacturing and construction, as well as consumer services and business/professional services.
For example, GE Commercial Finance recently decided to locate an operations center in the city and plans to hire more than 250 new employees. The city provides a number of medical facilities to serve the regional population of 400,000. Tourism is also a significant contributor to Billings’ economy—2 million visitors pass through the city annually as it’s one of the big cities closest to Yellowstone National Park.

Sectors primed for development
»Billings’ population is growing by about 3,000 people per year, according to Economy.com. This surge has created the need for single-family and multifamily housing, particularly affordable housing, says Linda Beck, director of business outreach and recruitment for Billings, Mont.-based Big Sky Economic Development Corp. Additionally, more rooftops are creating the need for more service retail. On the commercial side, Billings’ office building occupancy is strong—right at 5 percent, according to local real estate firm NAI Business Properties - which indicates an opportunity for office developers.

Notable projects
»A 48,289-square-foot building for GE Commercial Finance is under construction at the Trans Tech Center, a high-tech industrial park; Carlsbad, Calif.-based Foursquare Properties is developing South Billings Center, a 440,000-square-foot retail center anchored by Cabela’s; and the 80-acre Shiloh Crossing retail project is also under construction.

Government incentives
»State incentive grant funds; state workforce training grant; and low-interest, fixed-rate capital and infrastructure loans.

Bet you didn’t know
»Eastern Montana has the largest coal reserves in the nation and boasts a palladium mine, the only place in the United States where the mineral used in catalytic converters is found. Recently, Best Life magazine voted Billings as the third best city in America to raise children after Honolulu and Virginia Beach, Va.

Fast Facts

■ Closest big city: Calgary, Alberta, Canada
■ Population: 100,000
■ 2008-2009 job growth: 3.66%
■ Unemployment rate: 2.9%
Sources: Big Sky Economic Development Corp.; Economy.com; U.S. Bureau of Labor Statistics

Bowling Green, Ky.

Growth industries
»Automotive manufacturing has become a bastion of Bowling Green’s economy. A number of first- and second-tier suppliers have established operations in the city to be accessible to assembly plants in Tennessee and South Carolina, says Jim Hizer, president of the Bowling Green Chamber of Commerce. Ford Motor Co. and General Motors both have operations in the city, along with Bowling Green Metal Forming, one of the largest auto supply companies in the world. The city also is home to Western Kentucky University.

Sectors primed for development
» The city recently completed a plan to revitalize 17 downtown blocks near Western Kentucky University. Over the next 15 years, the city plans to obtain public and private investment of more than $200 million. The redevelopment plan calls for hotel, retail, residential, and office space, and the city is looking for developers who are interested in partnering with the city to transform downtown Bowling Green. There are also opportunities in the Kentucky Transpark, a 600-acre industrial park.

Notable projects
»Construction is underway on a new minor league baseball park, as well as the $28 million Southern Kentucky Performing Arts Center; and the local economic development authority will soon break ground on a 72,000-square-foot speculative industrial building in the Kentucky Transpark.

Government incentives
»On a case-by-case basis,developers can receive incentives such as discounted land and TIF zones, where public improvements and infrastructure are borne by the city.

Bet you didn’t know
»As a college town, Bowling Green has the second-highest secondary educational attainment in Kentucky. The city also has one of the few Certified Refugee Processing Centers in the nation, leading
to a diverse population with significant Vietnamese, Bosnian, and El Salvadorian communities.

Fast Facts
■ Closest big city: Nashville, Tenn.
■ Population: 55,000 (city); 254,800 (metro)
■ 2008-2009 job growth: 2.15%
■ Unemployment rate: 4.5%
Sources: Bowling Green Chamber of Commerce; Economy.com; U.S. Bureau of Labor Statistics

Boulder, Colo.

Growth industries
»The University of Colorado’s main campus is in Boulder, along with the National Center for Atmospheric Research and several other federal laboratories. Aerospace and alternative energy are emerging sectors, while professional and business services make up a large portion of the economic base.

Sectors primed for development
»Boulder is surrounded by open space, and land is fairly limited. However, far more land is available for development in the greater Boulder County, according to Frances Draper, president of the Boulder Economic Council. Increased retail space and single-family and multifamily housing, along with office space and hotels, will be critical as more companies and people relocate to Boulder County.

Notable projects
»Denver-based Wiens Real Estate is developing Arista, a 209-acre mixed-use project that includes office, multifamily, and retail components; a 140-room hotel—the Starwood Hotels and Resorts brand called “aloft”—is under development next door; Centura Health recently acquired 35 acres of land in Boulder County to build a 300,000-square-foot medical campus; and Siemens Energy is developing a 6,000-square foot U.S. wind turbine research and development center.

Government incentives
»None

Bet you didn’t know
»Many people consider Boulder to be the start-up capital of Colorado. The city has a high percentage of small businesses started by graduates of the in-town university. Boulder also is home to several venture capitalist firms and receives a major portion of venture capital investments made in the United States.

Fast Facts
■ Closest big city: Denver
■ Population: 103,673
■ 2008-2009 job growth: 2.7%
■ Unemployment rate: 4%
Sources: Boulder Economic Council; Economy.com; U.S. Bureau of Labor Statistics

Birmingham, Ala.

