This is part 2 in a multi-part series about the latest Emerging Trends in Real Estate® report, an annual forecast on the outlook of real estate finance and capital markets, investment and development trends, property sectors, metropolitan area, and other issues affecting the industry in North America. Check out part 1 here.
The residential real estate outlook presented in the latest Emerging Trends in Real Estate® report is one of growth and optimism in American suburbs and so-called “secondary markets,” like San Antonio and Atlanta. Much of the development in these areas is being attributed to above-average job growth, which obviously means the office sector of the real estate industry is also benefiting. In part 2 of our series on the recently released Emerging Trends in Real Estate® report, we’ll examine how these trends are affecting that sector, in addition to the various types of housing that consumers are currently seeking in the new “live/work/play” model and what it all means in terms of parking.
According to the report, employment is up by more than 2.9 million in the last year, and the July growth rate for jobs sat at a respectable 2.1%. While a lot of companies are utilizing the ease and convenience of teleworkers, office jobs still account for almost 40% of that gain, both in central business districts and suburban office settings. And the outlook for the coming year is “more of the same.” At the same time that the office sector is growing, the concept and design is also changing. Cubicles, and walls for that matter, are becoming a thing of the past as hip, cool open spaces become all the craze. Many corporate buildings are accommodating a mix of private configurations with open area, and entrepreneurial businesses, startups specifically, are also adding to the current changes we’re seeing. Whether it’s to accommodate an alteration in work style as some industry experts believe, or a means of attracting and keeping desirable talent, everyone can agree that the trend is picking up.
The self-employed and unincorporated workers, who make up about 8% of the workforce, are also driving the so-called coworking space firms, which have become a major player in the office leasing force in some large markets across the country. Coworking companies are leasing space from primary landlords, only to turn around and sublease private offices, suites, and even desks to self-employed or contracted employers. Additionally, the business model calls for a slew of provided amenities in the middle of the promised collaborative and synergetic work environment. The growth trajectory for this type of work space is fantastic as established firms in New York City, Los Angeles, Chicago, Miami and many other major markets continue to take off. While some industry experts expressed reservations about the trend (mostly about security situations), most agree that the small sector will have a big impact on the future of the office space real estate.
Just as the office component of the “live/work/play” trend is changing, so is the housing, specifically in terms of the type of residence being sought after. Developers are now faced with providing the type of housing required to meet the needs of the peak of the baby boom generation, aging millennials, and those deciding between urban and suburban roots, all while finding a way to provide affordable housing to support the growing workforce. Micro- and Co-housing solutions are trending as a means of addressing the limited availability and affordability in some markets. Communities are also providing convenience amenities like catered meals, happy hours, and shared recreation to consumers as young as the late 40s. And that’s not the only trend breaking age-related barriers. We’re even seeing student housing models (think dorms) being applied to a non-student market. Traditional single-family homes and condos will always maintain their fair share of the market, but these non-traditional housing solutions are likely to continue trending in the year to come.
Yet another consideration for real estate developers is the issue of parking lots and parking structures. The American Automobile Association has reported that the percentage of high school seniors with licenses to drive dropped from 85 to 73% in recent years, and many believe the numbers will continue to fall. On top of that, the number of miles traveled by car for drivers under the age of 35 has declined by 23%. It’s obvious that the urbanization trend is lending itself to public transportation and pedestrian-friendly communities where owning a car just isn’t necessary anymore.
The issue now is bridging the gap between the car-loving consumers that are still very much alive and well, with the commuters who will heavily depend on mass transit, which in many markets is still a few years out from being developed. One method of dealing with the conundrum is by building a parking structure that can/will later be easily converted to something else. Surface lots in business parks, for example, can easily be used in mixed-use developments down the road. The bottom line is that major players in real estate development are looking much further down the road and seeing self-driving cars and community transportation that will make current parking structures obsolete. While it may seem far-fetched and light-years away, many industry experts think that it’s something to be considered when dreaming up tomorrow’s communities.
For information about the real estate market in Miami and surrounding areas, contact Oceanica Real Estate at (786) 270-1743 or [email protected]