![\"The](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/01\/Gensler_The-MOD-Breaking-the-Box-of-Parking.jpg\")
<\/a>The MOD, a hypothetical Los Angeles cultural center designed by Gensler, shows how parking garages can be coverted to other uses as parking needs diminish. Garrett Rowland, courtesy of Gensler<\/p><\/div>\n
Just about any real estate professional is likely to tell you that the industry can be slow to change. Steeped in tradition and time-honored techniques, the industry has thrived thanks to its dependability and cyclical nature, but powerful forces are creating disruption on an unprecedented scale.<\/p>\n Technology, of course, is the best-known source of disruption, profoundly influencing operations and strategy in all property categories. E-commerce is pushing retailers to adopt omnichannel strategies and retail owners to rethink tenant rosters while also creating a boom in distribution center development.<\/p>\n The office sector is also in transition as occupiers\u2019 space, flexibility and connectivity needs evolve, while in the multifamily space, technology has opened the floodgates for a variety of amenities that residents expect owners to provide.<\/p>\n Generational shifts, too, are in play. Millennials have become the largest cohort, while the Gen-Z population is beginning to enter the workforce. At the same time, Baby Boomers are retiring later, and the population age 65-plus is set to nearly double by 2055, the Census Bureau estimates.<\/p>\n It\u2019s impossible to predict how these trends will disrupt the real estate industry next, but adapting to them is vital to staying relevant and thriving. Meanwhile, forward-looking firms are taking notice of additional disruptors that will make their mark on 2018 and the years to come. In this special report, we explore four of those far-reaching trends.<\/p>\n \u201cIf you tend to curtail immigrant populations from moving (into the U.S.), then you\u2019ll have less of that productive slice of the worker population that you do need to support an aging population,\u201d<\/em> he\u00a0 explained. Labor shortages were already prevalent well before the announcement of November\u2019s record-low 4.1 percent unemployment rate.<\/p>\n According to an August 2017 survey from Autodesk and the Associated General Contractors of America (AGC), 70 percent of construction firms experienced difficulty filling the hourly craft positions that represent the bulk of construction industry jobs. The shortage suggests that restrictions on immigration could further tighten the labor market and slow development.<\/p>\n \u201cIn the short term, fewer firms will be able to bid on construction projects if they are concerned they will not have enough workers to meet demand,\u201d<\/em> AGC CEO Stephen Sandherr commented.<\/p>\n States like California, Texas and New York\u2014which together account for 46 percent of the nation\u2019s 43.2 million immigrants, according to the Pew Research Center\u2014would likely be hit hardest.\u00a0\u00a0<\/p>\n In addition to impacting the workforce, more restrictive immigration policies could hinder multifamily growth. Immigrants have accounted for nearly 28 percent of all household growth over the past 20 years and have aided in the recovery of many housing markets hurt by the Great Recession. With average population growth expected to slow from 0.9 percent per year between 2000 and 2010\u00a0 to 0.7 percent annually between 2016 and 2030, according to a recent study commissioned by the National Multifamily Housing Council and the National Apartment Association, immigration will be necessary to fuel multifamily housing demand. Immigrants have a higher propensity to rent than the population as a whole and typically remain renters longer, the study showed.<\/p>\n Despite uncertainty surrounding health-care policy, owners are expanding and transforming properties to serve an aging population, noted Spencer Levy, CBRE Americas head of research. Only 20 years ago, health-care services were largely located on hospital campuses; today, suburbs or secondary markets with large populations of seniors tend to be the locations of choice.<\/p>\n Facilities that bring services closer to patients\u2014freestanding ambulatory-care centers, standalone emergency clinics and large MOBs, for example\u2014are in high demand, according to Marcus & Millichap\u2019s second-half 2017 MOB report. Medical office design is also changing: Online documents are reducing the space required for storage, and evolving uses call for more flexible floor plans.\u00a0<\/p>\n As the industry navigates a mature recovery, many investors are eyeing health-care real estate, which Levy expects will become a growth engine, particularly in secondary and suburban markets, where job drivers tend to be less diverse.\u00a0<\/p>\n Vacancy rates among senior-care facilities average 8.4 percent nationally, compared to 4.5 percent for the multifamily sector, Calanog noted, a sign that the late-1990s influx of product outstripped demand. \u201cPeople are living longer and living higher-quality lives, which means they\u2019re delaying demand for assisted-care homes,\u201d he observed. By contrast, vacancy at memory-care and skilled nursing facilities is declining because \u201cat that point it\u2019s no longer a choice, it\u2019s a need,\u201d he related.<\/p>\n Baby Boomers are also bucking tradition by retiring later and living independently longer, further bolstering the multifamily sector and constraining senior housing. By 2024, people age 65 to 69 will comprise 36 percent of the labor market, according to the BLS.<\/p>\n The implications are clear: To accommodate seniors choosing to age in place, developers must expand their strategy beyond the often-discussed Millennials. Project sponsors and investors will need to provide designs and amenities to offer seniors an attractive quality of life and facilitate interaction across age groups, according to a 2017 Capital One-MIT Center for Real Estate report.<\/p>\n
As Steven Weikal, head of industry relations at the MIT Center for Real Estate, put it: \u201cWe have this multitrillion-dollar industry globally \u2026 and yet we still run it off of spreadsheets and PDFs.\u201d<\/em><\/p>\nImmigration\u2019s import<\/h2>\n
<\/a>Though the impact of the Millennials and the aging of the population on real estate is well documented, immigration reform could be even more significant in the long run, argues Victor Calanog, chief economist & senior vice president at Reis.<\/p>\nHealth-care cures<\/h2>\n
<\/a>While a wave of retirements among Baby Boomers may be contributing to the labor shortage, it is a boon for health-care real estate fundamentals. Investors are taking notice, and transaction volume climbed from $4 billion in 2010 to $10.2 billion in 2016, according to CBRE\u2019s 2017 medical office building (MOB) report. Absorption has outpaced new supply for the past seven years, resulting in steadily declining vacancy rates that reached 8 percent in the first quarter of 2017.<\/p>\nQuality search<\/h2>\n
<\/a>Health care is a much-discussed issue associated with the aging population, but another impactful trend is the budding preference for aging in place.<\/p>\n