May 21, 2025
By Wen Shiau
In investing, as in life, chasing what’s in vogue is fleeting—but fundamentals endure. At Cypress Capital Group, we don’t follow the herd: fleeing from urban centers post-COVID or rushing from San Francisco and New York to Texas and Florida. We invest in enduring ecosystems—those that consistently attract talent, capital, and culture. In 2025, as the return-to-office movement and AI revolution dominate headlines, coastal tech cities like New York and Silicon Valley are thriving, while housing markets in Texas and Florida are struggling with oversupply and rising climate insurance costs.
Three articles from today’s Wall Street Journal (May 21, 2025) exemplify our investment thesis.
First, let’s examine a cautionary tale from the heartland. As reported by the WSJ, small college towns are facing economic collapse. WSJ: Small college towns are going bust. Western Illinois University and its hometown of Macomb have seen enrollment plummet by nearly 50%. Local businesses are shuttering, dorms are abandoned, and tax revenues are drying up. While flagship universities continue to flourish, the age of broad-based higher education-driven growth is over. Location now matters more than ever, and not all communities will share equally in the next cycle of prosperity.
Second, Austin—once the pandemic-era tech boomtown—is facing a stark reversal. According to the WSJ: Austin’s reign as a tech center may be coming to an end, Big Tech employment there fell by 1.6% in 2024, and startup jobs declined 4.9%. The promise of Austin as a tech capital may have been overhyped, with the city capturing only 1% of total U.S. VC investment. As AI centralizes power in Silicon Valley and New York, talent is gravitating back to these hubs with dense networks, top-tier universities, and abundant venture capital.
Third, Europe offers a mirror of what happens when ecosystems fail to adapt. As covered in the WSJ Europe’s share of Tech industry is only 10%, despite world-class education and infrastructure, Europe is falling behind in the global tech race. Structural issues—overregulation, risk aversion, fragmented markets—are choking innovation. While the U.S. has launched hundreds of $10 billion-plus companies in recent decades, Europe has produced just 14. Talent and capital are increasingly flowing across the Atlantic.
These three stories point to a clear conclusion: innovation is clustering, not dispersing. And with that concentration comes enduring real estate opportunity. In cities like New York and San Francisco, demand remains robust, housing supply remains constrained, and the economic gravity is intensifying. These are places where AI engineers collaborate, founders build, and capital scales.
As Warren Buffett reminds us, “It’s better to buy a wonderful company at a fair price than a fair company at a wonderful price.” The same holds true in real estate—location is the cornerstone of returns in real estate.
While others pursue short-term arbitrage in overbuilt or speculative markets, Cypress Capital Group is doubling down on Silicon Valley and NY. We invest in neighborhoods where world-class talent is planting roots, where economic moats are widest, and where the future is already being written.
Let us know your thoughts: Are you seeing the same talent shifts in your city? How are they affecting local real estate dynamics?
Cypress Capital Group
info@cypresscapgroup.com
T: 650-427-9883
