{"id":20161,"date":"2018-12-18T15:30:18","date_gmt":"2018-12-18T12:30:18","guid":{"rendered":"https:\/\/www.commercialcafe.com\/blog\/?p=20161"},"modified":"2025-07-16T11:20:13","modified_gmt":"2025-07-16T08:20:13","slug":"4-major-trends-set-impact-real-estate-industry-2019","status":"publish","type":"post","link":"https:\/\/www.commercialcafe.com\/blog\/4-major-trends-set-impact-real-estate-industry-2019\/","title":{"rendered":"4 Major Trends Set to Impact the Real Estate Industry in 2019"},"content":{"rendered":"

As the year comes to a close, it’s time to reflect and look forward at what we can expect from the real estate industry in 2019. Here are four of the major trends for the next 12 months, and beyond:<\/span><\/p>\n

1. Real Estate Bubble Unlikely to Pop in 2019<\/h4>\n

The ULI 2019 <\/span>Emerging Trends in Real Estate<\/span><\/a> report predicts the CRE industry will remain strong into 2019. The survey forecasts U.S. GDP growth to end this year at 3.0%. It will then slow to 2.5% in 2019 and 1.7% in 2020.<\/span><\/p>\n

\u201cStrong GDP and job growth in 2018 have set the stage for solid real estate demand and absorption, particularly for the rest of 2018 and 2019,\u201d survey participant William Maher, director of Americas Research & Strategy at LaSalle Investment Management, said <\/span>in a statement<\/span>. Maher is a leading ULI member and was one of the participants in the survey of 45 leading economists and analysts in the US.<\/span><\/p>\n

Cushman & Wakefield<\/span><\/a> also expects higher growth rates in the CRE industry. Its latest report states: \u201cThe global commercial real estate industry is expected to grow at approximately 5% per year to more than $4 trillion in 2022, outpacing expected global gross domestic product growth.\u201d<\/span><\/p>\n

This figure is slightly above the <\/span>IMF’s projection<\/span><\/a> for GDP growth of roughly 3.8% to 3.9% from 2018 to 2020.<\/span><\/p>\n

If<\/em> we are in a <\/span>real estate bubble<\/span><\/a>, it doesn\u2019t look likely to pop in 2019. \u201cIt doesn\u2019t seem like there\u2019s something on the horizon to forecast a sharp downturn,\u201d PwC director of Real Estate Research Andrew Warren said <\/span>during an Urban Land Institute panel in Boston<\/span><\/a>. \u201cNobody necessarily thinks we have to end [this current period of] the economic expansion.\u201d<\/span><\/p>\n

2. Home Prices and Interest Rates Will Keep Rising<\/h4>\n

The Fall 2018 edition of <\/span>The Housing and Mortgage Review<\/span><\/a> indicates that house prices and interest rates will continue to increase. The <\/span>realtor.com 2019 forecast<\/span><\/a> also predicts there will be a higher proportion of houses for sale, especially at the high-end of the market. <\/span><\/p>\n

\u201cThe big wild card in capital markets continues to be the potential impact from rising interest rates. Ninety percent of respondents do expect interest rates to increase over the next 12 months,\u201d according to separate <\/span>research from the NREI<\/span><\/a>.<\/span><\/p>\n

\u201cThe commercial real estate financing outlook for 2019 may moderate,\u201d said David Fetter, regional senior manager for Commercial Term Lending, Chase, <\/span>speaking in a statement<\/span>. \u201cHowever, we could see a similar range of production [in 2019 compared] to 2018 as long as interest rates maintain a narrow continuum and the market continues to absorb the new construction.\u201d<\/span><\/p>\n

With real estate prices and interest rates set to remain high throughout the next couple of years, buying a house remains a struggle for the majority of potential homeowners. <\/span>Millennials are predicted<\/span><\/a> to make up the largest proportion of buyers in 2019, accounting for 45% of mortgages.<\/span><\/p>\n

However, the Moody\u2019s\/RCA Commercial Property Price Index expects prices to decline over the next three years to 6%, 5%, and 4%, respectively, according to the ULI 2019 report. As a result, the CRE industry could eventually shift to become a buyer\u2019s market after years of favoring sellers.<\/span><\/p>\n

3. Technology Will Continue to Disrupt<\/h4>\n

Technology is (and will continue to be) one of the biggest disruptors for the CRE industry, according to ULI\u2019s 2019 <\/span>Emerging Trends in Real Estate<\/span> report.<\/span><\/p>\n

The Deloitte <\/span>2019 Commercial Real Estate Industry Outlook<\/span><\/a> report revealed 53% of survey respondents expect to see a significant impact from technology advancements on legacy properties in less than three years\u2019 time, and 15 percent believe that the impact is already visible. <\/span><\/p>\n

Furthermore, 9 in 10 respondents believe that proptechs will have a moderate to significant influence on the CRE industry in the year ahead.<\/span><\/p>\n

Predictive analytics, business intelligence and the Internet of Things (IoT) will be the technology darlings of 2019, according to Deloitte\u2019s report.<\/span><\/p>\n

More than 80 percent<\/span> of the survey sample believe that CRE companies should prioritize the use of predictive analytics and business intelligence. In fact, over the next 18 months, nearly two-fifths plan to increase the use of these two technologies to make their investment decisions.<\/span>
\n<\/span>
\n<\/span>\u201cMore than a quarter of the respondents believe that CRE companies should prioritize the use of IoT technology in (re)designing buildings. Respondents from China (48 percent) and Singapore (43 percent) place a greater emphasis on the use of IoT technology compared to respondents from the United States (15 percent),\u201d according to the Deloitte report.<\/span><\/p>\n

However, <\/span>Artificial Intelligence<\/span><\/a> will not have a significant impact as this technology continues to mature, according to Gartner\u2019s <\/span>strategic predictions for 2019 and beyond<\/span><\/a>. The report states: \u201cThrough 2020, 80% of AI projects will remain alchemy, run by wizards whose talents will not scale in the organization.\u201d The cloud, however, will spawn new revenue-generating products, according to Gartner.<\/span><\/p>\n

4. New Business Models Will Prevail<\/h4>\n

The Deloitte <\/span>2019 Commercial Real Estate Industry Outlook<\/span> report has the subtitle \u201cagility is the key to winning in the digital age.\u201d<\/span><\/p>\n

The report \u201cclearly indicates those real estate companies [that] are building agility into their strategies and daily operations will receive higher allocations of investment capital,\u201d according to Jim Berry, Deloitte\u2019s US Real Estate leader, <\/span>speaking in a statement<\/span><\/a>.<\/span><\/p>\n

New business models such as flexible leases and spaces–including <\/span>coworking spaces–<\/span><\/a>and mixed-use and non-traditional assets are expected to attract more investment. <\/span><\/p>\n

To capitalize on this brave new world (and building on <\/span>a major 2018 trend<\/span><\/a>), CRE professionals need to shift their mindset from \u201crent collector\u201d to \u201cservice provider\u201d to embrace these new business models and ways of working.<\/span><\/p>\n

\u201cThe nature of work is changing,\u201d Professor Antony Slumbers from the University of Bristol, England, said <\/span>when he opened the FlexOffice 2018 conference<\/span><\/a>. As automation becomes more commonplace, spaces need to focus on creativity and productivity. <\/span><\/p>\n

\u201cAn office that is designed around \u2018old\u2019 work will be obsolete,\u201d Slumbers warned. \u201cThe office is dead. Long live the imaginarium.\u201d<\/span><\/p>\n

In conclusion: the real estate industry in 2019<\/h4>\n

The next year does appear to be one of stability for the CRE sector, with little on the horizon to truly disrupt the status quo.<\/span><\/p>\n

Such expected stability will be comforting to many CRE professionals. But 2019 is not the time for complacency. CRE professionals need to adapt to new technologies, demands and ways of doing business. As such, agility is key for the real estate industry in 2019.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

As the year comes to a close, it’s time to reflect and look forward at what we can expect from the real estate industry in 2019. Here are four of the major trends for the next 12 months, and beyond: 1. Real Estate Bubble Unlikely to Pop in 2019 The ULI 2019 Emerging Trends in…<\/p>\n","protected":false},"author":202,"featured_media":17868,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37,2547],"tags":[2725],"class_list":["post-20161","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-real-estate-news","category-resources","tag-cre-resources","wpautop"],"acf":[],"yoast_head":"\n4 Major Trends That Will Shape CRE in 2019<\/title>\n<meta name=\"description\" content=\"As the year comes to a close, what can we expect from the real estate industry in 2019? 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