Washington – The Urban Land Institute (ULI) and PwC US recently released Emerging Trends in Real Estate 2024, an annual report unveiling critical data and trends in the real estate sector. In its 45th edition, the report’s overarching theme is “The Great Reset,” determining that the industry must form new “norms” and can no longer rely on past benchmarks to determine how the market will function in the future.
The report includes proprietary data and insights from more than 2,000 leading real estate industry experts, exploring shifts in property sectors since the pandemic, changing investor sentiment toward climate risks, the emergence of impact investing, and other real estate issues within the U.S. and Canada.
“It’s clear that the real estate industry is entering a new era of thinking, building and operating. The emergence of hybrid work models, the strength of the retail sector, and the growth of Sun Belt markets underscore the new reality on the ground, specifically in our top cities — Nashville, Phoenix, Dallas/Fort Worth, Atlanta and Austin — to watch in 2024,” said Anita Kramer, senior vice president of ULI’s Center for Real Estate Economics and Capital Markets. “Overall, our data this year shows slightly lower ratings across U.S. markets in terms of development and investment prospects, reflecting a certain degree of caution at the start of the new era. And ratings among top cities are tighter, indicating a sense that there is less difference among market prospects than has been the case. Now, industry professionals are at a turnkey moment that will require both innovation and adaption to shape a resilient real estate landscape for the future.”
“Despite economic headwinds and challenges with obtaining credit, there are opportunities available for high-quality properties that meet the needs of investors and tenants,” said Andrew Alperstein, a leader with PwC’s US real estate practice. “Firms must learn to ride out the current short-term risks and adapt their growth strategy to succeed in this period of higher-for-longer interest rates.”
Some of the report’s key insights include:
- Retail outlook is exceeding expectations, with tenant demand skyrocketing over the past 18 months.
- It’s all about the debt: Rapidly rising federal debt could potentially “crowd out” private investments in the industry, leading to slower economic growth and higher interest rates.
- Hybrid work is here to stay, as employee work and commuting preferences are standing firm.
- Outlook is still sunnier in the Sun Belt: The Sun Belt continues to be an attractive area for households, firms and investors, due to lower regulations and taxes, along with a growing labor force.
- CRE learning to navigate AI: AI advancements are showing promise in the real estate industry.
- Adapting for future climate challenges in leading CRE markets, means property owners and managers have more reasons than ever to make ESG a priority.
- Downtowns need to reinvent themselves, again: The future of downtown vitality may hinge on whether the economic forces of agglomeration continue to concentrate high-valued firms and industries into cities.
- Housing crunch: A key challenge that continues to cause pain is housing affordability.
Read the full Emerging Trends in Real Estate 2024 on ULI’s Knowledge Finder platform.