“We’ve always done it this way doesn’t cut it in real estate anymore. We need to find the best way to do it.”
I recently sat in on a great discussion by Urban Land Institute (ULI) Triangle, Emerging Trends, discussion led by Andy Warren from Price Waterhouse Coopers and Greg Lindsay from New Cities. Their insights mirrored what many real estate clients we talk with have voiced—technology is changing the real estate landscape. Technology is a big part of the disruption in real estate, but there are a few other factors with a big impact. Here are the top 5 Key Takeaways I got from their discussion.
Lack of Development Capital in 2020
In a study conducted by ULI, 20% of respondents think debt capital will be undersupplied in 2020, a 150% increase from 2019. In real estate today, there is an increasingly competitive dynamic. As new investors, both foreign and domestic enter the market, there are more players in the investment market than ever before. The fact remains that local knowledge in a market is still a competitive advantage, so there will always be a play for local investors.
Hot Markets
Despite extreme heat and climate change looming, the southeast is the hottest investment region in the United States for development. Austin, the Triangle (Raleigh-Durham, NC), Nashville, and Charlotte are the top 4 overall Real Estate Prospects and in the top 6 Homebuilding Prospects of 2020. Texas and Florida have taken a combined 40% of national migration, followed by North Carolina. Growth in jobs and housing make these target cities ideal for additional real estate investment. As growth continues, the need to automate, modernize, and disrupt how things are done will continue to increase.
Senior Trends and Housing Deficit
With advances in technology and healthcare, seniors are working later in life and aging in place. This will require the real estate industry to be nimble. Demand is still far outpacing supply, with the housing deficit trend, since 2017, is now at 3.5 million homes. The last boomers won’t turn 80 until 2044. This will mean a huge flood of seniors looking for a variety of housing options, including active lifestyle living and even upscale urban apartments (especially as many boomers downsize).
A Community State of Mind
While companies like WeWork are trying to win on “amenities” in the office, the real value and draw come from the community—which pulls value and emotional appeal. Hospitality, banks, and malls are being transformed into authentic experiences that create community. The amenity war is over — community reigns.
Suburb communities, while being anchored to vibrant metro areas, are developing their own live/work/play districts, each with unique and authentic twists. Greg Lindsay proposes this is because millennials are having children and being forced to choose between their personal lifestyles and more space to raise families.
The What and When of Technology Disruption
While PwC thinks 5G is a magic bullet that will disrupt the entire industry, we at Vaporware know better. 5G is a collection of technologies that can and will be rolled out piecemeal as customers demand essential requirements of mission-critical factory automation, immersive media applications, self-driving cars, and smarter cities. Like big data analytics, 5G is only a supporting technology to the ultimate disruption.
The Emerging Trends respondents, on the other hand, rank technology disruptors as follows:
- Construction technology
- Cybersecurity
- Big data analytics
- Coworking
- Internet of things
- Sharing/gig economy
- Artificial intelligence
- Workplace automation
- Autonomous vehicles
Based on our experience of these technology markets, and a brief glimpse into Shanghai by Greg Lindsay, these topics are spot on, but more related than individual disruptors. For example, the IOT disruption will explode with the advent of 5G in Urban environments. So combining them, and re-ranking for how technologists think of the impact, here is how we would rank the disruptors:
- Autonomous vehicles and drone technology
- Big data analytics and artificial intelligence
- Sharing, gig, and coworking economies
- Workplace automation
- 5G, Internet of Things, and Cybersecurity
- Construction technology
Want more information? Download the full report and more trends here. The report includes all 10 trends, markets to watch, and property type outlooks (including Canada-specific data).
This is an exciting time to be in the real estate market. Interested in a solutions partner that can help you harness the power of technology? We can help. Read more here.
