The next decade will be a reinvention of single family housing, leading to a wave of multifamily rental developments that will be designed according to consumer preference. For years, the models for developers were based upon sales numbers and price. That model will fade away over the next decade.
That was the consensus at ULI’s 2010 Fall Meeting session entitled, “Lessons Learned: New Models to Meet Changing Consumer Demand.” Panel speakers centered around how developers are adjusting their marketing strategies in order to deal with shifts in consumer attitudes and demographic trends. These dramatic changes are transforming the way people live, shop, work, and spend their free time. As a result, development in residential, retail, mixed-use and community development will reflect market research conducted on current and potential consumer attitudes.
“Customers know what they want, so you have to ask them, ” said Teri Slavik-Tsuyuki, senior vice president and chief marketing officer of Newland Real Estate Group. “The bottom line is for developers to be prepared to adapt. Developers need to see the impact of trends on priority demand of amenities and how consumers’ sense of value has been re-defined.”
Federal Real Estate Investment Trust’s senior vice president for development, Donald Briggs, says that urban living will be a continuing trend for the next decade. As cities adjust infrastructure to meet workforce demands, developers will create projects that complement. All of this will be driven by individual demand.
“If you want to know how people will live in the next decade, you need to look at what people are watching on television,” said Briggs. “People want the lifestyles of those on their favorite television shows. Developments and cities that provide those opportunities are the ones that will thrive.”
Timothy Sullivan, principal of John Burns Real Estate Consulting, stressed the need to understand what consumers are willing to pay for. His company’s market research found that despite the housing crash and economic downturn, people are not as disillusioned with homeownership as developers might think. Ninety percent of the population believe it is a good time to buy a home and fifty-five percent say that they would buy a home if the product was in accordance to their preferences. Sullivan also discovered that seventy-eight percent of the population want a masterplan and are willing to pay homeowners association fees.
What does it all mean for developers? It appears that there will be growth, but it will be bumpy. While there will be seismic shifts in population and income, there will also be changes in consumer behavior. American culture is known for its ability to redefine and rejuvenate markets in all industries, the built environment will not be an exception.