Increased confidence in the commercial real estate market has taken hold since the U.S. Presidential election, according to a recently released report from U.S. law firm Akerman LLP. The eighth annual Akerman U.S. Real Estate Sector Report revealed 53% of investors and lenders are more optimistic about the 2017 outlook for the U.S. commercial real estate market, compared to only 38% last year.
For the first time since the launch of the Akerman Report in 2010, commercial real estate leaders predict single-family home building (43%) will outpace multifamily development (37%). The Akerman Report shows investors and lenders anticipate an upswing in housing development across suburban markets that will continue to rival walkable, sustainable urban centers. Investor attention will focus on replicating the urban experience in smaller, scalable communities with ample access to public transportation. More than 60% agreed the preference for a live-work-play lifestyle in a compact city center is among the top three trends impacting U.S. real estate.
Outside the urbanization of suburbia, creative segments continue to emerge in the residential property market. So-called “agrihoods,” or sustainable farm-to-table centers, are forming in suburban spaces where people can surround themselves with community gardens and a sense of country living near the city. According to the Urban Land Institute, incorporating agriculture and food-based amenities is a growing trend in new home development and more than 200 such agrihoods exist or are being developed nationwide.
In addition, 38% of real estate executives surveyed for the Akerman Report see the aging population as the most significant trend impacting real estate development. Increasing demand for community healthcare and senior housing is transforming traditional town centers. Communities across the country are forming identity around large health systems, including the suburbs where outpatient care is growing at accelerating rates. As Gen X, Millennials and future generations place higher importance on healthy and conscious living, real estate developments will increasingly incorporate wellness into their concepts. According to the Global Wellness Institute, communities, master-planned for the health of their residents is a concept that is moving from the niche to the mainstream. The market for residential, hospitality and mixed-use real estate that incorporates wellness lifestyle elements into its design, amenities and services is now one of the three fastest-growing segments in the $3.72 trillion global wellness industry. In fact, the $119 billion wellness real estate sector is expected to reach $152.8 billion by 2020.
"A number of national, regional, and local developers are still very much focused on building communities outside the urban core, which provide the same level of comfort and attractions of city centers," said Cecelia Bonifay, chair of Akerman's Land Use & Sustainable Development Practice. "These new, reimagined suburban communities have all of the local-sourced restaurants, they've got the farm-to-table ethos in place and they’re walkable. They're near transit hubs. They have good schools. They have open space. There’s a big difference between the notion that everyone is moving into the urban core — which in many ways is hype — and the reality on the ground of reinvented suburban centers, which I think are a compelling investment bet — be it mixed-used projects with office and retail components, or sustainable communities developed around green, or energy-efficient concepts. The reinvention of suburbia has paved the way to a wave of construction across the country."