Urban Futures - Monitor v1.1.1
Texas leads the 2035 outlook due to massive water and grid investments ($1B annual water fund) and high-tech manufacturing, though federal solar delays pose risks. Coastal cities face a housing/homelessness crisis worsened by a major federal funding cut (down to 30%), while Chicago sinks to the bottom of the rankings following acute fiscal gridlock and a negative credit outlook.
Diff to Prior: Topic state updated to version 1.1.1. Key developments and new information incorporated.
Executive Summary:
Topic State: U.S. Urban Competitiveness—2035 Outlook Rankings
Rank 1 — Texas (statewide)
2035 outlook: Growth | Outlook score: 79/100 | Confidence: Medium‑High | Momentum: Up
• Housing capacity and affordability: Permitting and completions remain strong in the fastest‑growing large‑state markets; affordability advantage persists relative to coastal peers despite higher mortgage rates. Local reforms vary by metro, but the growth runway remains long given continued greenfield and infill supply.
• Homelessness, public safety, and disorder: Statewide conditions vary widely by metro; homelessness remains materially lower than West Coast peers on a per‑capita basis, though fast‑growing metros face rising shelter demand.
• Core infrastructure: Sustained highway and freight investments continue via TxDOT (Texas Department of Transportation) programs; water infrastructure is a new swing factor as statewide funding scales up. Proposition 4, approved by voters in November 2025 with 70.42% support, dedicates USD 1 billion annually (starting September 2027) from state sales tax revenue to a Texas Water Fund over 20 years, representing the largest single water infrastructure commitment in state history. TWDB (Texas Water Development Board) awards point to multi‑year delivery pipelines; however, data‑center water demand is projected to reach 399 billion gallons by 2030, potentially consuming 7% of total state water supply, creating a new constraint on growth planning.
• Climate resilience and insurance markets: Exposure to severe convective storms, hail and tropical systems is among the nation's highest; NOAA/NCEI (National Oceanic and Atmospheric Administration/National Centers for Environmental Information) data show persistent billion‑dollar disaster frequency for Texas. Insurance availability remains generally better than California/Florida but premium pressure is elevated.
• Energy and grid reliability: ERCOT (Electric Reliability Council of Texas) projects adequate reserve margins with rapid renewable and battery additions but remains weather‑sensitive; PUCT (Public Utility Commission of Texas) advanced a market redesign (Performance Credit Mechanism) to incent new firm capacity. However, federal policy headwinds present a material risk: over 13 GW (approximately 50%) of planned 2026 solar and storage capacity face delays or cancellation due to permitting slowdowns, tax credit rollbacks, and policy uncertainty; the 2027 pipeline (22.5 GW of 26 GW planned) faces similar jeopardy. Track SARA (Seasonal Assessment of Resource Adequacy) updates, new thermal announcements, and federal permitting timelines.
• Innovation and industrial base: Statewide manufacturing and data‑center momentum is strong; Samsung's Taylor cluster secured up to USD (U.S. Dollars) 6.4 billion in CHIPS funding toward a USD 40+ billion program, anchoring advanced‑node logic, packaging and R&D.
• Population and mobility: Texas continues to lead national net in‑migration, sustaining labor‑force growth and air/port throughput across major hubs.
• Governance effectiveness and fiscal health: State finances and bond market access remain supportive for big‑ticket programs (water/grid/transport); implementation capacity will be the swing variable at local sponsors.
• Real estate and downtown recovery: Office vacancy remains elevated in Austin and other metros versus 2019, but industrial absorption and housing starts are offsets; watch interest‑rate path and conversion policy experimentation.
• Texas—statewide signals only: Multi‑billion‑dollar water and grid capital stacks (Texas Water Fund; ERCOT market reforms) and landmark CHIPS awards are the core 2035 trajectory shapers.
Rank 2 — New York City
2035 outlook: Stasis tilting to Growth | Outlook score: 67/100 | Confidence: Medium | Momentum: Up
• Housing capacity and affordability: City of Yes for Housing Opportunity and the new 485‑x tax incentive (replacement for 421‑a) plus the 467‑m office‑to‑residential program materially expand entitlement and feasibility, including conversion of 5 Times Square to up to 1,250 homes (313 income‑restricted).
