Sunset on 2015
- Dec 04, 2015
Well into the economic upcycle, it’s been a fun-filled year, with the promise of an exciting encore in 2016. The decade’s midpoint brought us mega-mergers, Millennial-inspired maneuvers, market shifts and musings about multifamily’s prospects. It also brought wild swings in the energy sector, e-commerce advancement and expanded equity availability—in the form of crowdfunding, foreign capital and institutional investment. Then there were debt capital, development deals and drones. And the endless suspense over interest rates.
Most of these trends are now familiar, a hint that relatively few surprises may be in store for 2016. For years, the aging of the Baby Boomers and the rise of the Millennials have influenced business strategies, but developers and investors continue to finesse their response, and demographic forces topped the Counselors of Real Estate’s 2015 list of major industry trends. Debates continue about e-commerce’s impact on brick-and-mortar retail, which landed among both the Counselors’ top 2015 trends and the seven key takeaways from its recent convention in Charlotte, N.C., as retailers become more adept at addressing consumers’ needs and preferences. The search for yield, one of the Top 8 trends named in JLL’s third-quarter investment outlook, has pushed investors to secondary and tertiary locations and value-add opportunities in top-tier markets.
This year has also offered surprises, such as a sustained drop in oil prices after last year’s shale market boom raised expectations of a new growth industry. And REIT performance finally turned downward in the third quarter, breaking a streak dating to 2013, noted JLL. Counting this shift among its Top 8 trends, the global service provider foresees a stream of mergers and privatizations.
Indeed, so far this year’s mega-mergers include the $2.5 billion sale of Associated Estates Realty Corp. to a Brookfield Asset Management affiliate and The Blackstone Group’s $8 billion proposal to purchase BioMed Realty Trust. Marriott International Inc. topped them all in mid-November, announcing its intention to snap up Starwood Hotels & Resorts Worldwide Inc. for $12.2 billion. Beyond the REIT realm, Cassidy Turley bookended 2015 by closing its sale to DTZ for $1.1 billion on Jan. 1 and its $2 billion acquisition of Cushman & Wakefield Inc. on Sept. 1. Other trades include Blackstone and Wells Fargo’s purchase of $23 billion worth of assets from GE Capital in April and, most recently, Equity Residential’s $5.4 billion sale of 72 multifamily communities to Starwood Capital Group.
What will 2016 bring? Some more of the same, to be sure. But as any industry veteran knows, it is always wise to expect a few surprises, as well.
As the sun sets on 2015, let us also pay tribute to industry icons lost this year, among them John Zuccotti, Julien Studley, Patricia Goldstein, Kirk Kerkorian, Fred Sands and Phillip Nicholson. Though they will be missed, their contributions will be felt for years to come.