In the latest edition of our monthly news brief, JLL’s regional team curates the top commercial real estate industry articles to keep you in-the-know. In this month’s edition, JLL spotlights multifamily demand, the growth in e-commerce and the impact of home rentals on the hospitality industry.
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Rising Downtown Populations Spur Need for More Multifamily Development
More millennials, members of Generation X, and even baby boomers moving downtown have created an uptick in demand for multifamily development. Detroit, for instance, happens to be one market whose multifamily sector has taken off with 1,551 units added in just the last five years.
According to a data from the U.S. Census Bureau, 52 out of America’s 100 largest cities were in the renter majority in 2015. This trend is expected to continue even as millennials begin families. Baby boomers who are looking to downsize from their larger, multi-bedroom homes will cause the overall percentage of renters to keep increasing.
Because Midwest cities like Cincinnati, Detroit and Columbus are experiencing positive population growth, business retention and investment follow closely behind. Cities will soon need to strategize how to equip infrastructure and public spaces to accommodate the growing downtown populations.
Growth in E-Commerce Leads to Construction of Distribution Hubs
The continued growth in the e-commerce industry has created even more of a demand for industrial space for shippers and logistics providers. Today’s providers are developing industrial hubs that focus on the efficiency of space. Common features in these properties include 40-foot-high ceilings to accommodate for large warehouse tools, back-up generators, cross-dock configurations and more.
Typically major U.S. ports and hubs are based in heavily populated cities, such as New York City, Los Angeles and more. These cities allow uninterrupted crossings to international hubs.
Recently, the amount of e-commerce activity has spiked across cities like Cincinnati and Columbus. These cities both now rank nationally in the top 10 markets for e-commerce transactions. As a result, the need for distribution centers and warehousing space has grown.
Lack of Skilled Construction Workers Creates Challenges for Developers
While the overall demand and number of developments is high across the U.S., a shortage in construction labor could put projects on hold. The number of skilled construction workers hit a 10-year low last summer, even as hourly wages reached 3.5% higher than in 2015.
Looking at a market-by-market view, however, our research shows that construction volume in the Midwest and Southern markets remains steady for now. These markets are typically more affordable when compared to the Northeast and West Coast, and react to market shifts slowly.
To complete projects on time, contractors will need to adopt innovative solutions that can make up for the lost manpower and automate many processes.