Urban Land Institute’s 2015 real estate markets to watch
Real estate investment is not immune to the economic laws of supply and demand; and as more capital flows into the asset class, two main scenarios present themselves. The first is that competition for desired assets increases, driving up prices and lowering returns. The second is that capital begins to look for alternative investments where there is less competition.
Emerging Trends in Real Estate 2015 interviewees and survey respondents offered opinions supporting the view that both scenarios are likely to influence the market in 2015.
To better reflect investors’ growing acceptance of a wider set of potential investment markets, a few changes have been made to improve the list of markets in this year’s rankings. The total number of markets has increased to 75. The increase is the result of allowing survey respondents to select individual markets from what had historically been a more aggregate geographic area. The aggregate market groups of New York City, south Florida, and Washington, D.C., are now each represented by three markets instead of one. The Oakland/East Bay market now stands alone rather than being part of San Francisco, and Tacoma, Washington, has been separated from Seattle. To better represent each of the four regions, additional markets have been added.
The fast-growing South region now has seven (7) new markets: Birmingham, Alabama; Cape Coral/Fort Myers/Naples, Florida; Charleston, South Carolina; Columbia, South Carolina; Deltona/Daytona, Florida; Greenville, South Carolina; Louisville, Kentucky; and Richmond, Virginia. To the Midwest
region the following have been added: Des Moines, Iowa; Madison, Wisconsin; and Omaha, Nebraska. The Northeast and West regions also have been expanded: Buffalo, New York; Hartford, Connecticut; and Portland, Maine, are now part of the Northeast, while Boise, Idaho, and Spokane, Washington, have been added to the West.
Source: Urban Land Institute and PricewaterhouseCoopers
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Perspective on Regions
Emerging Trends in Canada
Urbanization has become one of the key forces shaping Canada’s real estate markets. Once viewed as an emerging trend, urbanization today is simply the “new normal.” People are flooding into city cores to live close to both work and the lifestyle they crave. Now, companies and retailers are following them, and this is driving new office and commercial developments in the core. In turn, urbanization is blurring industry lines, as commercial and residential developers explore the opportunities that mixed-use properties bring.
From a regional perspective, western Canada continues to be the country’s economic engine. Alberta markets are strong, propelled by Calgary’s office boom and significant development—from offices to condos to museums and a National Hockey League (NHL) arena—in Edmonton’s core. Vancouver, on the cusp of an economic resurgence, has several office developments coming onto the market, while foreign investment continues to pour into its robust housing sector. Saskatoon is enjoying record housing sales and long-awaited growth in industrial space.
In the east, Toronto’s condo market remains strong and stable as people continue to flock downtown. And retailers are following, eager to deliver the services and amenities that core-dwellers demand. In Montreal, the office market will coast along while condo development slows as the market continues to absorb the new inventory—yet retail is expected to undergo significant development and change. Halifax’s office market is looking bright, offsetting reduced confidence in the housing market.
Video: 2015 ULI Spring Meeting Houston