BY THE NUMBERS
WASHINGTON, DC—Less celebrated than urban
neighborhoods, yet more diversified, and
diverse, than they’re often given credit for
being, US suburbs still house the lion’s share
of population. They’ve also driven the
growth within their metropolitan areas:
between 2000 and 2015, suburban areas
accounted for 91% of the population growth
and 84% of the household growth in the top
50 metro areas, according to the Urban
A new report from ULI, Housing in the
Evolving American Suburb, makes the case that dividing metro
areas into “the city” and “the suburbs” is an oversimplification.
Using methodology developed by RCLCO for ULI’s Terwilliger
Center for Housing, the report identifies five distinct types of suburb within the 50 largest metro areas.
The five types, according to the ULI report, are “Established
High-End,” “Stable Middle-Income,” “Economically Challenged,”
“Greenfield Lifestyle” and “Greenfield Value.” Within each type of
suburb may be found “multiple types of potential housing and
mixed-use development sites, although some types of sites are more
common than others within a given type of suburb.”
Moreover, as there are distinctions between types of suburban
community, there are also differences in the suburbs’ relation-
ships to the central cities. For example, ULI notes that the median
home value in urban areas nationwide is $365,000 compared to
$305,000 in suburban areas. However, while this ratio may hold
true in the New York City metro area, suburbs in the central US
generally have higher home values than cities.
Although the ascendancy of American suburbs starting after
World War II occurred largely at the expense of cities, the recent
revitalization of urban centers is, in many instances, complementary to the continued strength of their suburbs, says Stockton
Williams, executive director of the Terwilliger Center. “Suburban
housing dynamics increasingly reflect some of the most profound issues shaping our society, including aging, immigration,
economic mobility, and evolving consumer preferences,” he says.
“As a result, suburbs will generate substantial residential development and redevelopment opportunities and challenges in the
years ahead.”—Paul Bubny
Fund Managers Upbeat on
WASHINGTON, DC—Prior to the election, some fund managers had
been skittish about the possibility of Republican candidate
Donald Trump winning the race for the US presidency.
However, views appear to have quickly shifted since then, at
least according to a survey of 182 alternative assets fund managers by the London based consultancy Preqin.
The survey found that more than half, or 53%, of fund man-
agers think that the election results will be positive for alterna-
tive assets in the US, while just 12% think
it will be negative. The reason for the
optimism is the expected reduction in
corporate tax (which 73% of managers
think will be positive) and proposed infra-
structure spending, cited as positive by
62% of managers.
However, the responses were not uni-
formly rosy. The majority of managers
surveyed believe that withdrawing from
trade deals will be negative, while 55%
believe that changes to the taxation of car-
ried interest will adversely affect them.
Also, fund managers with global hold-
ings were less optimistic. Twenty-five per-
cent of fund managers think the industry
outside the US will be negatively affected, with 22% expecting
a beneficial effect.
And in what looks to be a double-edged sword, fund managers also cited the uncertainty surrounding Trump’s policy proposals. Some managers suggested that potential impacts on
debt rates and securing investor capital might be negative, but
others felt that market volatility might serve to benefit alternative investments, and reduce recent correlation in returns
between the industry and more conventional financial markets.
The survey also shows that some alternative investment managers believe that they are unlikely to secure more capital from
investors outside the US as a result of the election. One firm
surveyed stated: “China-based investors could be reticent [to
invest]” while another said: “political uncertainty will lead to
foreign investors staying away from the US.”
Although the survey didn’t get into specific asset types, previous studies by Preqin have highlighted the strong appetite private equity and funds investors have for real estate investments
right now. In one recent report it noted that only 11% of private equity investors felt that their investments in private equity,
infrastructure or real estate failed to meet expectations.
Moreover, over a third (36%) of investors in real estate felt
their performance objectives were exceeded—the highest proportion of any asset class.—Erika Morphy
Gap Widens Between A and C Rents
RICHARDSON, TX—Across the 100 largest metro areas in the US, the
asking rent gap between the top end and the bottom layer of
the apartment market has widened to the point where it’s
essentially doubled, RealPage Inc. chief economist Greg Willett
blogged earlier this month. Specifically, Willett wrote, “the
most expensive class A product now rents for $1,663 per month
on average, basically double the average $850 monthly rents for
the lower priced class C properties.”
The gap is even greater on both coasts, and most especially
in the Northeast. Boston’s class A rentals ask an average of
$3,148 per month, nearly triple the $1,1168 average for C prod-
uct. It’s a little less steep in the New York City metro area, but
only by a few percentage points.
“The biggest influence on the disparity in the Northeast is
Brooks Gordon will be
promoted to head of asset
management at W. P.
Carey Inc. in March 2017.
He will succeed Thomas
Zacharias, who is retiring
as COO and head of asset