1.     Multifamily. Broadly favorable demand-supply fundamentals will prevail, but increasing levels of supply will reduce excess demand in markets in which regulatory barriers do not constrain supply additions.1 Continued employment growth, ongoing household formation, a preference by Gen Yers to rent, and increasing costs of for-sale housing suggest continued acquisition and selective development opportunities for multifamily uses.

The delivery of new product will reduce rates of rent growth and cause current, extremely low, vacancy rates to begin to increase. Potential large amounts of supply growth in such markets that are not regulatory-supply constrained (e.g., high-end product in downtown Chicago) suggest occupancy and rental rates may have peaked in such markets.

2.     Hotel. The hospitality industry boom continues from the Energy Belt of North Dakota, Colorado, Oklahoma, and Texas to tech and financial centers and global cities of New York, Chicago, and San Francisco.2 Increased demand from international travelers, business travelers, and leisure travel will cause hotel occupancy and average daily rates to continue to increase as supply growth has been constrained.

Many communities, however, are beginning to subsidize hotel development and Airbnb, a travel website that permits travelers to rent apartments, houses, rooms, etc. directly from people with available space and people with extra space to monetize that space by hosting guests will increasingly compete for—and disrupt—room-night demand from traditional lodging facilities, especially from leisure and younger travelers comfortable with peer-to-peer service models.3

Even lower-priced hotel brands will need to be designed and operated to respond to changing tastes and preferences from tech and design-savvy travelers, especially Generation Yers seeking new or immersive experiences.

3.     Industrial. Demand for industrial space and development and redevelopment opportunities will remain solid.4 This will be especially apparent near major population centers due to e-commerce-drivenlogistics centers and the supply-chain enhancements needed particularly to serve Gen Yers who tend to “want what they want when they want it.”

In addition, the manufacturing renaissance, growth in international trade, and spillover demands related to energy production and transport support industrial demand and development with locations near ports, major airports, and rail hubs preferred.

4.     Office. Demand is improving, but it will become increasingly imperative that locational and space characteristics be carefully tailored to users’ preferences, including need for flexibility.The aging of the office space inventory and improving employment levels in office-space-using sectors give impetus to create high-quality, eco-friendly space in old or new buildings, but only in transit- and amenity-laden locations proximate to housing in dynamic agglomerations.

5.     Retail. Retail bifurcation between “‘winners and losers” retail centers and most retailing locations will endure and grow more intense. Commodity-type community and power-center retail in markets with limited barriers to supply additions and lower average household income will be challenged to stay or become viable.

The continuing increase in the percentage of retail expenditures devoted to Internet purchases will lead to both shrinking footprints in big-box store formats like Office Depot and Barnes & Noble and store closings in the mid-price and teen mall categories that include such stores as Aeropostale, Abercrombie & Fitch, and American Eagle.6 The impact of new development and the slowing in openings, along with store closings, in dollar store, auto parts, and discount-apparel categories, will make the gulf between Class A and all other properties widen further.

Tourist-oriented, high-street retail in destination cities and counties will continue to experience sales growth.

1. Apartment market occupancy and rental rate statistics can be found at http://www.multihousingnews.com/category/market-data, http://www.marcusmillichap.com/research/researchreports, and https://www.reis.com/  to list four of multiple data sources for apartment markets.

2. http://www.hotelnewsnow.com/media/File/PDFs/Weekly_charts/MediaHR20141130_20141206.pdf. WThe website at http://www.hotelnewsnow.com/Article/14926/STR-US-results-for-week-ending-6-December contains data from STR, Inc., a hotel market information vendor. 

3. For one article describing the impact of Airbnb on San Francisco see the San Francisco Chronicle at http://www.sfchronicle.com/business/item/airbnb-san-francisco-30110.php. 

4. One of many sources of industrial market statistics is available on the website of Jones Lang LaSalle: http://www.us.jll.com/united-states/en-us/research/industrial-and-logistics.

5. A recent report on office market conditions and forecast for 2015 by Cushman & Wakefield, one of many brokerage firms that report on office space market conditions can be found at http://www.cushmanwakefield.com/en-gb/news/2014/11/global-office-forecast.

6. See, for example, the website of The New York Times article citing the closure of Staples office supply stores due to impact of consumer shopper pattern shift to the Internet: http://www.nytimes.com/2014/03/07/business/citing-online-sales-staples-announces-store-closings.html?_r=0. See examples of other site closings at: http://247wallst.com/special-report/2014/03/12/retailers-closing-the-most-stores/2/.