The AFIRE Winter Conference in New York opened on a positive note: the news was that the Senate Finance Committee had approved a bill that brings the industry one step closer to rolling back FIRPTA. The bill includes legislation to relieve foreign investors of some of the tax burden imposed on them by the Foreign Investment in Real Property Act.

The news was greeted favourably by delegates: In live polling, it was agreed that US taxations and regulations were the biggest impediment to increased investment, particularly by Chinese institutional investors, greater than Chinese government limits on outflows.

“If the government wants more foreign capital to come, FIRPTA needs to change,” Goodwin Gaw, managing principal and chairman of Gaw Capital Partners told the conference. “FIRTPA is very penalising.” Hong-Kong-based Gaw Capital advises large Asian investors, such as China’s Ping An, which – along with all foreign investors – face tax hurdles when looking to invest in US real estate.

Under the bill unanimously approved by the committee, foreign “portfolio investors” could hold up to 10% of a publicly traded real estate investment trust (REIT), up from the current 5%, without FIRPTA taxation. This measure would also be extended to “qualified collective investment vehicles” that meet specific reporting requirements.

The bill will not exempt foreign pension funds from FIRPTA taxation – one of the main goals of those leading the act’s reform – although several senators of both major political parties indicated that they are in favour of extending FIRPTA relief further.

The bill will now be considered by the Senate, and, if passed, will head to the House of Representatives for consideration. The timetables for these steps are uncertain.

The AFIRE conference was largely focused on other sources of future uncertainty. While the organisation’s annual member survey showed the US to be rated the most stable market with the best opportunities, members acknowledged that demographic changes and new technologies posed a risk of premature obsolescence in the suburban office market.

Gabe Klein, special venture partner with Fontinalis Partners, picked up the theme in his keynote address focused on the future of transportation. “The suburbs will have to become cities to survive,” he said. Klein noted a decline in interest in driving by younger people, which was being reflected in a change in the use of space by municipalities and real estate owners and developers. He pointed to the rise in segregated bike space and “road diets” – road redesigns that slow cars down for greater safety for pedestrians and cyclists. “The pedestrian,” said Klein, “is the ‘indicator species’ of a healthy and vibrant city.”

As car use declines, warned Bernardo Fort-Brescia, founding principal, Arquitectonica, “cities are going to face problems with white-elephant parking structures”. But this also represents an opportunity for mall owners and operators: “Parking lots are the biggest assets some malls have, and they can be redeveloped.” While the carless society is not quite on the horizon yet, Fort-Brescia said that the immediate challenge is whether garages can be designed that can in time be converted into something else.

Millennials are looking for walkable cities, and mayors are competing to develop “cooler” cities that will attract a young, mobile workforce, Klein noted. Young people and empty nesters have shared concerns, and redevelopment in their interest in cities is pushing poorer residents out into the suburbs.

It is estimated there are 78.6bn Millenials – those aged between 20 and 37 – in the US. “They are not driving radical change,” said Leanne Lachman, president of Lachman Associates. “Their goals are remarkably similar to their parents’”. But they are moving toward those goals more slowly: “30 is the new 20,” she said. For example, in 2014, only 25% of the cohort owned their residences: 50% were renting and 25% were living with their parents or in student or military housing.

Their preferences are influencing the use of space across the board. In multifamily housing, Millennials are looking for amenity-rich buildings and smaller apartments with affordable studios or one-bedrooms. And 57% are pet owners.

Laureen Cahill, development director, AvalonBay Communities, listed the top five real estate needs of Millennials: good technology connections; flexibility and adaptability; efficiency and convenience; affordability, and a recognition that the cohort has diverse desires.

The Millennial preference for “experience” over “things” presents a challenge for mall operators, said Adam Simensky, leasing associate at Simon Property Group. Simon has been updating the mix with “experiential” tenants, like fitness centres, cinemas, and nightlife. “This drives foot traffic and increases usable hours, but possibility results in lower ROI,” he noted. But as more and more shopping takes place online, bricks and mortar retail has to respond.

In the office sector, there is an emphasis on spaces that foster creative interaction and a smaller footprint per person. Lenny Beaudoin, senior managing director at CBRE, warned that the market would reach 150–175sqft per worker in 10 years, and that building infrastructure would have to be able to accommodate this denser use of space. “Millennials don’t have radically different habits in the workplace, but they believe in the importance of places to socialise there,” he said. “They want more formal meetings, and less connecting through social media.”

There is also the emergence of new workspace models, like WeWork, a provider of co-working space that is currently the fastest growing tenant in the New York City office market and has locations around the US and the world.

“The focus is on new building assets that can accommodate higher density and higher frequency of use,” Beaudoin said. “The spaces that win are able to create unique amenities attuned to the tenancy you want to accommodate.”