Last week, Virginia Commonwealth University’s Kornblau Real Estate Program held its annual Real Estate Trends Conference in Richmond, VA. Vera and I joined over 1,500 attendees at this popular half-day conference held in the Greater Richmond Convention Center. The conference provides a great overview of the health of the real estate market in Richmond and the economy more broadly. Simply put: Everyone was feeling good this year! A strong economy and demand across various real estate sectors is a good recipe for optimism.
A video introduction from leaders in Richmond’s real estate sector reinforced those positive vibes. From office and commercial to industrial and manufacturing to residential, demand remains strong. Of all the sectors covered, there were concerns about the residential real estate market, notably meeting the demand for new homes and the implications of rising interest rates on mortgaged. Despite these challenges, the sentiment remained positive.
That sunny outlook was reinforced by keynote presentations by Elliot Eisenberg, known as the bow-tie economist, and Steve Weikal of MIT’s Center for Real Estate. Both experts provided a number of valuable insights.
Check out our top five takeaways:
- Predicting the Next Recession: The big question for Dr. Eisenberg was when the next recession is coming. The answer: the probability of a recession increases in 2020, but it’s not guaranteed to happen then. It could be later, but as stimulus tools fade and interest rates rise, the probability increases by 2020. The economy is strong now, although it’ll have to slow at some point.
- Nonresidential Construction Looks Good: Nonresidential construction is an important indicator and, like the rest of the economy, it’s strong. It’s growing about 4% but remains stable and new nonresidential construction starts are up.
- Residential Construction Stable: Similar to nonresidential construction, this indicator remains stable, although it offers a mixed bag. Demand for multifamily development is picking up while single-family home construction is low. Lack of developed lots, rising interest rates, and high costs are all contributing factors.
- Challenges Ahead: The top challenges facing the real estate sector include a tightening labor market and lack of population growth. Both issues could become even more significant long-term concerns if policymakers and industry leaders don’t address them proactively and quickly.
- Co-working Disruption Just Starting: Co-working space isn’t just a trend and it’s no longer about serving freelancers and small businesses. The top names in co-working are increasingly targeting large corporations to bring innovative approaches to how and where their employees work. By 2030, JLL predicts that at least 30% of office inventory will be co-working space.