Growth industries
»The city is a hot spot for health care, medical research, and biotechnology thanks to the University of Alabama at Birmingham hospital and medical school in downtown. The city also houses a large number of banking and professional services firms.

Sectors primed for development
»The city is working to redevelop its downtown and attract more people to live in its urban core. There are a number of condos and lofts under development, but there are still opportunities for developers of downtown apartments. Additionally, many of the city’s close-in shopping centers need to be revitalized.

Notable projects
»Downtown Birmingham has more than $194 million in new, ongoing, or proposed hotel construction and renovation projects; a $150 million U.S. Social Security Administration payment processing center is under construction; Colonial Properties recently opened its $36 million Class A office tower at Colonial Brookwood Village; and a $20.6 million, 180-acre mixed-use development with 250 homes and retail space has been announced by New Hyde Park, N.Y.-based Kimco Developers.

Government incentives
»The city off ers an incentive program similar to tax abatements, according to Tracey Morant Adams, director of economic development for the mayor’s office. These incentives are negotiated on a case-by-case basis.

Bet you didn’t know
»Birmingham, which played a vital role during the Civil Rights movement, has devoted a district to honoring civil rights. The Civil Rights District is anchored by the Civil Rights Institute, which documents the history of Birmingham’s role in the movement and works to create an awareness of human rights issues worldwide.

Fast Facts
■ Closest big city: Atlanta
■ Population: 243,000 (city); 1.1 million (metro)
■ 2008-2009 job growth: 3.11%
■ Unemployment rate: 3.1%
Sources: City of Birmingham; Economy.com; U.S. Bureau of Labor Statistics

McAllen, Texas

Growth industries
»Known as the “jewel in the Rio Grande Valley crown,” McAllen benefi ts from its proximity to Mexico, says
Keith Patridge, president and CEO of locally based McAllen Economic Development Corp. Manufacturing, health care, and service industries, specifically retail, are the foundation of McAllen’s economy. Hundreds of U.S. manufacturing companies have established offices to take advantage of maquiladoras, Mexican manufacturing facilities. Beyond manufacturing, McAllen Medical Center is the largest full-service hospital in
the upper Rio Grande Valley. The city’s retailers serve a consumer base of more than 10 million people within a 200-mile radius.

Sectors primed for development
»With so many people visiting McAllen for business and leisure, the city’s hotel sector is underserved. Specifically, the city is looking to bring in four- and five-star hotels. Currently, the city is searching for a developer to construct a hotel for its recently completed $60 million convention center complex. The city also is accepting office, retail, and residential development proposals for a 40-acre site across the street
from the convention center.

Notable projects
» Simon Property Group recently completed the first phase of its lifestyle center, Palm Crossings, adjacent to
the new convention center, and the development includes 400,000 square feet of retail space anchored by
Barnes & Noble.

Government incentives
»Incentives are based upon what particular projects offer. They can include workforce training, property and sales tax abatement, retail sales tax sharing, and co-development partnerships with the city.

Bet you didn’t know
»McAllen’s La Plaza Mall, which is anchored by a Macy’s department store, is one of the top shopping malls in the nation when it comes to sales per square foot. Every year, La Plaza Mall attracts millions of wealthy Mexican Nationals, who travel to McAllen via the Hildalgo Reynosa International Bridge, the busiest pedestrian bridge connecting Mexico to the United States.

Fast Facts
■ Closest big city: San Antonio
■ Population: 140,000 (city); 1.2 million (metro)
■ 2008-2009 job growth: 2.69%
■ Unemployment rate: 5.7%
Sources: Economy.com; McAllen Economic Development Corp.

Rochester, Minn.

Growth industries
»Health care and medical research are the biggest industry sectors. The world famous Mayo Clinic is headquartered in the city. Additionally, two private hospitals, Rochester Methodist Hospital and St. Mary’s Hospital, are located there. Rochester also has a high concentration of high-tech businesses—one of the city’s biggest employers is IBM. Agriculture and agribusiness account for one-third of the jobs in the city and surrounding county.

Sectors primed for development
»Rochester is the fastest-growing city in Minnesota. The downtown office market has an extremely high occupancy of almost 97 percent, and opportunity exists for additional new space downtown. Additionally, the city needs new multifamily housing, especially near downtown, since the University
of Minnesota’s medical school is expanding its enrollment and on-campus housing is limited.

Notable projects
»The city of Rochester is building a $40 million, 150,000-square-foot office building called the Minnesota Biobusiness Center that will house Mayo Health Solutions, the clinic’s biobusiness development arm, says Gary Smith, president of Rochester Area Economic Development; also, the city has created a master plan for a downtown urban village and is looking for developers interested in building retail, multifamily, and office space.

Government incentives
»Local and state grants for employment as well as tax abatements for development.

Bet you didn’t know
»Money magazine reported that Rochester “radiates cosmopolitan style without the big city ills.” It also has one of the most extensive walking and biking trail systems in North America— the trail exceeds 45 miles and winds through the city.

Fast Facts
■ Closest big city: Minneapolis/St. Paul
■ Population: 99,000 (city); 150,000 (metro)
■ 2008-2009 job growth: 1.96%
■ Unemployment rate: 4.2%
Sources: Economy.com; Rochester Convention & Visitors Bureau; U.S. Bureau of Labor Statistics