“You can never forget about cycles, but the next 24 months look doggone good for real estate” according to PWC’s latest commercial real estate emerging trends report for 2016. “For real estate, 2016 will see investors, developers, lenders, users, and service firms relying upon intense and sophisticated coordination of both their offensive and defensive game plans. In an ever more competitive environment, with well-capitalized players crowding the field, disciplined attention to strategy and to execution is critical to success.”
Here is a look at some of the top trends and highlights for 2016:
2.0 Last year, Emerging Trends identified the rise of the 18-hour city. This year, the real estate industry is expressing growing confidence in the potential investment returns in these markets. We are finding a tangible desire to place a rising share of investment capital in attractive markets outside the 24-hour gateway cities.
Next Stop: the Suburbs . . . What Is a Suburb?
“The suburbs are a long way from dead,” said one interviewee emphatically. Another industry veteran counseled, “There are only about ten dynamic downtowns in the county; the rest of the areas, people are in the suburbs.” As prices have risen in the core gateway markets, it is apparent that a fresh look at suburban opportunities is gaining favor.
Parking for Change
Should we be phasing out parking lots and parking structures even before the widespread adoption of the autonomous vehicle (a.k.a., the driverless car)? Miles traveled by car for those people 34 years old or younger are down 23 percent. The American Automobile Association reports that the percentage of high school seniors with driver’s licenses declined from 85 percent to 73 percent between 1996 and 2010, with federal data suggesting that the decline has continued since 2010. The new Yankee Stadium, built in 2008, provided 9,000 parking slots for its 50,000 seating capacity. But that has turned out to be too many, since most fans come by mass transit, and the parking structure is left at just 43 percent occupancy
Infrastructure: Network It! Brand It!
“The U.S. is losing the battle globally,” when it comes to infrastructure, complained one investment manager interviewed this year. “What is our problem?” The conventional approach to infrastructure improvement is utterly disheartening. The most recent (2013) American Society of Civil Engineers (ASCE) Infrastructure Report Card give the United States a grade of D+. At present, state-by-state updating is going on, and the results are not showing much improvement. Arizona rates a C, as does Georgia. ASCE scores Utah a bit better at C+, but Illinois, Iowa, and Virginia get only a C–. And none of these states is in the oldest region of the nation— the New England/Mid-Atlantic corridor—or the heart of the factory belt in Ohio and Michigan. The ASCE estimate of $3.6 trillion in infrastructure spending needed by 2020 seems way, way out of reach.