Notes from the ULI Fall Meeting #3

At the 2012 Fall Meeting here in Los Angeles, the Urban Land Institute released a report entitled "Real Estate in the New Economy," which discusses how ongoing changes in globalization, demographics and technologies will impact land use in the years ahead.

You can download the entire report as a .pdf file by clicking here.

From the press release:

The introduction to the 21st century is still unfolding in cities and communities around the world. The complexity of the Great Recession continues to challenge all market players with implications that ripple out across countries, industries, currencies, and communities. From reconstruction dilemmas following natural disasters to civil unrest, political friction, and the heart-stopping ravages of the latest famine, we feel a world getting smaller yet more complicated and interdependent than ever before.

After decades of what felt like infinite resources and vast wealth pools available to fuel the consumption-based U.S. economy, we now face a mindset of shortage. We all know the history—government-supported mortgages and freeways, affordable automobiles, cheap gas, and post–World War II industrial expansion all underwrote the exodus from “cramped” urban neighborhoods to spacious single-family suburban homes.

Car models were a talisman for individual success, and public transit turned into an afterthought in suburban agglomerations. Proximity to anything didn’t matter when you could drive easily to almost everywhere. And exhilarating mobility over long distances enabled more people to own more land—and build larger houses—at the ever-expanding suburban fringe.b Employers sought to build suburban office islands, set apart from housing, retail, and transit.

As we preview the future, three critical forces drive change:

Accelerating Globalization—From energy to food to manufacturing, the metrics of globalization shed light on the rise and fall of global markets on a 24/7 basis as cities around the world ebb and flow with massive capital investments and withdrawals. Burgeoning and shrinking cities mirror investors’ search for lower costs of production and optimum locations for both manufacturing and services. Our social networks and governance structures struggle to keep pace and adapt quickly and creatively to process all of the input that various interests want and need to give. Disparities between rich and poor expand, uncertainty and lack of confidence grow, and prognosticators hyperventilate with fears of the future.

Changing Demographics—The rapidly evolving social composition of communities has a more powerful reach and not only reframes a neighborhood or a state but also triggers new markets, new opportunities, and new products and services. Immigration produces not just a plethora of diverse restaurants in virtually every town and suburb, but also new residents vying for jobs, housing, and a toehold on the ladder of success. The “barbell” population groups of the Boomers and Generation Y challenge the markets, from where and how we live and work, to how we learn, heal, and relax.

Ever-Evolving Technologies—Technology is pushing more information into the marketplace and onto our smartphones at warp speed. We can monitor and manage our activities, our navigation, and every value proposition with ever more accuracy and in real time. The community-building potential of communications technology is on a meteoric catapult across the globe, replacing entire industries along the way. Whether to detect underperforming heating, ventilation, and air-conditioning equipment, monitor the arrival of the next bus, or catalyze political engagement, communities and businesses are exploring the power of instant connectivity for good or ill.

These underlying forces will combine with many others in indeterminate ways over the coming years. In the world of real estate investment, the continual challenge is to understand new trends, capitalize on new market opportunities, and direct investment funds in strategic ways. No time in recent memory has been as complex or as subject to detailed analysis as our current time—or changing as rapidly...

Click here to download the entire report as a .pdf file.