Real Estate Trends 2016
Last week Urban Land Institute Columbus (ULI) hosted local and national leaders to share insights on real estate trends. ULI conducted a report in late September to collect feedback from industry experts so it could assess the condition of Central Ohio's real estate market. ULI also brought in a national expert to speak to broader real estate trends.
Among the speakers was Jung Kim, Managing Director of Research and Business Intelligence from Columbus2020. Kim shared that while many believe millennials are acting similarly to the generations that preceded them, they’re developing or “growing-up” later than previous generations. They still want a place to stake claim (as well as good school districts), just like the generations before them. Once they reach the age of settling down and growing their family, they will likely move to smaller communities that are close to or even inside a major city.
This has also had impact in corporate real estate. With millennials moving to the central hub, commercial real estate continues to be the more attractive option for office space, as opposed to outlying suburban areas. Anything being built in and around the downtown area is booming.
While millennials are a hot topic right now, presenter Chris Herbert, Managing Director of the Joint Center for Housing Studies at Harvard University, shared that the aging baby boomer generation is also a focus. Over the next 15 years, as this generation hits retirement age they will have to reevaluate housing needs. Accessibility and convenience will become priorities and large, two-story homes will make less sense. Also, once their kids are established and they become true empty nesters, baby boomers will need to downsize.
New single-family housing construction is still well below normal historic levels and homeownership is as low as it’s been since the 1990’s, yet multi-family housing is doing incredibly well—actually, growing at levels never before seen. However, that might not last well into the future. Herbert indicated that it looks eerily similar to the late housing crisis bubble.
However, there is opportunity to offset any negative impact to the multi-family housing boom, with millennials and boomers “trading places.” Multi-family real estate could shift to accommodate retirees, instead of young professionals through continuing care retirement communities. These developments provide single-family homes, independent living, assisted living, and nursing homes all within one community, allowing couples to move into more appropriate housing as they age without disruption to daily routines and a network of support, both physically and emotionally.
If there is an economic bubble occurring in the multi-family market, diversification is a tactic learned from the last recession. Those surveyed in Central Ohio tend to believe the best way to hedge against another sector crash is to diversify rather than pull out and reduce risk. It’s important to not only ride the wave, but to take necessary steps to limit the crashes impact on overall business.
by DREW GATLIFF
Drew is a project manager at M+A and graduated from Bowling Green State University with a degree in architecture and environmental design. His favorite vacation spot is anywhere with good company and a few cold beers.