Each year, the Urban Land Institute (ULI) surveys 1,700 commercial real estate professionals to create its Emerging Trends in Real Estate report. This study offers information about the state of the industry and the main trends that are expected for the coming year.
This past November, ULI senior vice president Anita Kramer, who directs the survey, spoke with Scotsman Guide. She offered further insights on the survey’s conclusions for how the commercial real estate sector will fare in 2022.
What is the general mood of your real estate experts heading into 2022?
Overall (it was) very, very positive. We had 84% of our respondents say their outlook for 2022 was good to excellent. Each year, we ask the experts being surveyed, what is their expectations for the coming year? And for 2022, the good-to-excellent responses were higher than they had been since 2016.
The main reason for this is that the fundamentals of demand are still in place. For instance, the multifamily-housing and single-family housing markets are doing very well, and consumer sales have been extremely strong. Bricks-and-mortar retail wasn’t hit as hard as expected and people are visiting restaurants. The only caveat to that is office space, which remains a big question going forward.
How do you expect the current focus on environmental issues to impact real estate markets in the future?
It is estimated that about 40% of carbon emissions come from existing buildings and the construction of buildings. This includes the utilities, such as the electricity used to heat and cool buildings. Now landlords and tenants are beginning to take note of this and look at ways to not only be energy efficient but to move buildings toward net-zero greenhouse emissions.
What did the survey uncover about the remote-work movement? How will it affect the office of the future?
We found our survey members generally were in two opposite camps on this issue — however, they ended up in almost the same place. One group thought that employees who were working from home were happy, productive, and expected that workers would not want to go back to the office more than two or three days a week.
The other group said workers at home were missing out on the corporate culture, and young people wouldn’t be able to learn or move up without the in-person experience. The second group thought employees should at least be in the office three days a week. So, the two opposed groups ended up very close to one another.
We also found in the survey that there will be a demand for office space. But it will be a flight to quality in terms of what people are looking for in an office and the amenities they want from their office building.
Your survey lists the top 10 markets for growth as named by your experts. Eight of these are in the Sun Belt region. Tell us about your findings.
We ask our survey members to rate cities around the country on various categories — including population, cost of living, development and redevelopment opportunities, and business opportunities in 2022. All 10 of the cities listed were very close in their final ratings.
The top-rated city in our survey was Nashville. It is a midsize city with room to grow. It has a strong downtown, and a variety of businesses and industries. It has a lower cost of living than many other cities and a young population. Next on our list was Raleigh/Durham, North Carolina, which was named the top city last year. As you say, eight of the cities are in the Sun Belt across the country, from Raleigh to Dallas to Phoenix.
The only cities on this list outside the Sun Belt are Seattle and Boston. What is special about them?
Boston has such a rich and deep business sector with extensive research and medical facilities, a large technology sector and one of the nation’s leading educational sectors. It is very strong and stable. Seattle is home to a powerhouse collection of companies, from technology to aerospace to retail, and it’s such a great place to live. It’s a place with high-paying jobs and where young people want to be. That is a good combination. ●