ULI Indiana News

Indianapolis in Top 20 of Markets to Watch, #2 in Midwest Region in Nation’s Leading Report for Real Estate Investors: PwC, ULI’s Emerging Trends in Real Estate® 2019

ULI Indiana event in early 2019 to cover the report and other local and national trends

The latest Emerging Trends in Real Estate® 2019recently released by PwC US and the Urban Land Institute (ULI), ranks Indianapolis in the top 20 “Markets to Watch” for overall real estate prospects in investment and development. Based on past reports ULI has on file, the #19 ranking is the highest Indianapolis has scored. Indianapolis ranked #37 in the 2018 report.

In addition, receiving a 4.01 score on a 5-point scale, Indianapolis ranks #2 in the “Local Outlook: Midwest Region” list, just trailing Minneapolis St. Paul (4.02). This is the highest Indianapolis has scored in the regional ranking, based on past reports ULI has on file. The score is based on local market survey participants’ opinions on the strength of local economy, investor demand, capital availability, development and redevelopment opportunities, public/private investments, and local development community.

Coinciding with the report, ULI Indiana—the local ULI district council—will host its 11th annual signature event, “Real Estate Trends 2019: Getting to the Next Level,” on Thursday, Jan. 24, 2019 at 3:30 p.m. at the Indiana State Museum. The event will feature a keynote by Mitch Roschelle, PwC Partner and co-publisher of the Emerging Trends in Real Estate® report. The agenda also includes breakout panels on topics including housing, workforce development and construction labor and cost issues. Krieg DeVault and the University of Indianapolis, Master’s in Real Estate Development Program are the presenting sponsors of the event.

“ULI Indiana’s members are excited that peers around the country are recognizing what we in Indy have known for a long time—that our state is a great place in which to live and invest,” said Kelli Lawrence, partner at Cityscape Residential and current ULI Indiana district council chair. “We look forward to celebrating our ranking while discussing other trends impacting our industry at ULI Indiana’s signature event.”

The report also outlines other optimistic observations about the Midwest East region:

  • “Population growth has historically trailed the U.S. average, but 2019 population growth rates in Indianapolis; Columbus, Ohio; and Madison, Wis. are all projected to exceed the national rate. These markets continue to benefit from positive levels of net migration.” (Page 46)
  • “The Midwest’s East region has a reputation of losing younger residents to other areas of the United States, but the analysis of the age distribution of the population tells a different story. Cincinnati; Columbus, Ohio; Indianapolis; and Madison, Wis. all have a higher percentage of residents under 24 years of age when compared with the same statistic on the U.S. level. Chicago; Columbus, Ohio; Indianapolis; and Madison, Wis. also have a higher population percentage in the prime worker years of 25 to 44 than the United States as a whole.” (Page 47)

In its 40 years, Emerging Trends in Real Estate® has grown with the market it covers. From its early days examining the $1.2 billion institutional real estate investment market, ETRE has expanded to coverage of the $7.0 trillion marketplace analyzing REITs, real estate private equity funds, commercial mortgage backed securities, mortgage debt funds and crowd sourced investments.

“Over the past four decades we have seen an explosion in the reach of the real estate market. Once held only by institutional investors, real estate is now democratized through REITs,” notes Roschelle. “Today individuals–foreign and domestic–can invest side-by-side, with the institutions, in everything from housing to complex debt transitions. This deep access to capital has propelled the market forward.”

“The key word for real estate’s future performance is transformation – in technology, in generational choices, and in a reconfiguration of preferences related to geography and property types,” said ULI Global Chief Executive Officer W. Edward Walter. “The market shift, which will continue to play out over the next several years, is being fueled by consumers and tenants changing the way they shop and live, what they demand of their spaces, and by new technologies that will enable real estate to be more flexible and responsive to users’ needs.”

Talent and economic diversity are the leading themes running through this year’s top cities in the report. The Top 10 Markets in Emerging Trends in Real Estate® 2019 include:

  1. Dallas/Fort Worth, TX
  2. Brooklyn, NY
  3. Raleigh-Durham, NC
  4. Orlando, FL
  5. Nashville, TN
  6. Austin, TX
  7. Boston, MA
  8. Denver, CO
  9. Charlotte, NC
  10. Tampa, FL

Top trends from the report include:

Amenities Gone Wild: New office buildings and multifamily assets are going well-beyond the fitness center and recreational areas to include child and pet care, bike storage and even a “curated garden” growing fresh fruits and vegetables for residents.

Retail Space is Not Dead: The rumors of retail’s demise may have been exaggerated. With low prices, it’s a good time to look at retail space to repurpose to accommodate alternative uses such as urgent care medical facilities, health and fitness providers, restaurants, financial services and entertainment venues.

18-Hour Suburbs: The generation that drove the urbanization trend and 18-hour cities, may finally be ready to move to “the burbs.” As the oldest millennials reach their mid-30s, they are looking to buy homes that meet the right criteria with urban amenities such as walkable neighborhoods in proximity to shopping and entertainment along with green space and good schools.

Disrupters are Disrupting Real Estate: From package delivery to bike sharing to ride-hailing services, everything from lobbies to sidewalks to roads are more congested. This B2C activity is one of the forces behind “amenity creep” and an issue residential and commercial property investors need to watch closely.

ESG Practices Important to InvestorsSensitivity to environmental, social, governance (ESG) issues has increased for U.S. real estate regardless of the direction of national policy. Funds with an ESG investment plan in place could see an advantage in attracting capital especially from institutional and international investors as well as public REITs.

Last Mile Industrial Development Needed to Meet E-commerce Demands: With the expansion of e-commerce far from over, the need for facilities to accommodate a denser distribution network is acute and will only increase over time, especially infill opportunities, providing “last mile” break-bulk sites.

Easing into the Future: The challenge to real estate markets is a prospective slowdown in demand, varying across geography and property types. But slower growth does not mean there won’t be opportunities. Functional obsolescence in all kinds of space, the need for affordable housing and responses to technologies will all require new investment and development.

Now in its 40th year, Emerging Trends in Real Estate® is one of the most highly regarded annual industry outlooks for the real estate and land use industry. It includes interviews and survey responses from nearly 2,400 leading real estate experts, including investors, fund managers, developers, property companies, lenders, brokers, advisers and consultants.

About the Urban Land Institute

The Urban Land Institute is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the institute has more than 42,000 members worldwide representing all aspects of land use and development disciplines. ULI Indiana was founded in 2007 and is one of more than 50 District Councils in North America. District Councils are ULI at the local level and implement the mission by connecting individuals and convening groups, providing a forum for education and sharing best practices, and giving back to our communities. ULI Indiana is a statewide district council, with our work focused in Indiana’s metropolitan areas. For more information, please visit indiana.uli.org or follow us on Twitter and Instagram (@uli_indiana) and Facebook (facebook.com/uli.indiana).

About PwC US 

At PwC, our purpose is to build trust in society and solve important problems. PwC is a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com/US.

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