Less Is More

We lived large, then experienced three years of dislocation and loss. Now we’re entering the “Era of Less” in 2011, predicted Miller Ryan’s Jonathan Miller, ULI senior resident fellow Steve Blank, and PricewaterhouseCoopers’ Mitch Roschelle yesterday, as the trio released ULI’s annual “Emerging Trends” report. The transition will be difficult, Jonathan says, but there’s somewhat of a bright spot—there are tempered but improved prospects for all markets and sectors. Part of the thaw includes a revival of the CMBS market. Also expect the gap to close between the buy, hold, and sell. However, many of the 875 respondents expressed concern about problems outside of real estate, including the US economy, inflation and deflation, regulation, and taxes.
City ratings have gone up over the year, even though some were marginal improvements. DC always takes the top spot when the economy is in the tank, Jonathan says. TARP and fed funds directed at banks helped NYC take second place, and the Big Apple moved up higher than any other city in the report. Rounding out the top 10 were San Francisco, Boston, Seattle, Houston, LA, San Diego, Denver, and Dallas. Other markets to watch are Austin and San Jose. Any 24/7 city that attracts brainpower jobs, Echo Boomers, and Baby Boomers will do well. Apartments are the only sector in the green, thanks to those demographics and housing-bust refugees. Following in strength is industrial, hotels, office, and lastly, retail. Welcome to a period that will be more like The Waltons, with more intergenerational households, less reliance on cars, and less credence on space—this less is going to become more, they say. Good night, John Boy—and good night, 2010.

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