December 5, 2013 by Eric Hawthorn


To view the report, click here PwC: Emerging Trends in Real Estate 2014 


Based on the results of the 2014 Emerging Trends in Real Estate survey, published by ULI and PwC, here’s a list of the Top 10 Worries for the Real Estate Industry in 2014. Just in case you’re looking for something else to fret about…


10. Refinancing

9. Global economic growth

8. Tax policies

7. Inflation

6. Land costs

5. Vacancy rates

4. Construction costs

3. Income and wage growth

2. Interest rates

1. Job growth


The industry sentiment data I used to construct this list can be seen on page 4. I want to mention that the Emerging Trends report organizes these and other issues in three separate categories: Economic/Financial, Social/Political, and Real estate/development. Each issue, of which there are almost 30, is given a score between 1 and 5 based upon the issue’s perceived importance among CRE professionals. Job growth, the highest concern, received a score of 4.63. I drew from all three categories to make today’s list; like other members of the Letterman generation, I find information most accessible when presented to me in the form of a Top 10 list.


It’s only been a year since the last Emerging Trends report, and our last Top 10 of issues affecting CRE professionals, but there are a few significant changes between this year’s list and last year’s. Like before, job growth and interest rates are the primary concerns of those professionals polled, which makes sense; regardless of market or asset class, the CRE industry’s strength is closely correlated with the nation’s economic health. Few factors are more important to the economy, and by extension CRE, than jobs and the cost of capital.


This list highlights some areas that have improved over last year. In light of the vacancy absorption we’ve seen in many markets and among most asset classes, vacancy rates (#3 last year) has been bumped downward. As vacancies go down and demand for new product increases, we see greater concern about construction costs and the price of land.


One issue from last year is conspicuously absent from this year’s list: Europe. Since the global financial crisis, investors and fund managers have kept a close eye on the financial turmoil in places like Greece, Italy, and Spain. The fact that Europe’s economy is receiving far less media attention in the States this year doesn’t necessarily mean the eurozone economy has completely healed, but it does suggest investors are confident in its recovery. In fact, big league investors like Blackstone (NYSE: BX) are even exploring distressed investment opportunities in places like Spain, suggesting the industry believes that, as far as Europe’s economy goes, the worst is over.