A Big Picture Look at the Future of Real Estate Development

Bruce Strebinger

August 11, 2022

A big picture look at the future of real estate development focuses on five key areas, including multifamily, office, retail, industrial, and residential. It’s helpful to examine past data to understand what each category means. In addition to data, the article provides examples and comparisons of different market segments. The future of real estate development is shaped by the current and future demands of these sectors.

Multifamily

Demand is expected to continue to outpace supply in the near and long term. According to recent estimates, there will be 4.6 million more renters by 2030 than there are now, and current supply trends are not expected to accommodate this demand. At the same time, demographic trends point to a significant decline in homeownership rates. Even with these problems, the multifamily market has always had high occupancy rates and rising rents, and this trend is likely to continue.

Office

The office sector continues to be a reliable source of cash flows. Moreover, the long-term nature of underlying leases makes cash flow predictable. Also, the demand for office space typically moves along with the overall trend in employment. Hence, office space will experience greater absorption rates during periods of higher employment, such as in knowledge-based and professional services sectors. However, vacancies are expected to remain high.

Retail

The retail sector is facing a tough time. This largely reflects the state of consumer confidence, which is a powerful leading indicator of overall economic performance. But savvy investors are diversifying their tenant mix to counteract the impact of reduced demand in any particular retail segment. Here are three areas to focus on in real estate development today. -The retail space is in high demand from tech startups and e-commerce.

Industrial

There are two general types of industrial real estate. Large, national manufacturing enterprises and smaller, private investors are looking for significant buildings with multiple buildings. Small-scale manufacturing enterprises, on the other hand, need a single industrial building or small strata complex that is more affordable. Industrial real estate developers may also target a specific type of user, such as a distribution center. In either case, the location is important to the type of business.

AI-powered CRMs

Unlike humans, AI can recognize errors in real estate documentation, allowing them to be more accurate and involve key consumers in the process. The startup CityBldr uses artificial intelligence (AI) infrastructure to identify undervalued, multi-property parcels. AI can also assist in matching individual sellers with commercial buyers. With this improvement, the real estate business is set to grow into an industry worth billions of dollars.

Blockchain technology

Real estate is a traditional industry, with mountains of paper and multiple parties involved. Tens of thousands of names are often involved, and the process can take years. Blockchain technology has the potential to revolutionize real estate and change the way we buy, sell, and rent houses. But the real question is how quickly the industry can adopt it. Inertia, regulation, and education are all issues preventing widespread adoption. In the past, the Internet was only widely adopted when enough people became educated about its benefits.

Telecommuting

Taking a big picture view of the future of real estate development means considering how telecommuting may affect the industry. Many people are already making the switch. Today, new homes are beginning to feature quiet offices equipped with robust electronics. New office buildings are also beginning to offer drop-in spaces with efficient “plug-and-play” technology. Those who are still working traditional jobs can opt to telecommute, allowing them to focus on their primary priorities.