This is part 3 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 the earlier installments here.
When asked to give opinions on “what to do to prosper in the year ahead,” respondents and interviewees who participated in the latest Emerging Trends in Real Estate® report shared the following thoughts.
Look to Key Secondary Markets
Secondary markets, such as 18-hour cities like Seattle, Nashville and Miami, offer relative value compared to other gateway markets. These areas are considered “hip, urban, walkable, and attractive to millennials.” They also offer future opportunities in regard to a rising net income and appreciation. They provide lower costs of living, specifically in housing, with a strong growth potential. Value-add investors have access to multiple sources of financing from insurance companies, CMBS lenders, private equity firms, and cross-border investors. Investment in secondary markets should pay off as a 2016 strategy.
Take Advantage of Available Data
Numbers and projections have never been so prevalent, or so important. Identifying a clear set of criteria for property characteristics, submarket qualities, and demand can help focus your investment strategy. Your personal investment objectives will vary based on unique business goals, so a one size fits all strategy should not be applied. The data is readily available, and everyone has access to it, so it’s no longer about who can get it, but rather who uses it correctly. After using your unique circumstances to identify prospective locations, the use of experienced real estate professionals to analyze factors like operating statements and rent rolls will prove to be crucial.
Multifamily Middle-Income Housing
The upper end of the multifamily housing market is fairly saturated at the moment, offering a good opportunity for investors in the mid-priced market. Affordable housing can be a viable enterprise, especially in or around areas with growing employment opportunities. Expect local government assistance in the form of equity support, middle-class tax benefits, and incentives for renovating dilapidated older housing, all of which are in the public interest. Millions of households are in need of middle-income, mid- to higher-density housing in both urban and suburban settings.
Prepare for Parking Changes
Parking requirements are in a state of flux as communities adapt to a more walkable design and a desire for proximity to transit options. Coupled with a decline in driving licenses among young adults and the implementation of autonomous vehicles coming down the pike, developers are having to rethink the scheme of things. Temporary versus permanent parking needs should be considered.
Take a Look at REITs Priced Below Net Asset Value
Real estate markets and stock markets are incredibly intertwined. Occasional mismatches between prices for the same assets across both sectors occur, creating unique opportunities. It appears that 2016 could be one of those periods. While the stock market is experiencing volatility and price correction, improved property market fundamentals are strengthening the value of properties. In such a period, it is recommended to search out REITs with solid “A” properties, preferably located in the 24-hour and 18-hour markets.
For information about the real estate market in Miami and surrounding areas, contact Oceanica Real Estate at (786) 270-1743 or [email protected].