10: The Rise of Experiential Retail:
Retailers are adapting to rising online shopping by trying to turn their centers into live-work-play communities, rethinking the tenant mix to provide unique shopping and entertaining experiences. The ideas is to create “destination” centers.
9: The Sharing/Virtual Economy:
Ride-sharing services such as Lyft and Uber mean retail centers and apartments might need fewer parking spaces. AirBnB is a serious threat to hotel owners. Crowdfunding, or ways to raise investment dollars from regular people, is changing real estate investing.
Spiking energy costs were a big problem for some tenants and a boon to landlords in energy-driven local economies such as Houston. Now that has flipped with the oil glut. Investors are reassessing their investments in energy boom towns. The office market in Houston is struggling amid layoffs and corporate restructurings.
7: The Disappearing Middle Class
More than just a problem for real estate, but stagnant wages and the expanding gap between rich and poor affects purchasing power for consumer goods, cars and homes.
The shift from home ownership to renting is one reflection of that, which does open opportunity for investors in apartment communities.
6: Housing Affordability and Credit Restraints
Both rental and home ownership are strained by issues of affordability. Wage stagnation plays a factor, as well. Home prices have risen out of the reach of many buyers, which forces more to rent, pushing prices up for apartments.
5: The Political Environment
It’s not just the presidential race or friction in Congress, but instability in politics puts doubt in the minds of investors, Lee said.
“The political environment has become acrimonious on all levels, whether that’s global, federal, state or local,” he said.
Urban areas are winning at the expense of suburbs with vibrant urban centers showing themselves to be more economically viable. In metro Atlanta, Alpharetta, Dunwoody, Sandy Springs and others are getting denser, particularly around mass transit.
Like the issue of experiential retail, there’s both a threat and opportunity for traditional retail and office centers.
3: Demographic Shifts
The nation is getting older, Millennials are waiting later to get married and have kids and all generations are demanding more in terms of services and amenities. Baby Boomers are headed to retirement and Millennials have now surpassed boomers in the workforce.
As boomers age, it will put greater strain on governments and real estate professionals to provide infrastructure and services to allow them to age-in-place, the report said. This also opens opportunity in the senior living and elder care industries, and likely in more densely-populated areas.
2: Debt Capital Market Retrenchment
Lending is slowing. Regulators are instructing banks to pump the brakes on commercial real estate lending and commercial mortgage-backed securities also are slowing. The competition for debt will intensify.
1: The Changing Global Economy
The top issue is the changing economy and cooling global growth. The U.S. remains a magnet for foreign investment, but trade activity abroad is weakening as is foreign investment.
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