• Homelessness, public safety, and disorder: Shelter census remains very high; Comptroller and DHS (Department of Homeless Services) reporting show shelter use above 100,000 mid‑2025, driven in part by asylum seekers.
• Core infrastructure: Congestion pricing remains paused amid litigation, clouding MTA (Metropolitan Transportation Authority) capital; however, Second Avenue Subway Phase 2 advanced contract awards with FTA (Federal Transit Administration) oversight and prior FFGA (Full Funding Grant Agreement).
• Climate resilience and insurance markets: Coastal flood and heat adaptation remains a long‑horizon investment need; track BRIC (Building Resilient Infrastructure and Communities) and WIFIA (Water Infrastructure Finance and Innovation Act) awards. NOAA/NCEI disaster tracking contextualizes rising hazard frequency nationally.
• Energy and grid reliability: NYISO (New York Independent System Operator) warns of tightness during extreme conditions; resource additions and transmission buildouts remain priority to meet electrification goals.
• Innovation and industrial base: Manhattan's office market shows improving absorption and falling sublease supply; leasing momentum is concentrated in top‑tier assets.
• Population and mobility: NYC posted an estimated gain of 87,000 residents between July 2023–July 2024; ports and airports continue to recover throughput.
• Governance effectiveness and fiscal health: Budget gaps persist but planning transparency is improving; monitor OMB (Office of Management and Budget) financial plan updates for recurring‑gap closure.
• Real estate and downtown recovery: Manhattan office vacancy eased to 22.0% in Q3 2025 with positive YTD absorption; conversion pipeline is expanding in Midtown and FiDi.
Rank 3 — Seattle
2035 outlook: Stasis | Outlook score: 61/100 | Confidence: Medium | Momentum: Mixed
• Housing capacity and affordability: State‑level middle‑housing law (HB 1110) and pending Seattle comp plan updates point to incremental capacity; delivery risk remains tied to cost inflation and permitting timelines.
• Homelessness, public safety, and disorder: King County's 2024 PIT (Point‑in‑Time) estimate increased to 16,868 people across sheltered and unsheltered populations; the 2025 statewide tally rose modestly. A major federal policy shift (November 2025) restricts Continuum of Care funding for permanent supportive housing to 30% of total allocations (down from approximately 87%), potentially displacing thousands from stable housing across the region and affecting up to 170,000 nationally. Capacity and governance reforms at KCRHA (King County Regional Homelessness Authority) remain a watch item alongside urgent advocacy for federal policy reversal.
• Core infrastructure: Sound Transit's Eastside (2 Line) and Lynnwood Link openings expand regional rail reach; continued ST3 schedule risk persists on later segments.
• Climate resilience and insurance markets: Wildfire smoke, heat and flood risks are rising but insurance availability remains comparatively stable; continue tracking BRIC grants and local levee/culvert programs.
• Energy and grid reliability: UTC (Washington Utilities and Transportation Commission) adopted integrated system planning rules to align gas/electric portfolios with reliability and decarbonization; monitor PSE (Puget Sound Energy) IRP (Integrated Resource Plan) updates.
• Innovation and industrial base: Cloud/AI incumbents maintain a deep footprint; industrial and export sectors remain competitive via Sea‑Tac and the ports.
• Population and mobility: Regional population has resumed growth; Link ridership uplift expected from new segments; SPD (Seattle Police Department) crime dashboard shows granular trend tracking for public safety.
• Governance effectiveness and fiscal health: The City closed a major 2025 gap without new broad‑based taxes; execution and 2026 endorsed budget are the near‑term tests.
• Real estate and downtown recovery: Office vacancy is elevated (mid‑20s percent metro‑wide), though sublease space has peaked; conversions and lab demand remain selective.
Rank 4 — Bay Area (San Francisco–Oakland–San Jose)
2035 outlook: Stasis | Outlook score: 58/100 | Confidence: Medium | Momentum: Diverging (AI‑led strength vs. civic/fiscal stress)
• Housing capacity and affordability: The planned USD 20 billion regional housing bond was pulled from the 2024 ballot; statewide reforms continue (e.g., SB 79, transit‑area streamlining), but regional funding alignment is a constraint. In San Francisco, pro‑housing zoning reforms face political headwinds: recall threats against supervisors supporting Mayor Lurie's 'Family Zoning' plan have emerged, creating uncertainty for developers and potentially chilling progress on the state‑mandated 82,000 new units by 2031.
