After rescheduling the event due to one of Boston’s many blizzards, the ULI 2015 Trends in Real Estate Forum proved to be well worth the wait. As part of the event, the charismatic Mitch Roschelle presented PwC’s 2015 Emerging Trends in Real Estate report imparting statistics regarding demographic shifts and his predictions for the upcoming year. Three major themes that Mitch presented that carried through the rest of the program were the effects of technology on the commercial real estate industry and the importance of investing in infrastructure as well as the impact of secular changes in the nation’s demographics.
While we know the modern tech consumer as one who is consistently receptive to new technologies, this has not always been the case. To illustrate this point, Roschelle presented intriguing statistics documenting the briefer and briefer periods of time it has taken people to adopt revolutionary technologies throughout history.
The time it took for 50 million users to adopt a specific technology:
- 75 years for the telephone
- 38 years for the radio
- 13 years for the television
- 4 years for the world wide web
- 5 years for Facebook
- 5 years for AOL
- 3 days for Candy Crush
Roschelle stressed that real estate will most definitely be affected by this accelerating receptiveness to new technologies, asserting that the industry will need to evolve or encounter meaningful disruption. The potential for industry transformation is strong enough that ULI Boston/New England and the MIT Alumni Association of the Center for Real Estate have collaborated to form a program called Real Disruption – an on ongoing series of events dedicated to examining disruptive technologies and how they are affecting the real estate industry.
Thursday night’s program included the presentation of videos showcasing two such disruptive technology platforms – CompStak and SourcedCapital – as well as a closing video showcasing a more condensed montage of other real estate technology platforms.
Another major topic that Roschelle introduced was the importance of investing in infrastructure, a discussion that focused on the current gap between estimated cost and available funding for these projects throughout the United States. This theme was further explored and applied to the Boston market specifically by panelists Tom Alperin of National Development, Don Briggs of Federal Realty Investment Trust, Paul Lee of Landsea Holdings Corporation and moderator Carlos Febres-Mazzei of CBRE/New England.
Febres-Mazzei said that, in addition to the projected $9.5 billion that is currently envisioned for infrastructure investment, additional funds may be required to make the 2024 Olympics feasible. The discussion of hosting the Games has been a good catalyst for identifying a greater vision for the region and has forced parties into examining ways to improve upon our current transportation infrastructure. Panelists agreed that even if Boston doesn’t end up winning the bid, we could still leave the vetting process with valuable new urban planning concepts that otherwise may have never been formulated.
As the population of Greater Boston continues to increase, it will be important to provide a transportation system that can provide stronger linkages between the area’s growing neighborhoods and unite the urban fabric of the region. Although it was not identified exactly how these infrastructure improvements would be funded, the public-private partnership model has proven successful in other markets and on specific projects within Boston. Investment in transportation infrastructure and facilities has a high re-use factor and can dictate the economic vitality of an area long after its initial application.
Roschelle also discussed the accelerating rate of urbanization that has been seen within the U.S. and across the globe. A slide detailing urban population growth on a global scale stated that 1.5 million people are added to the world’s urban population every week and that by 2025 there could be nearly 40 cities with populations over 10 million. Overall, Roschelle said, the concentration of the world’s population in cities is expected to be 72% by 2050. In a slide detailing urban population growth over the next 3 years in the U.S., Boston was among the cities with the highest percentages at just above 4%. Other notable locales for urban population growth were Austin, New Orleans and Denver.
Roschelle said that it isn’t just the Millennials who are driving this urbanization trend. Though we often associate the distaste for driving and eagerness for city living with those in their late 20s and early 30s, the younger half of Baby Boomers have adopted the same mentality according to Roschelle. Like their younger counter parts, those Baby Boomers born closer to ’64 than ’46 are happy to trade in backyards for short commutes and a more stimulating urban lifestyle. This massive multi-generational group is one that is willing to delay home ownership and for the foreseeable future will be looking instead to rent– good news for the multi-family market.
Just as Roschelle began his presentation with an inventory of which 2014 Emerging Trends projections ended up coming true, he ended by recapping his projected trends for 2015 beside empty “Yes” and “No” boxes to be officially checked at next year’s conference.
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