| Short-term optimism and long-term worries
Related stories:
- Market Leader Profile
- Major Transactions from Around
the State
- The Art of the Deal
- Trends
- Outlook
Virginia
Business
December 2004
Short
term, the outlook for commercial real estate is good
in 2005 with billions in equity capital expected to
flow into markets from pension funds, foundations and
foreign investors. Long term, though, some industry
experts worry about inflation, job growth and the financial
impact of the retirement of the first wave of the baby
boomers in 2008.
These concerns along with changes in the region’s
economy were key topics during Virginia Commonwealth
University’s annual Real Estate Trends conference.
The fall conference held in Richmond attracted more
than 600 real estate professionals.
With the number of office workers expected to decline
in conjunction with the retirement of boomers, there
could be a slowdown in the demand for and absorption
of office space. And real estate experts expect that,
as waves of boomers retire and die off, the largest
spending cohort in the United States will shrink. Other
ripple effects in the economy will be felt as boomers
sell their homes, move into retirement communities and
scale down many living expenses.
Another trend — the development of older urban
areas rather than outlying suburban tracts — is
expected to boost downtowns. Helping this trend are
lower lot prices in cities, which have not increased
as much as lot prices in suburban and rural areas.
The economy has been strong enough to support strong
retail growth and an uptick in some areas in warehouse
development and hotel investment. Looking ahead to next
year in Virginia: Office condominiums are expected to
remain popular, many smaller projects are already in
the pipeline — including restaurants, specialty
shops and strip shopping centers — and there appears
to be a growing concern about the need for more regional
planning to prevent sprawl.
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