• Homelessness, public safety, and disorder: Conditions vary across counties; PIT counts remain high in core jurisdictions and service capacity is stretched.
• Core infrastructure: Caltrain electrification entered service in 2024, improving corridor reliability and O&M (Operations and Maintenance) economics, and delivering a 47% ridership increase; however, the agency faces a USD 900 million annual structural deficit from 2027 onward if a regional funding measure fails in 2026, threatening closure of one‑third of stations, 9 pm service end, and elimination of weekend service. BART ridership recovery remains gradual.
• Climate resilience and insurance markets: Wildfire, flood, and heat adaptation needs remain large; NOAA/NCEI disaster data underscore regional hazard exposure.
• Energy and grid reliability: CAISO (California Independent System Operator) storage buildout continues to support summer reliability; regulatory focus remains on resource adequacy and rate impacts.
• Innovation and industrial base: AI is a material bright spot; OpenAI/Anthropic/Sierra and others expanded footprints, driving millions of square feet of leasing in 2025 and fueling an innovation jobs base.
• Population and mobility: San Francisco County continues to lag regional peers on population recovery; broader Bay Area metros are stabilizing.
• Governance effectiveness and fiscal health: San Francisco faces large structural gaps into the out‑years; proposed cuts and workforce reductions aim to right‑size.
• Real estate and downtown recovery: San Francisco office vacancy remains among the nation's highest (mid‑30s percent range), though AI leasing is starting to chip away at availability.
Rank 5 — Los Angeles
2035 outlook: Stasis | Outlook score: 55/100 | Confidence: Medium | Momentum: Improving on safety and mobility; fiscal/insurance headwinds
• Housing capacity and affordability: State‑level streamlining near jobs and transit (e.g., SB 79, signed October 2025) can unlock substantial infill by 2035; watch local ED‑level streamlining and affordable‑pipeline financing to convert approvals into starts.
• Homelessness, public safety, and disorder: LAHSA (Los Angeles Homeless Services Authority) reported the second straight annual decline in 2025: countywide −4% with unsheltered down −9.5%; 2024 data showed declines in unsheltered and rising shelter capacity. LAPD (Los Angeles Police Department) YTD snapshots show continued improvement in several violent‑crime categories.
• Core infrastructure: The LAX/Metro Transit Center Station opened June 2025; D Line (Purple) segments target mid‑2026 openings with Section 3 in 2027; the LAX APM (Automated People Mover) now targets 2026 after schedule resets.
• Climate resilience and insurance markets: California's urban‑wildland interface and heat‑risk trajectory keep resilience and insurer participation in focus; track state insurance reforms and local BRIC/WIFIA wins.
• Energy and grid reliability: CAISO notes growing battery capacity; analysts still flag stress under extreme heat events; Diablo Canyon life‑extension and storage help bridge to 2030.
• Innovation and industrial base: Ports throughput remains a strength; Port of Los Angeles posted a record quarter in Q3 2025 amid early holiday‑import shifts. LAX passenger recovery continues.
• Population and mobility: Census Vintage 2024 shows Los Angeles among the nation's largest numeric gainers 2023–2024; Metro rail/bus extensions should lift ridership into the late decade.
• Governance effectiveness and fiscal health: Budget pressure is real but managed; FY2025‑26 status reports highlight tight balances and risk monitoring; medium‑term surpluses depend on revenue recovery and cost discipline.
• Real estate and downtown recovery: DTLA office vacancy reached roughly one‑third of inventory; countywide vacancy near 24% with sublease stock starting to recede—conversions and creative reuse are pivotal.
Rank 6 — Chicago
2035 outlook: Stasis trending to Decline | Outlook score: 48/100 | Confidence: Medium | Momentum: Down on fiscal/office; steadier on industrial and transit megaprojects
• Housing capacity and affordability: Relative affordability is a regional strength; permitting pace is steady but large‑scale zoning reforms are limited compared with coastal peers.
• Homelessness, public safety, and disorder: Conditions have improved versus pandemic peaks in several categories, but rider safety perceptions remain a headwind for transit recovery.
• Core infrastructure: The CTA (Chicago Transit Authority) Red Line Extension advanced with significant federal commitments; governance continuity post‑leadership change is a watch item for delivery.
