So many are wondering and asking themselves what their next Real Estate investment move should be. Given the climate, which regions should investors be focused on with growth potential? Similarly, which markets should investors stay away from? What will happen to larger cities struggling in today’s uncertainty? Can struggling cities overcome a changing environment for what the future holds?
Let’s take New York City for example and its’ many amazing renown strengths. New York is the capital of the world for Financial markets, restaurants, Broadway shows, nightlife, and tourism. Now how will these industries re-stabilize and make a comeback to the degree they once were? Most in the hospitality sector are averaging 50% occupancy rate if we’re being generous or have already shut their doors. With all these industries struggling what is happening to all other aspects of business throughout the city? These are the million-dollar questions. Shall an investor buy into the city for a potential gain and hope for a climb in the future? How long will it take to overcome what lies ahead? I don’t think anyone has the answers to any of these questions, myself included.
Residents and companies moving from big cities to secondary markets and suburbs is likely to be one of the biggest shifts to come out of the pandemic (and is very much currently underway).
In the newly released annual Emerging Trends in Real Estate report by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC), one of the industry’s most highly anticipated publications, the first 3 of 10 trends highlighted focus on a shift away from big cities.
I completely agree with these statements and have been steadfast on this even pre-pandemic, as I have been seeing these types of shifts and the more prominent use and availability of technology. First, it was a migration to open office spaces and in the recent past, while visiting some of our larger third-party service providers I’d increasingly noticed their offices at very low occupancy. This begged the question of where was everyone? They would answer that most preferred to work “from home”. When pressing the issue further and asking why they still kept the space, all I got were shrugs and a half-baked answer of “ask upper management”. Even pre-pandemic there were indicators of a substantial shift on the horizon.
Now here we are in the era of Covid19 with an exodus from major cities. Investors and Developers need to follow the market, but moreover, they should be tuned into the other factors coming into play around the move to other areas as well, such as density issues, geopolitical unrest, and inadequate urban infrastructure. The key is finding the balance of current conditions and the potential a market has to flourish.
As highlighted in the Urban Land Institute report, the following cities have been identified as the top emerging markets:
- Raleigh/Durham, N.C.
- Austin, TX
- Nashville, TN
- Dallas/Fort Worth, TX
- Charlotte, NC
- Tampa/St. Petersburg, FL
- Salt Lake City, UT
- Washington, D.C./North Virginia
- Boston, MA
- Long Island, NY
Some of the main changes within the real estate industry has been social injustice, geopolitical climate shift as well as what I already mentioned the major transformation in the technological world as employees have shown a new appreciation for remote work, potential online schooling and education, more online shopping and online service utilizations. As I also said before there is nothing new with the transformation in a digital economy but it is definitely heading there much faster than we can comprehend.
All interesting food for thought and worth further diving into.
I want to hear what you have to say. Add your thoughts to the comments and let’s keep this conversation going.
– For Real Estate Trends, I’m Moses Gross.