This is a summary of the Real Estate Forecast 2017 meeting of the ULI Chicago District Council, which gathered at the Union League Club in Chicago to hear highlights of the Emerging Trends in Real Estate® report for 2017, a national real estate forecast published by ULI and PwC.
The guest speaker was Dean Schwanke, Senior Vice President, Case Studies & Publications, ULI – Urban Land Institute. Following his overview, a local response panel discussed a range of topics from an outlook on Chicago-area real estate to the projected impact of national developments, most notably the recent election of Donald Trump as the 45th President of the United States.
The moderator for the session was Matthew Lawton, Executive Managing Director, HFF. Local response panelists were Timothy Ellsworth, Managing Director, Head of Real Estate Transactions, Americas, Deutsche Asset Management; John Gavin, Principal, Sterling Bay; and Stephen Quazzo, Co-Founder and Chief Executive Officer, Pearlmark Real Estate.
Guarded optimism is the overarching tone of the Emerging Trends in Real Estate® report, which was assembled from more than 500 interviews and 1,500 survey responses. That mindset, building on recent years’ generally favorable business climate, is reflected in the report’s headline: “Playing for Advantage, Guarding the Flank.”
In his keynote presentation, Dean Schwanke noted that profitability expectations continue to be relatively strong, with 81 percent rating those prospects for 2017 in the “good to excellent” range. That represents a slight dip from 84 percent a year ago but is still markedly higher than the previous two years (74 percent two years ago, and 56 percent the previous year).
Schwanke provided a brief overview of themes communicated in the 100-page report including “Context: A Kinder, Gentler Real Estate Cycle?” and “Optionality,” in which space is designed and built with the potential for shifting from one use to another. Schwanke noted a trend in retail locations being geared to convert to restaurant use.
He also noted the “crossover point,” with more baby boomers retiring than millennials entering the workforce. The result is a labor scarcity that is seen acutely in the construction field, at all levels, including mid- and upper-level staff such as project managers and vice presidents. There are some factors that counteract that shift, including advances in construction technology such ULI CHICAGO: Meeting Summary as pre-fabricated construction, 3-D printing of building components, and strides in construction management software.