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Emerging Real Estate Concerns

Here are the Counselors of Real Estate's top 10 list of issues most affecting the real estate market in 2019:

  1. Infrastructure - Roads, bridges, tunnels, railways, airports, the power grid, water and storm water systems, and the levees that protect cities and farmland from flooding appear to be giving way with greater frequency.

  2. Affordability - Especially in California

  3. Weather and climate - Weather and climate related events present physical and operational risks for real assets. Both in terms of acute risk from hurricanes, flooding, wildfires, landslides, and extreme snowfall, but also chronic risks from sea level rise, drought, heat waves, water scarcity, and food security.

  4. The technology effect - Tech is going to drive the capital markets, use of space, leasing, brokerage, valuation, and building operations

  5. End-of-cycle economics -The extended upcycle has encouraged increased speculative development in non-traditional product and even in multifamily in some markets.

  6. Political division - pretty self-explanatory but the faceoff between a Democratic-controlled House of Representatives and a Senate aligned almost unanimously with a Republican-controlled White House has brought governance to a screeching halt.

  7. Capital market risk - As risk tolerance, perception of the market’s position in the cycle, and tastes and preferences for space change, so does pricing and demand.

  8. Population migration - Population is increasing in key places in all regions of the country, and yet other areas are experiencing net population loss. California is experiencing departures.

  9. Volatility and confidence - Confidence is fundamental for decisions to invest, spend or not spend, increase or decrease activity.

  10. Public and private indebtedness - Nothing could have a bigger negative effect on property values than higher long-term interest rates so it's something to watch.

Source: The Counselors of Real Estate, July 1, 2019

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