The Urban Land Institute (ULI) Fall Meeting was packed full of information that commercial real estate brokers need to know as they prepare for the year ahead.
I’ll take a moment to cover some of the most significant developments, all drawn from ULI's “Emerging Trends in Real Estate” report, which was released in conjunction with the conference. While covering all the data and trends would make this blog the length of a Russian novel, I’ll touch on the points that were covered most in-depth at the conference.
1. Texas is hot.
Two markets that commercial real estate professionals are most bullish on for investment and development over the next year are Austin and Dallas, where the event was held. Both of these metro areas boast rapidly growing populations and a diverse workforce, making them more recession-proof than many other cities.
2. Small developers are big.
Big projects with a lot of flash, such as trophy assets in major gateway markets, tend to gain a lot of attention from market observers. However, there are nearly 47,000 real estate development firms with less than 20 employees per firm, accounting for nearly 87% of the all commercial real estate companies. In the multifamily sector, they make up 91%. These types of companies are better positioned to gain financing from smaller regional banks thanks to their local focus and expertise.
3. Times are good, but there’s need for caution.
The commercial real estate industry has been on an outstanding run the last few years. Observers don’t expect that to change by next year, though there is some hesitancy about what the future will hold. The jury is still out on how the presidential election will affect the overall economy, of course, and financing and construction costs are on the rise. There’s also been an increase in competition as more and more investors put money into the commercial real estate industry.
4. “The suburbs are not dead.”
There has been a lot of attention on both millennial and baby boomer migration to urban markets, but the suburbs, in many metro areas, are still hot commercial real estate markets. The CEO of Trammell Crow, Matthew Khourie, stated outright: “The suburbs are not dead.” Certain suburbs have planned out live/work/play environments, tapping into the benefits that make urban centers so attractive. More companies are also looking to relocate their offices to these locales.
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