When the latest Emerging Trends in Real Estate® report was unveiled at the 2016 ULI Fall Meeting in Dallas, the panel discussion quickly turned to how to convert the research into action.

Several revelations in the report point to an industry in transition, one that is trying to find ways to maximize investments in a time of low interest rates and global uncertainty. Competitive was the word most often used to describe the market by the more than 2,000 respondents contacted for the report, said coauthor Andrew Warren, director of real estate research for PwC.

“It’s competitive at all levels,” he said. “It’s competitive to find deals to buy, develop, get financing, to do financing for. There’s a lot of competition in the market because—let’s face it—U.S. real estate around the world is still wildly popular.”

While there is a “little more optimism” in the market than in past years, panelists agreed that the industry needs to change its approach to capitalize on the trends identified in the report.

“We’re going to have to work with modest growth,” said Thomas Arnold, head of Americas real estate for the Abu Dhabi Investment Authority, during the conference’s panel discussion on the report.

The theme of Emerging Trends—“playing for advantage, guarding the flank”—characterizes the industry as playing a game of chess, with a playing field requiring “an artful mix of skills, tactics, and strategies.” The report focuses on trends transforming the industry, including flexibility, or “optionality”; the influence of technologies such as augmented reality and the “connectedness of cities”; and the growing influence of small entrepreneurial developers. But the report also emphasizes the headwinds facing the industry, such as labor scarcity and the increasing economic divide.

Cautious was the word that panelist Trammell Crow Company CEO Matthew Khourie—and many others interviewed for the report—used to describe the state of the industry going forward.

“We’re very long into the cycle,” he said. “Whenever you get long into the cycle, it is always appropriate to change your thinking.”

Sentiment remains strong, but “it’s not as strong as last year,” said Greta Guggenheim, chief executive of TPG Real Estate Finance Trust. Prime real estate should continue to be “very attractive” to investors due to yield, “but it’s very toppy,” she said, citing hotels in particular.

Guggenheim and Arnold were among several speakers during the conference to push back on the idea that the U.S. economy is in dire straits, a recurring theme during the election cycle. Many economic factors remain solid, with business and consumers relatively lowly leveraged, consumer spending strong, and steady job and population growth, Arnold said.

 “I don’t think there is a systematic problem,” he said. “I think there are a ton of reasons to be positive.”

Unlike in the last downturn, the industry is not highly leveraged, with equity still driving financing. “The lending community is showing a lot more restraint,” Arnold said. “We’re seeing a level of modesty and prudence on the debt side.”

Traditional lenders remain cautious, especially for construction financing, Guggenheim said. That restraint is “definitely feeding nonbanks,” especially the “shadow banking” industry, which is having a growing influence, she said.

“We’re seeing tremendous demand for debt products,” Guggenheim said.

The Emerging Trends research ranked Austin and Dallas number one and two respectively on the list of U.S. markets to watch, but the Texas cities represent very different opportunities, Khourie said.

Austin offers several positives, including strong job growth, Khourie said. “And the type of jobs they’re creating are really good jobs,” he said. And Austin is “one of the few cities that created a 24-hour environment,” he said.

But it “may be too late” for a big upside in Austin, Khourie said. It is still a small market, he emphasized. “It could be overbuilt very easily,” he said. “I would be cautious.” Austin’s growth in overall numbers is still small compared with that of Dallas, which offers a more diversified business and economic base, he said.

“Dallas has more running room than Austin,” Khourie said.

It was no accident that there are only two gateway cities—Los Angeles and San Francisco—in the top ten markets to watch, panelists agreed. There is a growing acceptance that many of the largest “safe haven” markets may be “fairly priced” or overvalued, with more downside than upside.

Report respondents see more opportunity for growth in secondary and noncore cities. Seven of the top ten cities on the list are showing economic growth well above the national average, the report notes.

Emerging Trends identified several “expected best bets,” focusing on ways to find the gaps and opportunities in the market. One was becoming a “problem solver” to help “make deals fly” in the “middle of the capital stack.” Other best bets included the use of technology to reduce construction costs, solving the e-commerce “last mile” problem, and finding opportunity in “adjancencies.”

Each opportunity requires a different approach than in the past, when similar ideas were brought forward. For example, “adjancencies” is “not quite like putting self in path of development,” but instead looking for openings around hot markets, Warren said.

Like the report, speakers challenged many of the standard theories about the future of development. “The suburbs are not dead, in my view,” Khourie said, in response to a question from the audience. While millennials may be gravitating toward cities now, “once they have kids they’ll move to the suburbs,” he said.

Discussion focused throughout the conference on new high-density suburban developments that offer the live-work-play environment. The suburbs are being “redefined,” Arnold said. “I think the action is in premier suburbs,” he said. “They don’t look like the suburban sprawl of the ‘60s and ‘70s.”