NORTH AMERICA – The US real estate recovery is set to continue, spreading nationally, while the mood among industry insiders is one of cautious optimism, according to the 2013 Emerging Trends in Real Estate, released by PwC US and the Urban Land Institute.
More than 70% of respondents expect good to excellent prospects for profitability in 2013, with a rising real estate market helping them to overcome concerns about rising interest rates over the next five years.
Byron Carlock, US real estate practice leader at PwC, said: "The surprise to us is that there is not more optimism. The market is proceeding at a pleasant pace in the right direction."
Based on interviews with 900 respondents, the report identifies trends to watch in 2013.
Among these are the fact that owners and developers are catering to the preferences of the 'millennials', twenty-somethings who looks for collaborative workspaces with good amenities in a green, eco-conscious envelop, and who want to live near where they work, willing to sacrifice size for location.
As a result, the report expects to see acquisitions concentrated in infill locations.
"Top 24-hour urban markets outperform the average, bolstered by move-back-in trends and gen-Y appeal," it notes.
Many of the top 20 markets are the usual coastal performers. San Francisco, New York City, Boston, Seattle and Los Angeles take the top five spots.
"We don't see any surprises in the top 10," said Carlock.
But he noted that the top 20 highlights some unexpected news. One example is Miami, which comes in at number 12 and has made a recovery faster than expected.
Both investment and development prospects have improved dramatically as the city is benefitting from demand both from domestic investors and global capital sources, particularly from South America.
It is also notable that three cities in the top 20 are in Texas – Houston, Dallas-Fort Worth and Austin.
Houston and Dallas have seen marked energy-related employment growth, and the growth of Houston's port is a good portent for future development.
"The smart money is following micro-fundamentals across all markets," Carlock said.
The survey also reveals increasing interest in secondary and even tertiary cities, in a search for yield.
Leading secondary markets include Austin, Charlotte, Nashville, Raleigh-Durham and San Jose.
The report says: "A comparison between the big six and the field in terms of certain macroeconomic elements reveals some strong areas for these markets.
"For example, averages of GMP, industrial diversity, and 10-year echo boomer growth all point to strength for secondary metropolitan areas."
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