2024 Winter Issue of Urban Land - 80

Emerging Trends
around the Globe
BETH MATTSON-TEIG
A common theme across all three of
this year's ULI/PwC Emerging Trends
in Real Estate®
2023 reports-three
separate publications covering the
Americas, the Asia Pacific region,
and Europe-is the need to adjust to
changed economic conditions and the
potential for a global recession in the
near future.
But those concerns vary in different
parts of the world. In the United
States and Canada, many industry
leaders, while concerned about current
economic conditions, say they are
reasonably upbeat about longer-term
prospects and expect asset values
eventually to soar to even higher
levels. In Europe, many industry leaders
interviewed for the report say they
have seen little direct effect from
Russia's war in Ukraine but that the
conflict clearly has exacerbated the
problem of a weakening economy,
pushing inflation and interest rates
higher, and created uncertainty
about European nations' strategy for
maintaining their energy supplies. In
the Asia Pacific region, industry leaders
seem to be taking a step back and
assessing a market whose direction
is still unclear, even as some of the
strongest markets continue to see
investment and development growth.
ULI members can find all three
Emerging Trends reports at knowledge.
uli.org.
Real estate maRket participants are in the midst
of a " Great Reset " when it comes to adjusting views
related to pricing, risk, and return expectations in
an environment marked by higher interest rates and
slower economic growth. The need to align thinking
and strategies to fit current market dynamics is one
of the key themes in the 2024 Emerging Trends
in Real Estate forecast for the United States and
Canada.
" The good news is that we have more clarity, more
certainty, but the bad news is we don't like what we
see, because the rates are higher for longer, " says
one leading investment banker interviewed. The
report, now in its 45th edition, features proprietary
survey data and insights from more than 1,250
leading real estate industry experts.
Respondents to this year's Emerging Trends survey
believe that the worst of inflation is behind us, with
more than half expecting inflation to decline in
2024, and another third believing that inflation will
at least stabilize. However, only three in 10 survey
respondents expect commercial mortgage rates
to drop in the coming year. Interest rates and cost
of capital constitute the top concern in the survey,
followed closely by capital availability. Debt is viewed
as slightly more available than it was last year for all
sources except commercial banks.
A clear theme highlighted in Emerging Trends is
that commercial real estate investors are becoming
increasingly cautious in their outlook and more
careful in choosing their assets. Such a mindset
reflects the expectation that, in an era of " higher and
slower for longer, " earning an acceptable return will
be harder. Investors are reconsidering not just which
property types they should buy but also the qualities
of specific assets within each property sector.
With commercial real estate capital markets so
disrupted by the recent increases in interest rates,
property owners and investors have turned their
attention to property market fundamentals as the
best way to generate returns. Yet a surprising result
from the survey is that investors are still eager to
acquire new assets. The Emerging Trends Barometer
for 2024 registered its highest " buy " rating since
80
URBAN LAND
WINTER 202 4
Emerging Trends:
United States
Recalibrating expectations
for the era ahead in
commercial real estate
http://www.uli.org
2024 Winter Issue of Urban Land

Table of Contents for the Digital Edition of 2024 Winter Issue of Urban Land
