Winter Issue 2022 - 65

OUTLOOK2022
had the easiest transition to remote working and are likely
to see the lowest share of workers returning to the office full
time.
Proptech
The property technology (proptech) industry has reached
a level of acceptance usually reserved for a more mature
sector. The use of technology to understand and manage
properties better has accelerated sharply. Even more, technology
can help tenants efficiently use their leased space
as the way people work continues to evolve. A new generation
of data analytics seems especially promising, allowing
companies to use artificial intelligence to proactively identify
opportunities rather than sift through deals one by one.
The chief operating officer of a property management and
development company detailed the cost savings that its portfolio
realizes through the use of property management software
that determines the required level of cooling or heating
based on building occupancy: " Now when you walk into a
room or building, your occupancy is actually influencing the
amount of chilled air or heated air that we're distributing,
and we lower it as the population of the building leaves and
we raise it when occupancy levels come back. It's a great tool
that saves us roughly 55 cents a foot per year. "
Climate Risks
The increasing frequency of natural disasters and more convincing
research connecting these to human-induced climate
change are both raising the alarm for greater action. Despite
industry participation in environmental accreditation programs
and broader environmental, social, and governance
(ESG) initiatives, investors have been slow to incorporate
environmental risks into underwriting.
That is because broader adoption is being hindered by
the lack of standardized metrics. One real estate investment
executive summed it up with, " We consider climate change
in all of our valuations but don't have a real formal process
to account for it. " One factor that may lead to formalizing the
process: the ability to show enhancements to risk-adjusted
returns.
Age of Uncertainty
The predictability of property markets over the past decade
ended decisively with the pandemic and ensuing recession,
heralding the beginning of a new era of heightened uncertainty.
A
capital markets director for a global investment fund
describes his confidence level as " 100 percent more confident
than I was a year ago, but only 50 percent more confident
than I was six months ago. " And there is more about
which to be uncertain. Says a portfolio manager for a national
office owner, " It seems like more things are changing at the
IMPORTANCE OF ISSUES FOR REAL ESTATE IN 2020
same time than during the typical cycle. We are dealing with
if and/or when demand will come back, what type of space
they will want, and everyone wants lease-term flexibility! "
Prospects by Sector
Industrial/Logistics. Industrial real estate remains the top
sector leading the pack for both investment and development
prospects in 2022 as it has for nine straight years dating
back to 2014. In pulling e-commerce penetration forward, the
COVID-19 pandemic amplified the need for resilient supply
chains and modern stock, which, in turn, has propelled
demand for logistics real estate.
Housing. Housing affordability worsened during the pandemic,
with home prices and rents barely pausing during the
brief recession and then quickly accelerating as the economy
reopened.
COVID-19 also revealed the connection of shelter to health
outcomes, as was explained in the ULI Terwilliger Center for
Housing's 2021 Home Attainability Index. Says one affordWINTER
2022
URBAN LAND
63
Winter Issue 2022

Table of Contents for the Digital Edition of Winter Issue 2022
