Each year, the Urban Land Institute (ULI) works jointly with PricewaterhouseCoopers (PwC) to provide an outlook on real estate investment and development. ULI chapters across the country then bring in a PwC spokesperson to review the findings and then pair them with a panel of local experts to see how national and local trends differ. In Florida, Trends events have been held in Jacksonville, Gainesville, Orlando, Tampa, and soon to be in Tallahassee. This combination of national and local perspectives gives the attendees a blend of expert opinions that they can then apply to their business decisions.
So what are the top trends in 2015?
From a national perspective, it turns out it is very similar to 2014, with a little less hesitation. Most of the metrics that were in place one year ago are still holding strong, including interest rates, which was a surprise to many of the experts polled this year. It was nearly unanimous that these rates would rise in 2015. There will likely be a continued influx of capital into US real estate because it is still considered a low risk haven for both foreign and fund investment. With a renewed demand for space, a lack of construction during the recession, funds readily available, and borrowing rates low, this year has the likelihood of seeing an even stronger return of new construction across all market types. The most dominant type continues to be multifamily and industrial, with big retail growth only coming in experiential shopping environments or mixed use developments.
From a local viewpoint in Florida, we heard much concern about how to properly address the waves in demographic changes that are already reaching our shores. The combination of the baby boomers moving en masse to the South and the millennials just now reaching income levels that broaden their choices in living and shopping, has created a new demand for urban renewal or mixed use “live, work, play” environments. In more dense markets, a thriving downtown is typically a solution that can satisfy both ends, but many tertiary or less markets have to work to create or recreate this setting in an economically viable manner or they risk missing this highly lucrative, impactful timeline. Many cities have identified these types of populations as the spark that has been needed to jump start their urban cores into life again and turn back the suburban exodus. Meanwhile, areas like Nocatee in the St. Johns area of Florida continue to see record breaking growth, sending confusing signals to developers about what the markets really want, regardless of what the data is saying. It was suggested by several local panels that each community has to decide for themselves what they want to be from the wide spectrum of options- such as a retirement beacon, an education and innovation hub, so on- and then focus their land use, re-use, and development efforts in that direction.
A copy of the full ULI Report can be found here: http://uli.org/wp-content/uploads/ULI-Documents/Emerging-Trends-in-Real-Estate-2015.pdf