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The Top 10 Real Estate Issues for 2017-2018 (Part One of Two)

July 10, 2017 | John Salustri

The Counselors of Real Estate has come out with its annual list of the top 10 issues facing the real estate industry: those that will “have the most significant impact on real estate in 2017 and 2018.” The list was unveiled earlier this month by Chairman Scott Muldavin, CRE, at his keynote address during the annual conference of the National Association of Real Estate Editors in Denver. In this first of a two-part blog, we’ll highlight the top five issues Muldavin identified.which is

  1. Topping the list is Political Polarization and Global Uncertainty. Muldavin said in a statement following the address that this issue impacts “decision-making at every level of government and throughout the business community.

    “Even at the local level,” he continued, “there is continuing and intensifying polarization between and within political parties, making it virtually impossible for representatives to find the common ground needed to resolve differences and move ahead… If people struggle to express and hear divergent opinions, it will be nearly impossible to address existing and emerging problems.”

    Drilling down from the macro, the impact on real estate is both immediate and long-term. While uncertainty about immigration impacts cross-border trading, Muldavin said, “Longer-term implications could be much more severe, as polarization prevents long-term fixes to issues such as infrastructure, affordable housing, local and state pension liabilities and education.”

  2. Next on the list is the Technology Boom, specifically, “an unprecedented wave of commercial real estate technology innovations that are expected to change the way real estate is bought, sold and managed.” In fact, Muldavin pointed to MIT’s real estate innovation lab, which has “identified 1,600 real estate tech startups worldwide.” Robotics are part of the picture, and not just for the industrial and retail markets. For instance, 30% of banking jobs are expected to disappear in the next 10 years.

    Big data, autonomous vehicles and new retail formats will all have a hand in the future of real estate construction, and “smart lenders and investors are already insisting that new construction reflect future demand patterns, not those with which we are currently familiar,” said Muldavin.

  3. We couldn’t get too far into the list of major issues without touching on Generational Disruption. While boomers are opting to free themselves from the burden of lawnmowers and house repair, millennials are gaining in earning power and looking to set down roots in homes, according to Muldavin.

    “Real estate developers, investors, owners and builders will need to understand not only the location preferences of each group, but the design and amenity features of housing units, whether rental or owner occupied,” he said. And on the workplace side, changes are coming in how and where we work. While boomers as a class prefer traditional offices, millennials lean toward open and collaborative workspaces. But the two must co-exist, at least until the older group fades away. “The challenge for builders, landlords, owners and tenants alike will be in finding an acceptable design balance that appeals to the contrasting audiences they serve,” Muldavin advised.

  4. We touched on retail (and did so as well in my last blog), but Retail Disruption got its own category as number four on CRE’s hit parade. Simply put, faced with such new-age concepts as creating a “retail experience” and omni-channel shopping, retailers must adapt or die.

    And while we have seen evidence of this in some of the bad news we read (can anyone say “Sears?”), there is good news here. “As retailers refine their inventories, distribution methods and fulfillment models,” Muldavin predicted, “the retail market will survive and even prosper—but will do so in fresh, new ways.”

  5. Rounding out the top five issues is another popular theme in this post-election season, Infrastructure Investment. This issue is loaded with good news for jobs and for companies leaping on the infrastructure bandwagon, such as Blackstone, which is planning to create a $40-billion infrastructure fund.

    “How the infrastructure challenge is met—or not met, as the case may be—will have major real estate implications,” said Muldavin. “Reliance on public-private investment means projects must have strong revenue-generating capacity to be funded, something most rural projects and many water, electricity and road undertakings cannot achieve, particularly in struggling communities.” He also pointed out the sheer volume of need as another issue. Indeed, where to start?

Check out part two of this list, where we recap issues six through 10. You can read the full statement here.

About the Author
John Salustri is editor-in-chief of Salustri Content Solutions, Inc., a consultancy focused on enhancing the web and print content of clients around the nation. He is a regular contributor to JPM Magazine and a frequent blogger for IREM’s website. Prior to launching SCS, John was founding editor of GlobeSt.com, the industry’s premier real estate news website, where he managed the daily output of 25 international reporters, and prior to that, he was editor of Real Estate Forum Magazine. John is a four-time winner of the National Association of Real Estate Editors’ Award for Excellence in Journalism.

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