Industry forecaster Lachman sees residential real estate market changes

By Linda Myers

America's aging baby boomers and "Generation Y echo boomers," whose oldest members are just entering the labor force, will drive most of the demographic trends in real estate in the coming decade. That was the prediction of forecaster Leanne Lachman in her luncheon address on campus last Friday, Sept. 19.

Leanne Lachman, left, keynote speaker at the Cornell Real Estate Conference, talks with conference attendee Blonde Grayson Hall, Cornell A.B. '79, an attorney with Hall Associates law offices in Philadelphia, on Sept. 19 in the Statler Hall ballroom. University Photography

The principal and head of real estate strategies with Lend Lease Real Estate Investments, Lachman delivered her remarks at the Statler Hotel's Carrier Grand Ballroom as part of Cornell's 21st Annual Real Estate Conference.

The day-long conference, which was sponsored by Cornell's Real Estate Council, was titled "Residential Real Estate: What's Next?" and featured some of the top names in residential real estate in the country, many of them Cornell alumni. The conference aims to link real estate practitioners and educators in addressing the industry's most pressing issues.

"The steady movement in the country is to the South and West," said Lachman. She spoke about the ongoing trend toward suburban living, which she said would continue unabated, overriding a much smaller resurgence in central-city housing.

In terms of investing, "real estate's strong income returns will continue to siphon capital from other asset classes," she stated. "Returns are good now and will be excellent in the second half of this decade." Lack of liquidity is not a barrier, she said. "We'll see real estate migrate into fixed-income portfolios, which will become easier as it is securitized."

However, while the largest and smallest real estate companies will flourish, medium-sized ones -- unable to support the cost of infrastructure as they try to compete with the bigger firms -- will flounder, Lachman said. "We'll see lots of mergers as mid-size companies join with larger ones and more joint ventures, so that small companies can access the capital of larger companies, and large ones can access the smaller companies' niches."

She said that young people would demand more green and sustainable housing and that water shortages would challenge housing growth in dry inland areas such as Las Vegas, which she termed "the fastest-growing metropolis in the U.S." And she predicted a trend toward more global outsourcing of skilled services, with call centers, business, tax return and other office processes migrating to overseas locations with skilled, educated work forces such as India, China and Eastern Europe.

In addition to Lachman's talk, the symposium featured panels that looked at "Trends and Changes in Single-Family Housing Products, Processes and Markets" and "Multifamily Real Estate." A dinner talk by Theodore Lowi, the John L. Senior Professor of American Institutions at Cornell, "Cold War II: Monotheism, Martyrdom and Mass Destruction since 9/11," drew a large crowd to Willard Straight Hall's Memorial Room.

The Cornell Real Estate Council was created in the 1970s to enable alumni to assist the university with its real estate concerns. It now has more than 1,000 members. The council fostered the formation of Cornell's two-year MPS graduate Program in Real Estate, which now has 41 students enrolled and an additional four joint-degree students, three in business and one law.

For more information, visit http://www.realestate.cornell.edu.