The annual PwC & ULI ( Urban Land Institute) Emerging Trends in Real Estate report is an in-depth 100-page review that takes a macro-level look at major trends and key markets to watch in both the U.S. and Canada. It also provides overviews of the operating performance and outlook in six property sectors – office, industrial, retail, apartments, single-family homes and hotels.
There continues to be significant liquidity in the commercial real estate market on both the debt and equity side. The amount of private equity “dry powder” is estimated at more than $2 trillion globally, with at least 5% of that capital allocated to commercial real estate. One of the key themes in the 2020 report is the need for investors – and cities – to embrace change and rethink growth strategies in an environment where there are plenty of changes afoot ranging from disruptive technologies to climate change.
PwC & ULI Emerging Trends in Real Estate 2020
We strongly encourage you to download the full report and review in detail. Some of the top trends highlighted in the report include:
A New Menu for Markets
The competition to find suitable investments is prompting investors to look beyond traditional methods of zeroing in on market size and growth. Instead, they are looking at new and more complex ways to identify target markets and property sectors that meet return requirements. In particular, specialization has become the “hallmark” of real estate, drawing investors to different types of markets for different reasons.
Families, cities and employers are battling affordability that has reached the “breaking point” in many markets. Challenging housing conditions are impacting local and regional growth and employer location decisions. Public and private entities are increasingly looking at new solutions ranging from co-living developments to inclusionary zoning to address the problem.
The live-work-play districts that have taken hold in urban areas are increasingly spreading out to suburban communities. Some of the keys to creating these vibrant “hipsturbs” are transit access and walkability along with abundant retail, restaurant, entertainment and recreation options.
Boomers and Beyond
Boomers are staying active and living longer, both of which have broad implications for commercial real estate. The boomer generation will continue to influence the size and type of housing, including demand to live in vibrant downtowns and the above mentioned hipsturbs. Boomers also will continue to influence workplaces as many are choosing to keep working or are pursuing second careers.
There is a growing commitment to ESG (environmental, social and governance) principles among corporations and real estate owners. Millennials in particular are highly focused on environmentally and socially conscious business practices, which is impacting everything from where they choose to work and live to the products they buy. As such, sustainability evaluation is becoming a bigger priority for institutional investors.
The What and When of Disruption
Technology is affecting all property types, most obviously retail and industrial. Property managers are turning to technology solutions for productivity enhancements and improved operational efficiency. In addition, demand is on the rise from occupants and capital sources for technological sophistication across all sectors.
Real estate professionals unwilling to wait for a federal solution to America’s urgent infrastructure needs can look to states and localities that are committed to improved infrastructure as a foundation for economic growth.
Industrial Remains Hot
The industrial/distribution sector continues to rank highest for investment and development prospects, reflecting the impact of e-commerce and rising demand for storage and delivery facilities. Data centers also are attracting more attention due to growing reliance on tech.
The top 5 markets to watch for overall real estate prospects in 2020: