As the CrowdStreet team travels around the country attending industry events, meeting with commercial real estate operators, private equity companies, REIT’s and investors, one notable observation is that America is in the midst of a ‘Golden Age’ of real estate opportunity.
Last week we attended a 350 person conference in New York City where we had the pleasure of meeting with some leading commercial real estate operating companies based in Manhattan and elsewhere around the nation. These people are working tirelessly to ‘make hay while the sun shines’. No matter what the product type (Multi-family, retail, office, industrial, etc.), there is strong demand for product driven by solid fundamentals. Furthermore, there is ample (some say “excessive”) capital chasing these real estate investment opportunities. It’s a pleasant new reality given that we just recently emerged from a six year economic slump where supply exceeded demand and opportunities were scarce. The smiles have returned to real estate investors faces.
The upbeat tone of our conversations with real estate investors can be physically seen in skylines across America. NYC, for example, is filled with cranes building shiny, glass condo and office buildings. Across the river in Brooklyn, a decade long gentrification trend has turned America’s 4th largest city into one of the hippest (and increasingly expensive) places on the planet. Moving west, Denver, Colorado (Go Buffs!) is exploding with real estate development as active lifestyle oriented people flock to this Rocky Mountain mecca. Downtown Oakland, CA is benefitting from the Bay Area’s white hot technology sector with people living and working in the city center. In fact, all the major west coast cities are well into the expansion phase of the real estate cycle.
Our notes from the field indicate a strong investment market with several years of positive growth to follow. While it’s nice and meaningful to hear individual opinions from market participants, as a technology company, CrowdStreet executives base our decisions on what the data says. According to the ULI Emerging Trends report, the top trends are:
- Urbanization of smaller, more affordable cities presents opportunities
- Boomers and Millennials are driving demographic trends
- There’s a looming labor shortage to meet job growth
- Technology is changing the real estate industry (ahem, CrowdStreet…)
- Over $300 billion in retirement savings could be invested in real estate
- U.S. infrastructure investment will pick up and create more jobs
- Housing has rebounded and is stable
- There are few signs of market bubbles and even fewer signs of a recession in the next few years
Fortunately, the data supports the opinions and we are therefore confident that we are participating in a healthy real estate market with upside opportunities. With that said, we believe the discerning, educated investor is most likely to avoid bad deals and focus on the good ones.