Emerging Trends in Real Estate® Americas

Coordinating Offense and Defense in 2016

Emerging Trends in Real Estate 2016

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Every major college and NFL football team sees its game plan shaped by its offensive and defensive coordinators, working in concert with the head coach. The coordinators are expected to have both technical and strategic skills, the ability to work under pressure, and the capacity to adjust to rapidly changing conditions.

For the offense, the coordinator is charged with marshalling the team’s resources to maximize opportunities and to translate them into points on the road to victory. For the defense, the coordinator is constantly assessing risks, both before and during the game, and countering them. In limiting the competition’s advantages, the defensive coordinator seeks to put his team in the best position on the field by managing adversity and, as much as possible, turning an opponent’s risk taking into an opportunity for his own squad.

For real estate, 2016 will see investors, developers, lenders, users, and service firms relying upon intense and sophisticated coordination of both their offensive and defensive game plans. In an ever more competitive environment, with well-capitalized players crowding the field, disciplined attention to strategy and to execution is critical to success.

A lending officer at a large financial institution said, “You can never forget about cycles, but the next 24 months look doggone good for real estate.” At the same time, as one senior capital markets executive said, “The first 15 minutes of any committee discussion is on the potential risk in the deal.” We’ve learned some lessons in the not-too-distant past.

Real estate has become ever more dynamic as it adapts to a networked world. Everything is connected to everything else, so market participants cannot afford to ignore developments well beyond the property markets themselves. The major forces of globalization, technology, urbanization, and demography are constantly interacting with each other. A lapse of attention or a misstep in execution can result in being blindsided, foiling even a well-considered plan of action.

Because of this, it is important to understand that none of the trends we identify and discuss should be considered in isolation. The “Keep It Simple, Stupid” rule has its strengths, but only if it also recognizes that a complex world punishes any overly rigid approach to change in the markets. In business, as in biology, adaptation is the key to survival and competitive advantage.

So as we discuss the top trends for 2016, we will be emphasizing granularity, the weaving together of several strands of change, and the continuing capacity of the economy and the real estate markets to surprise by their flexibility, resilience, and innovation as both local and macro forces compel ever-greater open-mindedness about the future.

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