Emerging Trends in Real Estate 2012 - Urban Land Institute

occasional build-to-suits, the odd class A office building or hotel
in a 24-hour market, and possibly shopping centers in burgeoning
Hispanic areas adapted to attract retailers who specialize in
serving Latin American populations.
Go Green. Tenants want energy-saving technologies simply
to reduce costs. “It’s not about tree hugging; it’s about bottom
lines,” says a developer. The modest extra upfront project costs
can produce long-term operating savings, which help improve
building values and ensure competitiveness over time.
Property Sectors
Multifamily Any Way You Like It. It almost doesn’t matter
what part of the country is concerned, interviewees go totally
gaga over apartments: buy class A, value-enhance class B,
develop from scratch, purchase in infill areas, acquire in gateway
cities, or hold in lower-growth markets. “Even buy class C
and upgrade, spend a little more, hold a little longer—demand
will be there.” The only caveat: avoid severely affected housing
markets where a surfeit of empty single-family homes will
compete as rentals.
Fortress Malls, Infill Shopping Centers. Location and
retailer quality gain importance in the shopping center world,
fighting against e-commerce incursions. Aptly named fortress
malls, near upscale suburban neighborhoods and strategic
highway intersections, continue to concentrate the top brand
chains and attract more shoppers away from their weakening
competition—centers situated near older or more commodityclass
housing districts. Grocery store–anchored centers with
leading supermarket and drug store chains still command
plenty of traffic from necessity shoppers, and investors love the
steady cash flows.
Coastal Port Industrial Space. Global trade will power
export activity around the nation’s primary seaboard ports,
where traditional big-box warehouse distribution assets rebound
after experiencing uncomfortably high vacancies. All eyes focus
on which East Coast cities can position themselves to capture
Pacific container-ship traffic slated to come through a widened
Panama Canal in 2014. Some winners will turn into new industrial
hubs, but first need to dredge harbor channels to handle
deep-hulled vessels. Miami, Charleston, Savannah, and Norfolk
look like prime contenders, and New York/New Jersey will not
be left out. Houston should pick up business along the Gulf
Coast.
Business Center Hotels. “It’s the point in the cycle where
lodging makes sense.” But only the major 24-hour cities attract
consistently strong combinations of business and tourist travelers
to sustain occupancies and advance room rates during the
week, as well as into weekends. Middle-market hotels without
food and beverage service lure budget-conscious travelers
without outsized operation overheads, enhancing bottom-line
results.
12 Emerging Trends in Real Estate ® 2012