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ULI Emerging Trends in Real Estate 2013 – Best Bets

Following ULI Charlotte Emerging Trends Presentation, Westin Charlotte, November 2, 2012


Concentrate acquisitions on budding infill locations

Focus on locations where people want to be, especially where hip residential and commercial areas meet. Consider options near transit stations a top priority – especially apartments.

Use caution in secondary and tertiary cities

Leading secondary cities include Austin, Charlotte, Nashville, Raleigh-Durham and San Jose



The real estate recovery will continue to move forward in 2013 but slowly. Global economic turmoil will restrain confidence but overpriced core markets will begin to drive interest in strong secondary markets. Most locations can still not support commercial construction because of the weak tenant demand and employment outlook. Multifamily development remains the only strong sector but is expected to be peak in 2014-2015.

Capital markets are resolving legacy loan issues at a slow pace and the wave of commercial mortgage maturities is expected to surge over the next three years.

The real estate industry must accept the new realities in tenant demand driven by technology and cost cutting. Office users pack more people into less space and prefer green buildings featuring real efficiencies. Retailers are also requiring less space as ecommerce continues to surge in popularity and the way retailers use bricks and mortar stores changes. Gen Y prefers urban lifestyles and is increasingly renting small apartments in locations where the neighborhoods include enticing amenities, walkability, and access to mass transit.

Investors still prefer 24 hours gateway markets but as prices become overheated and the supply of good product diminishes, interest in secondary markets is gaining strength. Top secondary markets include Austin, Houston, Seattle, Dallas, and Orange County – driven primarily by sustainable job growth in technology, health care, education and energy. “American infill” locations continue to outshine the rest. Other secondary metros with strong prospects include San Jose, Miami, Raleigh-Durham, Denver, San Diego, Charlotte and Nashville.

In general, industry leaders continue to favor apartments; the industrial and hotel sectors are forecasted to see the biggest improvement in 2013, along with downtown office in gateway cities. An expected uptick in the single-family residential sector is anticipated around 2014-2015. This should provide a boost to the overall economic recovery and the needed support for other property sectors to continue to regain strength.


Principal Authors and Researchers: Jonathan D. Miller and Charles J. DiRocco Jr.

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