Tag Archive for: technology boom

In disruption there is opportunity as well, and the Counselors of Real Estateā€™s annual list of theĀ Top Ten Issues Affecting Real Estate certainly goes heavy on disruption.

Itā€™s also not a list of items that can be ticked off and dealt with one by one: in announcing the 2017-2018 CRE Top Ten list earlier this month, Scott Muldavin, chair of the invitation-only Counselors, noted that many of the issues are interconnected and reflect both global uncertainty and seemingly relentless disruption in the economy and multiple real estate sectors.

Heading the list is a hydra-headed issue that has an impact on all of the others because, as FTI Consultingā€™s Michael Hedden points out, it makes reaching decisions on anything more difficult. The issue is global uncertainty and political polarization, as exemplified by recent elections in the US, the UK, France, Austria and other countries.

The Counselors see ā€œresurging nationalism, testing existing diplomatic and trade relationships around the globe as exemplified by Brexit and NATO.Ā  Potentially devastating military conflicts seem more likely in Asia and existing conflicts in the Middle East are more volatile.ā€ Within the US, its scope isnā€™t limited to Washington, DC by any means, but carries through to the local level as well.

For real estate, the negative implications are immediate, according to the Counselors: ā€œUncertainty about changes to trade, travel and immigration policy threaten cross-border investing, hospitality properties, retail, and manufacturing supply chains, among other effects.Ā Rising interest rates and retail inflation will make middle-class homeownership that much more difficult.ā€

Longer-term implications, the Counselors warn, ā€œcould be much more severe, as polarization prevents long-term fixes to issues such as infrastructure, affordable housing, local and state pension liabilities, and education. And so, one or both of these trends affects virtually every issue on this yearā€™s list and a host of others that didnā€™t make the cut.ā€

On a brighter although no less disruptive note is the second item in CREā€™s list, the technology boom. This boom encompasses everything from the tech start-ups that are revolutionizing commercial real estate operations to ecommerce and the trend toward autonomous cars that may eventually render parking garages obsolete.

In retail, according to the Counselors, ā€œthe question has shifted from ā€˜Do you shop online?ā€™ to ā€˜How many deliveries did you have today?ā€™ Online retail continues to drive warehouse demandā€”but each foot of new warehouse space leased by online retailers translates into eight feet of vacant retail. Smart lenders and investors are already insisting that new construction reflect future demand patterns, not those with which we are currently familiar.ā€

Third on the list is generational disruption. A few years ago, Baby Boomers (formerly the largest generation by population) and Millennials (who now outnumber them) were perceived as by and large going their own ways.

Ā ā€œThe generations are crossing paths everywhere:Ā in the workplace, in housing and at the local bar and grill, intersecting and sharing spaces, despite their often disparate priorities when it comes to the built environment.ā€ the Counselors say. ā€œStudies project that Millennials will ultimately behave in a fashion similar to Boomersā€”but do so 10 years later.ā€

Other issues on the latest CRE Top Ten list include retail disruptions, infrastructure investment, housing: the big mismatch, lost decades of the middle class, real estateā€™s emerging role in health care, immigration and climate change. Issues to watch include tax reform and monetary policy, various other policy matters and cannabis.

Under the direction of research executive and author Peter C. Burley and Victor Calanog, chief economist and SVP with Reis, the Counselorsā€™ 1,100 members globally undertook an extensive collaborative dialogue on current issues and trends to compile the final list.

 

Source: GlobeSt.