• Climate resilience and insurance markets: Severe storm and flood resilience investments remain critical; insurance availability more stable than coastal states, though premiums have risen.
• Energy and grid reliability: ComEd/ICC (Illinois Commerce Commission) grid‑modernization oversight continues; reliability acceptable but capital needs are large as electrification rises.
• Innovation and industrial base: Industrial fundamentals are comparatively healthy, with vacancy around mid‑single digits and improving utilization across logistics nodes.
• Population and mobility: Cook County's long‑term population is roughly flat to slightly down; sustained labor‑force attraction remains an open question.
• Governance effectiveness and fiscal health: S&P revised the City's GO (General Obligation) rating outlook to negative in November 2025, citing structural gap risks and persistent budgetary imbalance. Mayor Johnson's FY2026 budget proposal (USD 16.6 billion) failed a key committee vote (25–10) on November 17, 2025, rejecting USD 600 million in new tax measures including a proposed USD 23 per-employee head tax on large employers. This represents acute governance gridlock and signals difficulty in closing a multi‑year structural gap estimated at USD 1.19 billion—a critical test of mayoral and council capacity through FY2026 and beyond.
• Real estate and downtown recovery: CBD (Central Business District) office vacancy remains very high (mid‑20s percent), with modest improvement in absorption but muted rent growth; conversions are selective.
What to watch next (cross‑market triggers tied to 2035 trajectories)
• Housing: Any citywide upzoning or incentive that credibly unlocks 10,000+ units; proof that conversion programs in NYC/SF/LA pencil at scale.
• Safety: 2025–2026 PIT (Point‑in‑Time) updates and court decisions affecting street enforcement and behavioral‑health siting; also track federal Continuum of Care policy reversal potential.
• Infrastructure: Major transit/water projects hitting FONSI/ROD (Finding of No Significant Impact/Record of Decision), FFGA, or financial close milestones ≥ USD 1 billion; Caltrain and regional Bay Area funding measure outcomes in 2026.
• Climate/insurance: Material insurer withdrawals or moratoria, or big BRIC/WIFIA awards in monitored metros; NOAA/NCEI data shifts as federal series maintenance policies change.
• Energy and grid: ERCOT/CAISO/NYISO emergency alerts, large‑scale storage/thermal additions ≥ 500 MW; federal solar and storage permitting timelines and tax credit policy.
• Fiscal health: Bond rating actions and multi‑year budget gap closures or new gaps ≥ 5% of the general fund; Chicago budget negotiation outcomes.
Sources cited or referenced for today's state
• Housing/land use: NYC City of Yes; 485‑x and 467‑m conversion framework; San Francisco Family Zoning political headwinds.
• Homelessness: LAHSA 2024–2025 results; NYC shelter reporting; King County PIT; federal Continuum of Care policy shift (November 2025).
• Infrastructure/transit: MTA SAS Phase 2 monitoring; LAX/Metro projects; Caltrain electrification and structural deficit; Sound Transit openings.
• Energy/grid: CAISO summer assessments; NYISO reliability outlook; ERCOT market design and federal solar/storage deployment risk.
• Industry/trade: Port of Los Angeles TEUs; Manhattan and Bay Area office/AI leasing momentum.
• Fiscal/ratings: NYC OMB updates; San Francisco fiscal outlook; Chicago S&P outlook change and FY2026 budget vote failure.
• Water: Texas Proposition 4 passage; data‑center water demand projections.
Notes on cadence and volatility
• Housing and Safety subtopics can move quarterly with policy decisions and annual with PIT counts; Infrastructure, Energy, and Climate are multi‑year arcs but punctuated by milestone triggers; Governance and Real Estate shift with quarterly budget and market prints. This ranking will be updated as those triggers fire.
Key Developments:
- Realtor.com's 2026 housing market forecast highlights geographic shift, with implications for long-term affordability and growth in monitored cities like Los Angeles and Seattle. https://prnewswire.com/news-releases/realtorcom-reveals-the-top-housing-markets-for-2026-302637142.html
- AARP's 2025 Livability Index ranks top U.S. communities, providing insights into livability factors including housing and safety for cities including New York City and Chicago. https://press.aarp.org/2025-12-09-New-AARP-Livability-Index-Shows-Americas-Top-Scoring-Livable-Communities-in-2025
Change Log:
- No changes recorded
Published: 2025-12-11 04:21:44 UTC