(Released October 22, 2014)
Another year, another look at the Emerging Trends expected to affect real estate in the coming year and beyond. It’s a healthy discipline for our industry, taking a periodic look ahead to evaluate the contenders and pretenders among the forces shaping the real estate business. By survey, by interview, by a review of data, and by a thoughtful sifting through of fact and opinion to arrive at considered judgments, nothing is taken for granted. Each prospective “trend” has to prove itself to a cross section of the industry if it is to make the list.
For 2015, we propose ten top trends for your attention. What are their salient characteristics?
Since real estate’s value is a function of how it serves its users—workers, consumers, businesses, travelers, homeowners, and apartment renters—we look to human elements for signs of trends. Demographics, labor force characteristics, location preferences, and motivations discerned by observed behaviors and the interpretation of real estate professionals are among the most reliable indicators of trends.
The physical attributes of the built environment also count. Interviewees consider how properties either enhance or detract from productivity. They worry about obsolescence in the face of change. They care about physical supports such as transportation infrastructure, the power and communications grids, and, in a significant part of the nation, water. None of those issues has emerged overnight; none of them will go away soon. Tackling them effectively can enhance the property markets. Ignoring such issues threatens the economy generally and the property markets in particular.
Financial factors also help define trends, this year and always. The volume and form of our savings as a society count. The flow of capital from around the world influences U.S. real estate mightily. The appetite for risk and the pricing of risk help direct that capital to the preferred geographic locations and property types. Competition hones the pricing of real estate itself, and the various services needed to get the most out of properties. The wide variety of investment opportunities equity and debt, direct and indirect investment vehicles, the legal structures that offer a range of choices to property professionals—requires us to discuss trends in a specified and nuanced way. Even with a limited number of “top trends,” it is important to tell the stories carefully.
With these salient principles in mind, we herewith present our selection of the top trends in real estate for 2015. Let the discussion and debate begin!