2019 Emerging Trends in Real Estate Recap

Below is a summary of Key national trends highlighted in the Emerging Trends report. View the full report here.

SUMMARY OF KEY NATIONAL TRENDS:

• Amenities Gone Wild:  To attract more clients and gain a competitive advantage, new office buildings and multifamily housing projects are going to extend amenities well beyond common areas, fitness centers, recreational areas and other services typically offered in the past. Amenities such as dog runs and pet care, childcare, smart home technology, package lockers, access to coworking space, and even curated gardens for growing fresh fruits and vegetables, are becoming the the new norm.

• Retail Transforming into a New Equilibrium:  Retail’s "demise" may have been exaggerated. With low prices, it is a good time to look at retail space to repurpose it for alternative uses such as urgent-care medical facilities, health and fitness providers, restaurants, financial services and entertainment venues.

• 18-Hour Cities:  As millennials are forming families, having children and planning for the future, they are entering the homeownership market. An increasing number are moving to so-called 18-hour cities—suburbs with urban amenities such as walkable neighborhoods in close proximity to shopping and entertainment along with green space, good schools and an overall more affordable cost of living than larger cities.

• Technology Disrupting Real Estate: From ride-hailing services and driverless cars, to package delivery and artificial intelligence (AI), new technologies are expected to impact all real estate sectors. Real estate tech investment is anticipated to expand dramatically in 2019 and will transform the industry and all industry players will need to adapt to these changes.

• New Focus for Investors:  Sensitivity to environmental, social and governance (ESG) issues has increased for U.S. real estate regardless of the direction of national policy. Funds with an ESG investment focus in place could see an advantage in attracting capital, especially from institutional and international investors and public REITs.

• Last-Mile Industrial Development Needed to Meet E-Commerce Demands:  With the expansion of e-commerce far from over, the need for facilities to accommodate a denser distribution network is acute and will increase over time. While ports and hub cities still play key roles in the distribution network, the demand for “last-mile” break-bulk sites will generate more infill opportunities.

• Dealing with the Real Costs of Free Delivery: The demand for “fast delivery” in both a business-to-consumer (B2C) and business-to-business (B2B) context has created new challenges for the real estate industry. The growth of e-commerce and the potential of increasingly speedy delivery has contributed to transportation gridlock in major U.S. cities. As transportation infrastructure continues to deteriorate due to inadequate funding, it’s evident that businesses will bear the burden of enormous congestion costs and the real estate industry will be impacted by the cost of dealing with infrastructure challenges.

• Easing into the Future: The challenge to real estate markets in the future will be the slowdown in demand, varying across geography and property types. Despite slower growth, there will continue to be real estate opportunities. Functionality upgrades to all types of space, the need for affordable housing, and responses to new technologies will require new investment and development.

Portland RANKINGS

The 2019 Emerging Trends report includes rankings for 79 U.S. cities. Notable Portland rankings include:

• Overall Real Estate Prospects: #21

• Homebuilding Prospects: #16

The report also includes ratings that reflect the perspective of local market participants on their own market. Ratings are on a scale of 1 to 5, where 1 = weak, 3 = average and 5 = strong. The following ratings reflect how Portland survey participants feel the Portland market will fare in 2019:

• Local Outlook: 3.90

  Note: Average score of local market participants’ opinions on strength of local economy, investor demand, capital availability, development and redevelopment opportunities, public/private investments, and local development community.

• Local Market Perspective - Investor Demand: 4.15

• Local Market Perspective - Development/Redevelopment Opportunities: 3.99