7 emerging real estate trends for 2015

Written by Posted On Monday, 13 July 2015 06:29


Every year professionals working in real estate sector are looking towards research studies and reports unveiling the future trends in commercial real estate for the unfolding year. One of the most important reports is published every year by PriceWaterhouseCoopers in collaboration with the Urban Land Institute. This report is called Emerging Trends and its brand new  2015 edition has already been published, attracting lots of attention from real estate professionals curious about the future direction of the sector. Here are 7 key emerging trends the report predicts we'll see develop during this year.




1. Lower demand for long-term lease of office space




For this sector of the real estate industry, the report clearly demonstrates that office landlords and their brokers will be hoping for the status quo to continue uninterrupted, with  traditional credit tenants sill signing long term leases.




This hope is contrasted with reality, where working environments are rapidly changing by the growing degree of mobility experienced in practically all professions. The mobile transformation combined with the rise of the sharing economy is a factor that renders a distinct and stable place of work no longer a business demand. Needless to say, small and mid-sized businesses won't be willing to sign long term leases either.




2. Collaborative spaces




Professionals working in real estate have been observing with great attention a trend gaining steam in recent years – collaborative workspaces and open space plans. Still, most such professionals operate on an outdated business model and predict that the trend for separate offices will return in a few years.




Inside the sector, many people are certain that open spaces are just a fad and millennials will soon lose their collaborative spirit in favor of traditional office structures. Moreover, the same millennials are expected to soon repeat the pattern of previous generations and move to suburbs to raise their families.




3. Progressing urbanization and 18-hour city




The report points out that the progressing urbanization of America has brought a new source of life to cities that historically had always been recognized as 9 to 5. Today, it's not just the great coastal cities that are alive round the clock and during weekends.




The development of several key aspects of downtowns, such as retail, housing, walk-to-work offices and dining, acts as a significant factor in generating new urban centers, fostering investments and improving the general life quality.




4. Housing not in a bubble anymore




Professionals interviewed by the creators of the report suggests that the sector of housing is gradually leaving the excess of the bubble and the consequent collapse behind. A major trend in residential real estate will be the return of the classic principle of supply and demand.




This is very good news because residential real estate is a major segment of the American economy and seeing it return to such a fundamental economic principle, the American public is likely to develop a new confidence in the residential sector.




5. Various generations will impact the sector in different ways




First, there are the millennials who are actually a much larger group of people than the baby boomers. It's true that millennials generally postpone property purchase and choose instead to rent housing for a longer time – thi is bound to impact the apartment sector in the next few years. But professionals asked about this issue also pointed out that investors should think about how the needs of millennials will change in a the near future, for instance in 2020.




Another potentially influential group of consumers will be the smaller Generation Z. This means that investors should prepare for a smaller number of workforce entrants, consumers and potential property owners.




Finally, there's the generation of baby boomers who are now still working or already retiring and will still have a significant influence over the real estate market for the next 20 years! If you thought this age group is irrelevant, you better think twice.




6. Expansion of technology and its impact on real estate




It's clear that real estate is not an exception in the gradual invasion of technological innovation that has completely changed the face of other business sectors. The report suggests that the real estate sector has a kind of love/hate relationship with technological innovation.




One the one hand, it provides businesses with new opportunities, environments and tools – all of which radically change the ways in which organizations use space, choose locations and impact demand levels.




On the other, the accelerated pace of change is hard to keep up with and real estate professionals are compelled to anticipate and respond to technologies even before they become mainstream. All in all, the fear about technological disruption is not as pronounced as in previous years.




7. The danger of the bubble is still present




Even though the report is generally positive in tone, there's one key insight that shows the dark side of the real estate market development. We all know how upcyclees build optimism which, when reaches excessive levels, fosters bad investment patters that spread all over the sector.




The report suggests that in most cycles, issues such as overbuilding and excess leverage should have already started to build their momentum. By now, nothing really bad has happened, which motivated many interviewed professionals to agree that the sector has finally learned the lesson in self-correction and self-regulation.




Even if you don't agree with some of the report's findings, bear in mind that Emerging Trends attempts to provide a very wide panorama of prospects for various sectors of real estate in the US and Canada, ranging from residential and office to retail, hotels, and industrial.




Emerging Trends is based on the content of nearly 1,500 interviews and opinions from developers, asset managers, brokers, owners, and academics, so it's findings are credible and should be taken into account by everyone working and investing in the real estate sector.

Torri Myler is a real estate agent and a project manager at an online UK bank opening times directory - bankopening.co.uk.


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