Real estate will be worthless in ~30 years than it is now. Prove me wrong.
- Malls, retail stores are dying - kills retail space
- Advances in Automation/AI, Outsourcing + Virtual work stations (work from home) - kill office real estate
- Other misc advances that kill RE: Netflix, virtual doctors, Amazon groceries (go to NYC, delivery services for groceries is Top tier)
These lead to these spaces being redeveloped for Multifamily, nursing home use. This leads to a surplus of MF and just real estate in general. This leads to reduced residential (SFH, MF, nursing) prices. Surgery centers will also benefit of this RE surplus.
The only things people will leave their houses for are restaurants and recreational activities (note - not cinemas! Those are also dying thanks to netflix. Look what happened to Cannes film festival :)! )
Industrial warehouses will probably remain steady, but some of the redeveloped properties from above will be mini-warehouses for Amazon, Walmart, etc.
Prove me wrong @CRE"
What happens if there are more people born each year than die each year?
Where are they going to live?
Take a look at global, national, regional population statistics... population growth is plateauing in most developed regions. Population growth is really flourishing in India and undeveloped nations.
I'm not sure I've ever had an entire thread meant for calling me out before.
I can't prove you wrong, though, because you can't prove a that a theoretical situation thirty years from now is incorrect or not. But, let's address your points.
They really aren't. High end malls are doing fine and the dying malls are either being re-purposed, are prime spots for redevelopment, or are more a reflection of a dying community/area of the country than they are a reflection of a product type. Malls have been synonymous with JCPennys, Sears, Kmart, etc. for years, but it's important to understand that they are not the same thing. Outdoor malls, such as mixed-use town centers, are also thriving.
Retail too is just fine. Studies have shown that online sales increase when a retailer has a physical presence, and one only has to look at Amazon to see this. Retail is shifting to a more experiential and/or showroom model, but that's fine. Pretty cool, IMO.
Again, no. It may "kill" traditional office space, but even that's debatable. There are a lot of traditional people out there. Shared office space is on the rise and traditional office space is doing fine as well. Starbucks is loud - can't take calls from there - and I can't take meetings at home. Office will always have a place even if it doesn't look like it does today.
I think you're a bit off the rails here. Netflix leads to space being redeveloped for multifamily, which kills prices? More people than ever both want to rent and have to rent. Multifamily is fine. You can watch Netflix in your apartment too.
I promise you that people will leave their houses for things other than eating out and having fun, but even if your premise were to be true, what does that have to do with anything?
What was the point of all of this?
to piggy back off what CRE said. Yes, times are changing and technology is advancing at an exponential rate. But people are still going to leave their apartments/house. At the mall in my hometown, a Dillards got re-purposed into a gym.
Four hours later and OP still doesn't have a rebuttal. #wrecked
To support your point on office space: IBM, one of the major original proponents of working from home, has all but eliminated it's working from home policy and has told employees to put their asses back in their cubicles. As did BOA a couple years ago.
NealCaffrey beat me to it. My wife works for BOA and telecommutes from home. While she is still permitted to do so because of her corp executive status, she told me BOA is phasing out the program as a whole. The reason? Contrary to popular belief people are not in fact productive from home. In town office isn't going anywhere. There is a new 500,000 sq.ft. office building being finished in our office park that already has secured a major anchor tenant. And don't me get started on the multifamily predictions... lol.
The conclusions of OP look like some doomsday porn one would read in Zero Hedge. It's funny how naysayers have the knee jerk reaction to predict the sky is falling because of historical windows of economic contraction while totally dismissing historical lengthy periods of prosperity as if they're just isolated flukes.
The notion is: that due to technological advances, retail and office buildings (finite) will be redeveloped into additional housing faster than the population of home buyers, an exponentially increasing number, over a 30yr period of time? I'd bet on the other thing.
OP has some weird "No one will leave their apartment" theory
Meanwhile, apartments are trending smaller and smaller because more people want to spend more time out in the cities they live in as opposed to sitting in their living rooms.
Don't even get me started on the "Tiny House" bs. Millenials don't want to buy because they'd rather experience, hell, how many 20 somethings do you know that have 1K in the bank? Let alone enough for a down-payment of a median house
Hardly scientific, but I can think of four new movie theaters that have opened in my immediate area over the last half-dozen years and none that have closed.
Precisely. The number of screens in the US has increased YOY for as long as counts have been logged.
When virtual reality headsets become ubiquitous, would you rather watch a movie on a movie screen or through a VR headset?
dumb thread is dumb. You think anyone in the 1970-1980's was projecting that some random suburb in the bay area would lead to biggest technological hub in the world AFTER the rise something called the internet?
We could see an epic revival of american manufacturing 30 years from now by building SpaceX spaceships all across the US and hyperloops all around the world. No one knows what the future holds and it's silly to make any predictions like that.
Commercial medical construction makes up something like half of new building starts, so I don't think your argument is completely valid.
Edit: The old buildings you mention would likely cost more to re-purpose into a medical facility than it would cost to just build it outright.
OP, have you ever heard of Occam's Razor?
Maybe take a look at how the rate of population growth compares to the rate of land creation (hint: one's lagging behind a bit).
Also, the number of movie screens in the country is increasing year over year.
