By Tom Gibson – Partner, Sr. VP-Nashville
Every year, the Urban Land Institute publishes The Emerging Trends Report, which is prepared by Price Waterhouse Coopers. I thought our employees [and others] might find some trends that will impact our business and our industry to be of interest.
The urbanization of America has given life to cities and, more importantly, the urban core. The transformation of Nashville’s urban core is a dramatic example of this trend as the key ingredients of housing, retail, dining and the ability to walk to work have vividly changed our city. This trend will stress infrastructure and it will create an increased need for funding of construction of mass transit in our community and other similar cities.
The age game is going to be very impactful; the millennials are an even larger segment of the population than baby-boomers. They are waiting longer to marry and this has had a significant impact on the housing market, particularly apartments. The generation that will follow the millennials is known by demographers as generation Z. This will be a smaller population sector and they will impact the real estate economy with a slowing of household formations. Both baby-boomers and millennials will have a dramatic impact on the workplace as you have one generation that will be retiring and leaving the employment pool and another large generation who will be entering the employment pool.
Forward looking, businesses are waking up to a realization that the retirement of a large fragment of the population will generate a stress on the labor pool as an older experienced workforce exits the marketplace. This retiring generation will have an impact on real estate as they downsize and relocate during their retirement. The number one issue that determines where retirees live is their proximity to their grand-children. As a consequence, if you live in a city with a vibrant young workforce that is creating jobs, you are likely to also have an influx of retirees that want to be close to their grandchildren.
Technology continues to have a love/hate relationship with real estate. Technology is a great disruptor. One only has to look at how digital music transformed the music industry and the impact technological innovation can have on an industry. The impact of this disruptor was certainly felt in the city of Nashville as record sales plummeted and many music acts came to the realization that the best way to make money was through concert venues and not sales of albums. E-commerce is another disruptor as we continue to find it much easier to get on the Internet to order goods and have them delivered to our home in lieu of traveling to a shopping center. This in turn has created the need for warehousing and very sophisticated logistics and picking operations within the confines of those buildings. The young techies are coming up with new business plans every day and this produces tremendous demand for innovative office space. We have been fortunate to be on the forefront of this opportunity with spaces such as BowTruss, The Sheds, and The Sawtooth buildings that cater to this growing and important segment of the real estate market.
Competition is unrelenting in all businesses including the real estate industry. There is a need to have a brand identity. It will be important to navigate the competitive environment to develop market differentiators and continue to deploy technology in a manner that allows the company to increase productivity and the quality of the services that we provide. The drive for efficiency and effectiveness in service delivery will be a challenge, but also a necessity for companies such as ours. We will need to continue to invest capital in these areas.
Globally, infrastructure throughout the United States will be important. The current infrastructure whether it is bridges, roads, educational facilities, or healthcare facilities is aging and will require a significant infusion of capital. This undoubtedly will put an increased burden on all of us as tax payers.
As we continue into our 62nd year, it will be increasingly important to look forward and challenge ourselves to be better tomorrow than we are today, to continue to be focused on our core competencies, and, above all else customer service and teamwork.