The Urban Land Institute and Pricewaterhouse and Coopers teamed up to crystal ball real estate trends for 2019. These two research dynamos tapped the expertise of +750 real estate experts and economists for this joint project.

Two stand-alone expectations: the overall economy will slow down in 2019 and the “only certainty for 2019 is uncertainty.”

Here are the “other” top 10 trends these dynamos anticipate to shape 2019 real estate:

  1. An “acute” affordability crisis is tantamount.
    1. The combination of rising prices for single-family homes and rising mortgage interest rates has cut affordability by 15%.
    2. According to the Housing and Urban Development Department (HUD), one half (50% of all renters pay +30% of their income on a place to live.
    3. According to HUD, 12M spend +50% of their income on a place to live.
    4. Academics estimate that the US requires +124.6M added rental units by 2030.
  2. One of most far-reaching changes is rewriting how real estate professionals do business with the rise of industry-specific technology.
    1. Capital is following finance technology.
    2. Many anticipate the rise of new markets and the continued winding down of traditional “retail” real estate.
  3. With a decelerating overall economy (Congressional Budget Office anticipates average GDP growth of 1.9%), deceleration in real estate means identifying and capitalizing on new opportunities.
    1. Replacing older buildings.
    2. Developing emerging markets.
    3. Adaptive reuse
  4. “Second” cities and their suburbs may be key markets.
    1. Housing surrounding 18-hour cities (if walk-able and transit-oriented) will be in high demand.
    2. In smaller markets, +55% new residents have moved in and relocated to suburban homes.
    3. According to US Census Bureau, +2.6M moved from “first” cities within metro areas to suburbs in 2016-2017.
  5. Amenity creep to compete for buyers/renters
    1. Amenities are no longer just gyms and rooftop access…amenities are on-site, for residents movie theaters, dog runs, communal gardens, access to co-working spaces.
    2. Smart homes and service-economy firms are taking the challenge and offering hotel-style concierge services such as food and laundry services.
  6. Technology tackles real estate.
    1. CB Insights project real estate tech investment may top $5.2B by end of 2018.
    2. Investment in building & construction tech is booming.
    3. New platforms for home selling will continue to pop up.
  7. Dealing with real costs of “free delivery”
    1. “Next day” delivery has become “just in time” delivery.
    2. Hunger for warehouse space has supercharged industrial real estate sector.
    3. BUT, the result of just in time, free delivery is transportation gridlock compounded with underfunded infrastructure.
    4. Businesses must bear the price of $240B for this congestion over next 5 years.
    5. Real estate has to help pay and factor in congestion pricing.
  8. Shrinking size of retail footprint and rising size of services.
    1. Urgent care, health & fitness, restaurants, financial services, etc. are elbowing out retail services.
    2. Strength of “the experience” economy
    3. Shorter leases and pop-up leases will become usual.
  9. Focus on sustainability.
    1. “Green” will be core part of real estate and other businesses.
    2. This is a combination of self-interest and social responsibility.
  10. Continued rise of AI
    1. AI may offer benefits for building efficiency, safety and security.
    2. Companies like WeWork and smart buildings such as The Edge offer potential for analyzing user behavior to refine, redesign and create virtual feedback loops.

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