LOS ANGELES (October 26, 2011) – A new economy is unfolding over the course of this decade, driven by an extraordinary convergence of demographic, financial, technological and environmental trends. Taken together, these trends will dramatically change urban planning, design and development through 2020, according to a new report from the Urban Land Institute (ULI).
What’s Next? Real Estate in the New Economy outlines how every aspect of living, working and connecting will change in major ways, driven in large part by the values, preferences and work ethic of Generation Y, the largest generation in American history. The report was released today by ULI at its Annual Fall Meeting and Urban Land Expo in Los Angeles.
“Land development is, by nature, a forward-looking enterprise. If we are to be successful, the communities we shape now will have to serve the needs of those who follow after us,” said ULI Chairman Peter S. Rummell, principal of the Rummell Company in Jacksonville, Fla. “Together, these changes are of a magnitude that could transform our society over the course of this decade, and we need to understand them if we want our cities to prosper in this hyper-connected age of globalization.”
The report was prepared to kick off a series of events ULI is hosting over the next 12 months to commemorate its 75th anniversary. The institute is recognizing the milestone as much by looking ahead as by celebrating its past achievements, said ULI Chief Executive Officer Patrick Phillips. “What’s Next compels us to rethink our approach to urban planning, design and development,” he said. “Going forward, what and where we build will reflect changing consumer needs and preferences in terms of livability, mobility, and flexibility.”
What’s Next? covers six categories:
- Work, which covers employment drivers and markets;
- Live, which examines housing demand and economics;
- Connect, which looks at how technology is changing people’s desire for proximity to work as well as the demand for retail, residential and commercial space;
- Renew, which contemplates new sources of energy and demands for greater efficiency;
- Move, which covers increasing demands for efficient transportation and ways to finance improvements, and
- Invest, which looks at globalization and other factors affecting the availability of capital for residential and commercial real estate markets.
Among the report’s findings:
- Technology will reshape work places. Office tenants will decrease space per employee, and new office environments will need to promote interaction and dialogue. Offices will be transforming into meeting places more than work places, with an emphasis on conference rooms, break areas and open configurations.
- Developers will craft attractive environments to attract young, talented workers.
Major companies will value space that enables innovation. They will continue to pay more for space in a global gateway served by a major international airport, or in 24-hour urban centers. Hard-to-reach suburban work places will be less in demand.
- The influx of Generation Y, now in their teens through early thirties, will change housing demand. They are comfortable with smaller homes and will happily trade living space for an easier commute and better lifestyle. They will drive up the number of single households and prompt a surge in demand for rentals, causing rents to escalate.
- For most people, finances will still be constrained, leading to more shared housing and multi-generational households. Immigration will support that trend, as many immigrants come from places where it is common for extended families to share housing. This may be the one group that continues to drive demand for large, suburban homes.
- The senior population will grow fastest, but financial constraints could limit demand for adult housing developments. Many will age in place or move in with relatives to conserve money. Developers may want to recast retirement communities into amenity-laden “age friendly” residences. Homes near hospitals and medical offices will be popular, especially if integrated into mixed-use neighborhoods with shops, restaurants and services.
- Energy and infrastructure take on greater importance. Businesses cannot afford to have their network connections down, and more will consider self-generated power or onsite generator capacity. Developers, owners and investors are realizing that the slightly higher costs of energy- and water-saving technologies can pay for themselves quickly, creating more marketable and valuable assets. Ignoring sustainability issues speeds property obsolescence.
On Asia and Europe:
- Nearly all Asian countries are going through a radical urban transformation, and many believe that the next decade of Asian urbanization will drive the global economy. By 2020, China alone will have 400 cities with populations over 1 million. Asia’s surging middle class is projected to reach an amazing 1.7 billion in 2020. Water availability—and the maturation of real estate capital markets—will be major issues.
- In Europe, the global financial crisis has made investment capital increasingly hard to obtain. Resilient cities, those with a strong city government and high degree of market trust with investors and businesses, will be most attractive to investors. With companies operating in increasingly global markets and citizens expressing a desire to reduce their commute times, European cities must place an even greater emphasis on effective, state-of-the-art transportation systems.
Full copies of the report can be downloaded from www.uli75.org.
About the Urban Land Institute
The Urban Land Institute (uli.org) is a global nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in sustaining and creating thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines.