Blog

Top Ten Issues Affecting Real Estate™ 2018-19

CRE today shared the 2018-19 Top Ten Issues Affecting Real Estate™—the issues and trends most likely to impact commercial and residential real estate. Jacqueline Buhn is a long standing member of The Counselors of Real Estate®, the global professional association which annually creates this list. Members of The Counselors organization are recognized property experts who provide specialized, objective real estate advisory services to clients.

 

Current Issues Impacting Real Estate

Topping the Current Issues list is the cost of money—Interest Rates and the Economy. As interest rates rise, the commercial and residential real estate markets are experiencing decreasing demand for commercial property, and higher home mortgage rates. Rate increases also limit value appreciation for commercial real estate and make housing less affordable.

 

Politics and Political Uncertainty was a close second on The Counselors’ list.  Tax reform and policies enacted to change the balance of trade with other countries impacts jobs, incomes and property of all types, commercial and residential.

 

Other current issues include:

  • The lack of Housing Affordability across nearly every income bracket with the exception of the wealthiest households.

 

  • Effects of Generational Change and Demographics—for the first time in more than half a century, there are four distinct groups exerting influence on both commercial and residential real estate–aging Baby Boomers, a similar number of Millennials, and the smaller groups on either side of Millennials (Generation X, now mostly middle-aged), and Generation Y, including students and those in their early 20s.

 

  • E-commerce and Logistics—the growing practice of online shopping is affecting the retail sector with pressure on providing convenience, selection and fast delivery times, while impacting warehousing and infrastructure with increased demand.

 

Longer-Term Issues Affecting Real Estate

 

Infrastructure leads the list of longer-term issues—roads, bridges, airports, water and sewer lines, electricity, even public transit, all necessary to sustain and expand cities and communities—are rapidly deteriorating.  U.S. infrastructure was given a D+ rating in the American Society of Civil Engineers 2017 Infrastructure Report Card. As much as $4.5 trillion is estimated by that organization to improve critical infrastructure by 2025.

 

Disruptive Technology—ranked second of the longer-term issues. Examples include advanced robotic manufacturing and warehousing; driverless cars and trucks; the extensive availability and utilization of personal and transactional data (which enhances all kinds of business decisions), “smart” building technology that enables efficiency; global connectivity; automated business processes; and information protection through cybersecurity.

 

Other longer-term issues include:

  • Natural Disasters and Climate Change—projected to result in property and environmental damage from events such as severe storms, wildfires, floods, earthquakes, volcanic activity, and rising sea levels.

.

  • Immigration—if reduced by law, will have a negative impact on new housing starts and home purchases as well as worsen the current skilled labor shortage in the U.S.

 

  • Energy and Water—natural resources important to property and quality of life, yet threatened by not only environmental damage but also by entangling state and local regulations which complicate development; there are no national regulatory standards.

 

On the Watch List are four additional issues—Construction Costs, Urbanization/Suburbanization, Tax Cuts and Societal Leadership.

View the full list of issues and trends with explanations and interpretations on The Counselors of Real Estate’s website.

.