OP, you're right, thirty years from now we will all be losers like you with no friends. This will mean movie theaters, malls, and restaurants will stay empty. In fact, we will all be such losers that thirty years from now Pornhub will be a Dow Jones company.
Point worth noting, the 'hub presently has an Alexa ranking of 38. They may beat that 30yr estimate.
I actually agree with the OP that it's PLAUSIBLE (though not PROBABLE) that real estate prices, adjusted for inflation, could be lower than they are today for many of the reasons he laid out. However, nominal real estate prices (that is, not adjusted for inflation) will almost certainly be higher due to the ~doubling or so of the population + regular inflation.
Kind of on a separate but similar note, I'd argue that mass adoption of autonomous cars could be the most disruptive technology since the internal combustion engine, and we have absolutely no idea how that could impact real estate. The complete unknown right now regarding autonomous cars is especially why I would maintain that it's plausible--though again not probable--that REAL real estate prices could be lower in 30 years.
The effect of autonomous cars on real estate apart from the effect on parking spaces (if we assume subscription model takes off) is incredibly overrated .
Maybe it is, maybe it isn't, but that's kind of the point--we have no idea. For all we know, urban areas will be in huge demand as a result of convenient transportation that isn't mass transit, which might obliterate the suburbs. Or, for all we know, a mass exodus will occur from urban areas because people will want big houses in the suburbs and can go at 100 miles per hour anywhere they want with minimal traffic. If suburbs come back to life, maybe suburban office market reawakens. Or, maybe being able to recover hundreds of millions (if not billions) of square feet in space once dedicated to the 800 million parking spaces available in the United States will obliterate the supply/demand curve for real estate that we presently know, pushing real estate prices down dramatically as supply explodes.
There are countless ways that autonomous cars could completely disrupt real estate.
Does this include the DISRUPTION in the real estate ECOSYSTEM caused by SEX DUNGEONS?
Real Estate is one of the only asset classes where the underlying product actually has value. However, I think your broader assumptions about the degree to which we will subscribe to the "stay at home economy" is overly ambitious.
Netflix is a piece of shit. I surely hope you don't think it's actually taking a part in killing cinemas. No good movies, half decent shows, hardly updated.
The OP's incredibly narrow perspective casts his more open minded investment banking breathrens in a poor light. Viewing the entire world through the lens of capitalism and profit is shortsighted at best; OP fails to consider the human element to real estate (and specifically placemaking) entirely. In threatening an industry that has been historically unsophisticated relative to the financial markets, innovations have (and will continue to) impact the landscape we real estate professionals play in. To make a statement as bold as "all RE will lose value within 30 years", you clearly don't understand why you pay 5x in rent living in NYC as I do in Dallas. Land (and views) cannot be recreated, and people will ALWAYS need places to interact, socialize, dine, and experience the beauty of the world. Value is created in a variety of ways and some of these means cannot be fully analyzed via financial statements. Also, do you really think your investment banker buddies will work from home in 30 years? Hitting the required facetime quotas would be impossible that way.
These look like the opinions of someone who only looks at the loudest voices rambling on about the latest tech fads.
The population is increasing at a geometric rate and that alone will increase demand for land.
Also: I like CRE's post above as it was exactly what I'd planned on doing, so kudos to you +1 SB.
This isn't entirely true. Global pop growth is about 1.11% annually. That's hardly moving at all. While we aren't growing more land, the U.S. has surprisingly low population density, so there is plenty of land available for centuries of growth. Add to that disruptive market forces of potentially decreasing retail and office demand as well as increased land recaptured with autonomous cars and decreased construction costs through new technology and it's possible that the real estate cost curve could bend. I'm sort of appalled at the groupthink going on in this thread.
Let me also add as an edit that historically paltry interest rates have definitely propped up real estate valuations. Rates pushing closer to long-term averages are just another of the many things that could conceivably bend the RE cost curve.
I am dumber for reading the OPs post.
Can we get the ban-hammer over here?![Banhammer](a href="http://i1.kym-cdn.com/photos/images/newsfeed/000/007/725/banhammer15gq9.jpg">http://i1.kym-cdn.com/photos/images/newsfeed/000/007/725/banhammer15gq9…</a "Banhammer")
nah
Hey Op don't you have some Netflix to watch?
kmkmkmoo - this post is so linear in thought, it is of no surprise almost no one has gone through and picked at your points to prove you wrong. You're flawed logic is not worth going through.
I suggest retaking some macro econ courses, as well as reaching out to alum for an internship at any brokerage, wealth management, or finance related business.
Do you have any specific questions, as oppose to blanket statements picked from WSJ headlines you're looking to prove?
Well, if the population growth is observed in developing countries, invest in foreign real estate. A simple solution to the problem.
Make sure to check what part of the S curve that developing nation is in.
Honestly... that's an interesting opinion OP.
lol
There are only two ways RE could be worthless in 30 years;
You're using today's dollars. We'll keep printing money and inflation will grow causing dilution of 2017 values. $1,000,000 in 2017 exposed to hyper inflation could easily be worthless in 5 years, let alone 30. Hello Zimbabwe
World destruction. "I'll buy your gun for this can of tuna"
So sure, I guess I've just proven you correct.
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