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Three Big Real Estate Trends That'll Drive Your Decisions

San Francisco

Three big trends are playing out in the real estate market, according to Guggenheim Real Estate co-founder Scott Muldavin. (If anyone can come up with a mnemonic device to help remember them, we'd appreciate it.)

1) Healthcare

Scott--who's now chairman of the the Counselors of Real Estate's external affairs committee and also prez of The Muldavin Co--says the demand for seniors housing and medical care is on its way up, and there are huge opportunities in the growing medical facilities market. Even real estate players outside of this specialty space can fit in; he says that he attended ULI's Fall Meeting in Chicago last week, and while on the plane, he met a woman whose biz is finding physicians homes near expanding medical facilities. We snapped him above at NAR's 2013 convention this week at the Moscone Center.

2) Cap and interest rate risks

Source: The Counselors of Real Estate

Investment-grade commercial real estate values are at near all-time highs, and almost all the value lost during the recession is back. That's a far cry from 2011, when the industry wondered whether capital would ever return. ("We totally knew things would get better," America's brokers said, slowly removing the cyanide pill from their cheeks.) In 2012, transaction volume spiked 30% to 40%, and credit became instantly available, he notes. Are we getting carried away? He warns that relatively small changes in cap rates can result in huge declines in value, and he thinks interest rates will rise significantly in the next few years.

3) Echo Boomers

Echo Boomers, made up of 80 million people ages 18 to 31, also made Scott's list. His daughters, ages 23 and 26, value mass transit and are willing to trade size for an urban location. About 25 years ago, he did a project with 250 SF units near San Francisco's theater district but never got the money for it. Now that's the norm; a micro-housing pilot in New York (above, NYC Mayor Mike Bloomberg checks out a model unit) calls for 55 units ranging from 270 to 350 SF. Google realizes boomers want to live in the city (even if their jobs are in Silicon Valley) and will bus downtown dwellers to and from work, he says.