THE UNIVERSITY OF SOUTHERN CALIFORNIA'S (USC's) Lusk Center for Real Estate, Los Angeles, forecasts that more opportunities for real estate development and investment will be found outside traditional commercial and residential markets in 2005 and beyond.
"It's not your father's real estate market anymore," said Stan Ross, the Lusk Center's chairman of the board. "Historical trends aren't necessarily a reliable predictor of future demand for real estate," added Stuart Gabriel, director of the Lusk Center.
Ross predicts developers and investors with stable cash flows from their core businesses and portfolios will be able to expand into fast-growing, specialized markets such as building biotechnology or health-care facilities, converting obsolete properties to new uses or constructing housing for immigrants. "These markets have high barriers to entry, requiring specialized knowledge and skills such as designing and engineering biotech facilities or navigating local zoning and building codes for adaptive reuse projects," he said. "Developers with the requisite knowledge and skills will have a competitive edge."
According to Gabriel, developers and investors will have to be well-attuned to changing conditions and adept at spotting emerging trends in increasingly complex and dynamic real estate markets in 2005. "While projections of white-collar employment are traditionally used to forecast demand for office space, the outlook is complicated by the increasing amount of...