I do have a physical office. My current set up has a main hub site of domain.com and pages with cities on them and then "neighborhoods" further in.
I would normally never opt for a niche site but I've never had the luxury of an exact keyword match before. The city itself is large enough (enough content) to stand on it's own - so it's just the effort it would take to get it up on it's own.
I think I answered my own question. In instances like this if I have the resources then it's worth it only if the city is large enough. If I was in Texas for example and had Texashomes.com - wouldn't it make sense to have Austinhomes and dallashomes as well and build those out?
Thanks for your response!