6 Real Estate Trends to Expect in 2016
These trends will define real estate in the coming year
As far as the economy is concerned, 2016 got off to a bad start. Between the crashing Chinese market and the trouble with oil prices, there’s good reason to be skeptical of what’s to come—and we’re still less than two months into the year.
Nevertheless, the predicted real estate trends for 2016 are not entirely pessimistic. According to a study by the Urban Land Institute, the coming year is looking good. Here are some of the trends that experts are looking out for.
1) Second-tier cities won’t be second-tier for long
There are a slew of relevant but less well known cities in the US that command significant appeal among young workers while still offering cheaper rent than the likes of San Francisco and New York. Cities like Austin and Portland will continue to grow in 2016, bolstered by their “hip” factor and their affordable prices for both tenants and investors.
2) Millennials are leaving the urban cores
Every generation gets older, and millennials are no exception. As millennials continue to get married and have kids, more and more families will move to the suburbs. At the same time, they haven’t abandoned their youthful tastes; experts are expecting to see suburbs develop more in line with millennials’ preferences, with features like public transit and trendy, modern shops. These new suburbs should grow around urban cores to meet the needs of these families.
3) Open offices are on the rise
This one won’t come as a surprise for anyone who follows the coworking scene. The average sq ft per worker continues to shrink (from 253 in 2000 to a predicted 138 by 2020), suggesting that an increasing number of workers is interested in sharing their office space. Investment in this industry will continue to boom.
4) Some parking lots may be torn down
Driving isn’t as big as it used to be, especially in downtown cores where traffic is a nightmare. Younger city-dwellers tend to rely on public transit and ride-sharing, and car ownership isn’t as common as it once was. With this in mind, city planners are wondering if parking lots are a good use of precious downtown land. Surely parking lots won’t be removed en masse, but some cities may opt to replace centrally-located parking lots with property that gets more use.
5) The roof garden is still relevant
Roof gardens caught on a few years ago thanks to both their environmental benefits and their aesthetics, and it looks like this trend isn’t going anywhere. Roofs of buildings usually don’t get much use, so it’s great to see building designers generating value from the space.
6) Algorithms haven’t replaced investors yet
Investment-by-algorithm has always been a hot topic in stock trading, and there are plenty of real estate investors who use data to analyze market trends too. Even so, all markets are infamously unpredictable, and the steady up-and-down swings suggest that the system has not been beaten yet. If you’re thinking of investing in real estate, don’t rule out discussing the matter with a professional; humans with a nuanced understanding of their chosen real estate market are as essential as ever.