BY EMMA HALL | OB WEB EDITOR
“This will be the decade in which we find out who wants to live above a Walmart,” says Uwe Brandes, vice president of initiatives at the Urban Land Institute's Washington D.C. branch. Environmental, financial and demographic trends have created a new economy that will radically change urban planning and development patterns through 2020. These trends were the topic of discussion at an event held by the Urban Land Institute Northwest at the Multnomah Athletic Club earlier this week.
The event coincided with release of ULI's new publication What’s Next? Getting Ahead of Change — one of two books released to celebrate ULI’s 75th anniversary last year. It aims to dig into how drivers of real estate value are changing, and how real estate professionals can stay ahead of changes. It is based on the belief that exit strategies on a land/property investment is going to be different than when you made your investment, due to natural market cycles lasting about 7-10 years.
Brandes reviewed the book's five main points: scale up, stay close, make over, jump ahead and keep watch. Brandes explained that Portland was a good example of these directives.
“Portland is just such a wonderful, unique place,” he said. “While it’s not the largest market, people pay attention to what’s happening here.”
“In terms of explosive growth, we [in America] have so much more in common with Asia now,” Brandes said. At the same time, the industry is scaling down at home and at work. The average American workplace will only have 150 square feet per worker by 2020. “Less really can be more—scale down and become unique in your market,” Brandes recommended. Tiny homes are catching on in a big way locally.
Speaking of both Copenhagen and Portland, Brandes described examples of cities that successfully knit communities back together after the era of suburban sprawl. “There are those markets that have been known innovators for a long time, but it’s not time to stop and rest on laurels,” he said.
Portland is one of the best examples of public and third space successfully competing with private space, especially with Generation Y, who are making a conscious decision to live in cities. A recent study by Portland State University found that “since 1980, the Portland metropolitan region has attracted college-educated individuals under the age of 40 at some of the country’s highest net migration rates.”
The third point of the book implores developers to work with existing aspects of cities, instead of only considering giant projects to be “development.” “The impact these small projects have within cities is really reusing existing assets,” Brandes said. Existing suburbs and city outliers represent a new frontier of reinvention, such as the $1.6 million Latino Mercado being built in a renovated car dealership in East Portland.
A makeover also applies to products and services. “A sharing economy can mean new real estate products—especially for Gen Y,” Brandes said. He also implored real estate professionals to think about providing services, instead of being transaction-based, similar to Living Room Realtors’ business model.
The future of technology will change the market in ways not yet imaginable. Online sales are going up, but not just for retail. Education and other online sales are also increasing. The effect this will have on areas where jobs are mainly at universities and hospitals will affect land values in the near future.
Hurricane Sandy is just one of many recent disasters that industry leaders can learn from to prepare for the future. “Black swans become normal,” Brandes explained. “At the very least, vigilance should eliminate surprise about upcoming surprises.” The impending Oregon earthquake is one such black swan that planning officials have to prepare for.
It's no secret that the real estate industry was one of the hardest hit by the recession. But ULI sees the economic downturn as an opportunity for the industry to drive change in the coming decade, rather than just accept it.
Web Editor Emma Hall writes about the intersection of Generation Y and the economy