What do growing megacities mean for the CRE industry?
In the next decade, urbanization is predicted to grow, which means we’ll be seeing more megacities across the world. Euromonitor reports an expected 39 megacities (up from 33) by 2030.
What is a megacity?
A megacity is a dense, urban city with a population of over 10 million people. Megacities include places like New York, Los Angeles, Lima, Mexico City, Rio De Janeiro, Sao Paulo, and Buenos Aires – with Chicago expected to be next on the list.
Megacities are geographic hubs for investment, education, and employment for residents. While they offer many of these opportunities, megacities also face major challenges like overcrowding, congestion, and air pollution that need innovative solutions in order to really be sustainable.
So what does all of this mean for the CRE industry in megacities?
An emphasis on green buildings in megacities
As the CRE industry adapts to new trends, one that has evolved significantly in the last few years is environmental friendliness and corporate responsibility. Eco-friendly approaches can give brokers and investors increased revenues, decreased operating costs and reduced capitalization rates. In short, going green improves property values.
CPower Energy Management reports that green buildings are estimated to consume between 30 and 50 percent less energy than their non-green counterparts. With lower energy bills, everyone from investors to tenants can save money.
More opportunities for data and predictive analytics
In a megacity connected through the Internet of Things, retail, industrial, multifamily, and office spaces will all generate usable tenant data helping both brokers and investors be more efficient in meeting tenant preferences.
And with artificial intelligence, CRE professionals will be able to predict what properties clients are most interested in based on specific data about past investments and interests. Tools powered with AI can also ensure fewer buildings harbor empty units. Brokers using these tools can add value to their services for the owners they work with, increasing capital for everyone.
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