January 18, 2019
A new generation entering the workforce and a new coterie of tech-centric markets are among the key trends this year, says Cushman & Wakefield. The emergence of Atlanta, Dallas/Fort Worth and Provo, UT as tech hubs in the making comes in at No. 10 on the firm’s “Top 10 Trends to Watch in Commercial Real Estate 2019” roster.
Another tech-related trend figures in the Top 10. Coming in at No. 6 is proptech, with Cushman & Wakefield’s Revathi Greenwood advising, “Watch for the tech industry to shift the way companies transact, analyze and approach commercial real estate.”
Proptech comes in just ahead of Generation Z on Cushman & Wakefield’s Top 10 ranking. Tallying all of the people born in the U.S. between 1996 and 2010, this cohort is some 61 million strong,“ more than every previous generation.” The oldest of the “digital generation” is now entering the workforce post-college.
The preferred commuting method of a fair number of Gen Z workers ranks ninth on the roster. Prognostication on the impact of ride-sharing services such as Uber and Lyft has been with us for a few years already; now it’s time to look at microtransportation, i.e. bicycle- and scooter-sharing. This market is expected to reach $6 billion by 2020.
A forecast of CRE trends wouldn’t be complete without industrial, and Cushman & Wakefield identifies two trends related to the sector. A lack of industrial space, leading to “a slow rebalance in vacancy, but a steady rise in rents,” is eighth in the Top 10.
Higher up in the ranking is warehouse site selection at No. 4. The main driver here isn’t access to transportation infrastructure or low pricing on land; rather it’s how site selection is shifting to attract and retain workers, with Class A office-style amenities now part of the package.
No. 2 in the ranking cuts across three CRE product types: the “co-“ trend, or as Greenwood puts it, “co-everything.” Joining co-working are the emerging sectors of co-living—where Germany-based Medici Group just secured $300 million in financing for a U.S. expansion—and co-retail.
Not only do macroeconomic factors top the ranking, but they also represent a plurality, with three of the Top 10 trends related to the economy. At No. 5 is “tariffs and trade tension,” while the effects of low unemployment, labor shortage and rising wages rank third.
Topping them all is recession indicators. Although four of the five indicators identified by Greenwood—yield curve, jobless claims, consumer confidence, the ISM manufacturing index and the S&P 500—point to low risk at the moment, all of them bear watching as the year progresses.
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