2019 Favourite Asset Classes: Top real estate picks from leaders of the US & Canada

MIPIM attendees were full of questions: “Where are we in the cycle?”, “What are the best cities to invest in?”, and “What capital market trends are we seeing?” Here are some of the answers.

 

The “Us And Canada Property Market Trends” panel was moderated by Andra Ghent from the University of Wisconsin-Madison and featured panellists Arif Shah from WeWork, Carole Handfield from Fonds Immobilier de Solidarité FTQ, Roelof Opperman from Fifth Wall and Rony Tamayo from Lennar.  A summary of salient comments are provided here:

Coworking offices

“We need to start treating tenants as customers, and that is what coworking does”, shared Arif Shah from WeWork. There was a common agreement among different speakers at MIPIM that coworking is here to stay. Increased flexibility, favourable locations and creative, collaborative environments are a few of the attributes that make coworking a unique trend in the office market. “People want to work close to home, and they want to work where and when they need to”, Mr Shah claims. The unique qualities of the coworking concept offer a competitive advantage that will continue to make it relevant in the upcoming years.

 

Healthcare facilities

An increasing population and a rising life expectancy drive an increase in demand for healthcare. Technological advances continue to assist in creating more affordable services to respond to the needs of people in urban and suburban areas alike. “I expect healthcare facilities of different kinds to take whole blocks of cities and provide services in new, creative ways”, shared Arif Shah from WeWork. From X-rays to primary care, healthcare facilities promise to be a rising asset class of the future.  Concentrating multiple services allows for some economies of scale in sharing patient data and admin.

Sustainable real estate

Futura Park, the fully-green winner of the Best Futura Mega Project prize at this year’s MIPIM Awards

“We are giving a lot of priority to projects that are focused on fighting climate change”, shared Carole Handfield from Fonds Immobilier de Solidarité FTQ. In a few years the impacts of climate change will be more compelling and investing in the right sustainable properties today will have an impact on the cap rates of tomorrow. “If we are flooded our investment is flooded too”, she added. And, here too, it comes as no surprise that technological advances will only make sustainable real estate more efficient, affordable and impactful.

Dark kitchens

“An increasing number of restaurants today have more than 50% of their revenue coming from online orders”, shared Roelof Opperman from Fifth Wall. Dark kitchens are subsidiaries of a restaurant that operates in different locations from their brick and mortar establishment for the sole purpose of fulfilling online orders. Another similar concept is that of “ghost kitchens”, which are delivery-only and have no physical restaurant premises at all. Both of these innovative concepts look to fulfil a growing demand for deliveries while increasing efficiency and reducing costs.  This corresponds to millennials demanding less personal kitchen prep space in rental units, although shared larger kitchens are becoming more common.

Last-mile logistics

“Repurposing retail is one of those opportunities that can be used for creating logistics hubs that are closer to the consumer”, explains Mr Opperman. The last portion of the delivery process is the most expensive and inefficient. Coming up with innovative solutions to reach consumers safely, efficiently and while reducing costs will be a key challenge in the upcoming years and one that hundreds of e-commerce firms are and will be looking to solve.

Single-family rentals

“70% of people today still live on single-family homes”, explained Rony Tamayo from Lennar. “However, the problem is that many people cannot afford to purchase. Some others just want the flexibility that renting offers”, he explains. Technological advances are helping landlords more efficiently manage single-family home rentals in ways that come close to how vertical developments have been traditionally managed. Increased demand for this asset class (Single-family rentals) will also come with a need for more streamlined property management tools.

 

From retail to office, to residential, the future of real estate shows that no matter the type of asset, the key to the future relies on technological advances and innovation that can help make life healthier, safer, more affordable and more sustainable.


About Author

Rocio Budetta

Rocio Budetta is a Master of Science in Real Estate candidate at the University of San Diego. Her experience includes working in real estate development in Buenos Aires, Argentina. Previously, she worked in the financial sector in Washington, DC. She received her BA in International Studies from the University of Miami.

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