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Thanksgiving is right around the corner, we're more than halfway through Q4 and before we know it 2016 will be over. From Donald Trump's shocking presidential victory to understanding Millennial preferences, the commercial real estate sector can expect some big changes in 2017— some disruptive, others not so much. Here are five things to keep your eye on next year.
Trump's Surprising Victory
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Experts fear Trump may increase rates on carried interest, based on claims he made on the campaign trail, but at the same time he's proposed lowering the tax rate for business partnerships from 23.8% to 15%. That grouping could include property fund managers. At the same time, some real estate execs are afraid Trump will scare away foreign investment, although Blackstone CEO Steve Schwarzman isn't worried.
Thriving Urban Centers
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Many Millennials are continuing to flock to urban centers, and employers are following them by increasingly relocating their HQs from the suburbs to downtown districts. Colliers International chief economist Andrew Nelson says we should expect this trend to continue into 2017. Transwestern partner Ron Friedman reminds us that all is not lost for suburban offices, especially if they focus on providing access to great amenities.
Millennial Preferences
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While it's true that many Millennials have moved into urban centers, they don't always prefer the city to the suburbs. CBRE director of research and analysis Darin Mellott told Bisnow that according to US census data, Millennials still predominantly reside in suburban markets—a critical mythbuster for developers to keep in mind. Millennials also are driving nationwide trends with their support of the sharing economy and their preference for experiences over materials, and we expect those trends to continue in 2017.
Rise Of Generation Z
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While so many are focused on Millennial CRE disruption (and for good reason), it's already time to turn our attention to the next generation: Generation Z. Born after 1998, Gen-Z members see themselves as future homeowners. According to Better Homes and Gardens Real Estate, 97% believe they will own a home, and not just any home—they overwhelmingly want a lot of square footage. Student housing developers must also increasingly turn their attention to Gen Z to ensure their buildings accommodate tomorrow's college students, who require more connectivity than Millennials.
Tech Advancements
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During the course of 2017 we can expect the Internet of Things to impact real estate, especially industrial. Drones are expected to gain more widespread use. Industrial developers should look to keep upgrading their facilities—the more advanced a facility is, the more efficient, reliable and profitable it will become. When it comes to drones, property listings with videos get 60% more leads and CRE firms are growing increasingly innovative in their drone ues, from sensing gas to observing traffic. We expect these technologies to gain more steam in the coming year.
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