Two megatrends are currently shaping what will become the new normal after the prolonged period of recovery for the U.S. economy. The first is the rapid emergence of America’s metropolitan areas as the true centers of population and economic growth. For the first time in history, more people are living in urban areas throughout the world than in rural communities.
The second is a worldwide shift in the sources and flows of global capital, creating a new world of funding sources available to be configured in new ways toward new goals. The fluidity of global streams is becoming more pronounced and vast sums of capital are seeking stable, long-term returns.
The real estate industry has reached a pivot point, one at which land use is as much or more about the management and redevelopment of existing space as it is about new development. This emphasis on rebuilding and reusing the old and obsolete illustrates how the “use of land” cited in ULI’s mission encompasses existing buildings and what happens in them, how they are operated, and how they perform over time. Nowhere was this more apparent than at ULI’s recent forum on financing tools for energy-saving retrofits, held in New York City in early June.
When Michael Maples, principal and chief executive officer of Trumark Homes, was asked at a recent real estate conference about his company’s competitive advantage, the answer was unexpected. “We don’t know what we’re doing,” he said. Not that Maples and his partner Gregg Nelson are new to the business; their residential development firm has been active in California since 1993. But it was not until two years ago that they started a homebuilding operation, and what Maples was saying is that they bring a fresh perspective to the industry.
The National Bus Rapid Transit Institute identified seven elements as those undergoing innovation in bus rapid transit.
In the current recession, thousands of stores have been shuttered, new projects have been shelved, rents have been pared, property values have cratered, and retail workers have been sent packing in legions: more than a half million lost their jobs alone in 2008. But as the dust begins to settle and the rolling metal curtains are peeled back for a new sales day, retail is reemerging as a different animal, one that is leaner and keener.
With consumer confidence low and vacancy rates high, shopping centers across the globe face a challenging economic climate. Yet the current downturn also paves the way for renewals of existing centers. Departed anchors create opportunities for radical interventions. At the same time, municipalities are strongly motivated to provide economic incentives to help turn around declining malls and shape them to be more responsive to their communities. The following ten shopping centers, all completed in the last five years, offer new strategies for bringing cultural uses into shopping centers, examples of contemporary architectural design that responds to the particularities of the local context and population,creative applications of urban design principles, sensitive incorporation of new construction with historic buildings, as well as examples of navigation of the complexities of public/private partnerships to provide benefits neither sector could have supplied on its own.
From an open-air shopping center in Guadalajara, Mexico, to a LEED Platinum–rated convention center in Vancouver, British Columbia, and from the 5 million-square-foot (465,000-sq-m) L.A. Live development in Los Angeles to the eight-unit, 72-foot- (22-m-) wide Thin Flats townhouse project in Philadelphia, this year’s Americas winners in the ULI Awards for Excellence program integrate solutions to environmental challenges as well as social and economic challenges.
The ten Americas award winners and one Heritage winner constitute a portfolio of projects that reflect a healthy balance among economic viability, ecological stewardship, and social equity, noted jury chair Marty Jones, president of Corcoran Jennison Companies in Boston. “Many of these developments involve environmentally sustainable features, public/private partnerships, and innovative financing. All have proven to be financially successful in their industry class while enhancing and strengthening the surrounding community.”
After months of uncertainty, the California, Oregon, and Washington real estate industry appears to have stabilized. That’s good news. The even better news is that the real estate sector is starting to improve, albeit slowly.
With employment losses moderating and industrial productivity showing renewed life, the economies of California, Oregon, and Washington appear to have hit the trough and should reflect modest steps toward recovery through 2010, says Jeffrey Munger, director of research at Kennedy Associates Real Estate Counsel, LP. “California, Oregon, and Washington have each been significantly [affected] by the recession,” he says. “However, it should be noted that these states have a high concentration of industries such as health care, information technology, and business and professional services that are anticipated to lead the nation in growth over the next few years. M oreover, after a period of decline, strengthening trade volumes with now-expanding Asian economies will serve to provide a lift to vital West Coast ports over the short term.”
As commercial property development and homebuilding practically came to a standstill last year, many real estate companies laid off employees. This year, amid signs that the U.S. economy is slowly recovering and property markets may be nearing the bottom of the cycle, companies are beginning to hire again. “We are beginning to see signs of life,” observes Tony LoPinto, head of the North America real estate practice at executive recruiting firm Korn Ferry International.
While the capital markets ended the year in positive territory, few real estate investors would say that 2009 was a “good year.” Property fundamentals, most notably rental rates and occupancy levels, continue to deteriorate; demand drivers showed few signs of recovery; and banks gave little indication of a desire to restart lending to commercial real estate. Furthermore, the bid/ask spread between buyers and sellers remains stubbornly high.
Nevertheless, real estate investment trusts (REITs), as measured by the National Association of Real Estate Investment Trusts (NAREIT) U.S. Real Estate Index, delivered an approximate 27 percent return during 2009. It was a bumpy ride along the way, with the index touching a multiyear low of 185 in March before ending the year at 325.