How Real Estate is Shaping Up - 4 Major Trends

How Real Estate is Shaping Up - 4 Major Trends

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The realty sector is adapting rapidly to the world of networking and digitization. In this age when everything and everyone are interconnected, one has to look at developments not only in the property market but those in other business segments as well.

As per the latest edition of Emerging Trends in Real Estate, put out by Pricewaterhouse-Coopers (PwC) and the Urban Land Institute (ULI), the major forces that are shaping recent trends are technology, globalization, and urbanization. It's necessary to consider all these without ignoring any because adaptation is important in survival and gaining an advantage in this competitive industry.

Looking Beyond Gateway Cities

Location definitely matters when it comes to real estate decisions. 2016 has seen real estate investors’ growing confidence in the potential markets other than the mainstream 24-hour cities. There are a growing number of 18-hour cities across the United States, including the likes of Austin, Denver, San Antonio and San Diego. These potential catchments are attracting considerable amounts of capital, with investors both local and international broadening their interests within the US.

Increasing Demand for Office Space

Since 2014, the rate of employment has gone up by 3 million each year and real estate has benefited a lot from this. These gains are most evident in different metro areas, with New York, Los Angeles, New Jersey and Dallas taking the lead. Absorption of office space has been rapid in both suburban and central business district areas alike. These will continue in 2016 as entrepreneurial businesses look at making changes to their floor plans to adapt them to their specific needs.

The growing job market is shaping trends in residential options too. Surveys show that more than half of generation Y plan to live in separate single-family homes over the next five years. Access to expanding job opportunities will continue to be a major factor in the future as well. 

Affordable Housing for All

Demand is high for workforce housing as well as affordable options. Though much depends on the government and politicians, savvy real estate players will continue to determine the broader trends. This means coming up with products that target people in different income brackets with solutions such as rental, outright ownership, and rent-to-own properties.

Price Rise in Gateway Markets vs. Bargain Opportunities in Suburbs

As prices in major gateway cities continue to grow, suburbs continue to attract more investments. While baby boomers tend to prefer the suburbs, most millennials prefer the downtown areas of denser cities. The correlation between homes and jobs is the major factor that seems to be driving the growth of suburbs. Local businesses, often viewed as key to vibrant small economies continue to contribute in a big way.

The primary factors fueling the uptrend are the strengthening of broader macroeconomic performance, compression in the cap rates, increasing levels of risk tolerance and the data explosion. While this is most reflected in bigger cities like New York and San Francisco, it is now seen spreading to other cities such as Milwaukee, Nashville, Oklahoma, Philadelphia, Portland, and Austin.