Opportunity for urbanists: Occupy Wall Street
There’s tremendous capital waiting to be invested in urban real estate, but capital funds managers face a gap in experience and expertise.
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We are at a unique time in history for real estate markets and finance, analysts say. After six decades of rising homeownership and suburban expansion, the markets have shifted to rental units and walkable, urban neighborhoods connected to transit. The market shift is long-term and is likely to last for a generation, say Arthur C. “Chris” Nelson of the University of Utah, Christopher Leinberger of the University of Michigan, and other analysts.
Developers and financiers now understand that amenity-rich, mixed-use places offer more real estate value. But they don’t know how to assess that value in a quantitative way.
“There’s been a wholesale realignment of real estate priorities in the US,” says Adam Ducker of Robert Charles Lesser & Co. (RCLCo). Financiers, he says, “get it. Projects near transit, near shopping, have more value than a single-family house in a subdivision. But we are not that far down the road in understanding how to adapt that knowledge to the quantitative models that we use [for real estate finance] in America.”
People involved in capital markets are “looking aggressively for ways to place hierarchies on urban locations where there are underserved markets, and to assess how well development projects perform,” Ducker says.