In discussing household formation, Berman said we will form between 1.2 million and 1.6 million households over the next 10 years, and in the best-case scenario, 300,000 new rental units per year will be added. He said roughly 34% of rental households are single family, and given the costs to build, there is very limited supply of single-family homes. “There's an imbalance of what's coming in because of the costs. We will have a severe housing crisis over the next 10 years.”

Stoffers said this is not likely to ease up for another reason. “The problem with Trump getting immigrants out is that there's no one to build the homes.” Berman agreed. “Where will the labor come from? We already have a construction-labor shortage; where will the labor come from to create the needed infrastructure” to support new homes? He said we will have an inflationary situation.

Dennard pointed out that another major is taking place with the demographic shifts we're experiencing. Berman said the Millennials will be the majority of the workforce by 2020; what are their real estate patterns? With 30% of the workforce being made up of private contractors and 20% of the workers being remote contractors, what impact will this have on the office sector? Dennard said, “Everything will become more efficient in the future.”

Dennard asked about digital technology and how this will impact real estate. Stoffers said, “You can put in 20% to 30% more headcount in 30% less office space. The pendulum swings, so there could be a trend back to private offices,” particularly in some of the oil-producing regions.

With regard to the retail sector, shifts are still taking place. Berman said Amazon recently hired 100,000 new employees, while Macy's is closing 100 stores, Sears is closing even more than that and the Limited is closing all its stores. “These are evolutionary changes—there will be winners and losers” in the retail sector, Berman said. Stoffers said last-mile industrial will be very active in the next few years as companies work to deliver product to consumers ever faster.

In discussing Airbnb—another disruptor, particularly for the hotel sector—Dennard noted that some developers are joining the fray by setting aside spaces for this type of business in their multifamily developments. Berman compared Airbnb—which started in 2008 and offers one million rooms added at virtually zero cost—to Marriott, which started in 1957 and has 1.1 million rooms, with a market cap at approximately 12% to 15% more than Airbnb. “It's the shared economy. Based on the network they've put together, the capital markets have rewarded them. To what extent does real estate want to take advantage of that?” Stoffers cautioned about the tech bubble of 2000.

Dennard asked the panelists how technology as a disruptor has impacted real estate. Stoffers said the ability to configure space on the spot is a monumental advancement. Berman said lenders can get direct access to 100% of the data an environmental consultant can get with regard to EIRs, which shortens the length of loan transaction times to as little as a one-day turnaround. Lenders can also tap into information about crime, flooding, etc. via big data in order to help them underwrite loans.

Lastly, Berman said rising water is an emerging disruptor for real estate. More than 15 500-year floods have taken place in the country over the last five years, prompting a city proposal to spend $100 million to raise the streets in Miami in order to put in a pumping system. At high tide, there can be 7 inches of water in the streets there even when it's sunny. He sees this as an issue that will continue to worsen over time and one that will require major infrastructure changes in other cities to stem.

SAN DIEGO—There's about a 75% chance that Fannie Mae and Freddie Mac will emerge from conservatorship before the end of President Trump's current term in office, speakers told attendees during the special session, “The Future of CREF: Disruptors & Demographics” at MBA's CREF/Multifamily Housing Convention & Expo 2017 here Tuesday. Panelists discussed a variety of industry disruptors including technology and regulation, along with demographic trends that would affect the market.

Michael Berman, principal of Michael Berman Consulting LLC, said getting the GSEs out of conservatorship is a priority, according to the Trump administration. Because Trump comes from real estate, he said, we are likely to see legislation emerging from the Senate, particularly from Mike Crapo, who co-wrote the Johnson-Crapo GSE-reform bill. Treasury Secretary Steve Mnuchin has also addressed the matter of the GSEs, saying that while GSE reform is not a priority for its first 100 days, the Trump administration would likely move relatively fast to get it done. He added that we will probably see legislation by 2018 and that the role of private capital is key in this important debate.

Brian Stoffers, global president of debt structured finance for CBRE Capital Markets, said healthcare, PACs and foreign trade will be dealt with first, but “we will see action quicker than we would have seen it with another administration.” He predicted that Senator Elizabeth Warren will delay reform.

Moderator Thomas Dennard, chairman & CEO of Grandbridge Real Estate Capital LLC, asked for the panelists' observations about shadow banks, and Berman said over the last 10 years, the shadow-banking industry has grown exponentially, and he expects this trend to continue.

In discussing household formation, Berman said we will form between 1.2 million and 1.6 million households over the next 10 years, and in the best-case scenario, 300,000 new rental units per year will be added. He said roughly 34% of rental households are single family, and given the costs to build, there is very limited supply of single-family homes. “There's an imbalance of what's coming in because of the costs. We will have a severe housing crisis over the next 10 years.”

Stoffers said this is not likely to ease up for another reason. “The problem with Trump getting immigrants out is that there's no one to build the homes.” Berman agreed. “Where will the labor come from? We already have a construction-labor shortage; where will the labor come from to create the needed infrastructure” to support new homes? He said we will have an inflationary situation.

Dennard pointed out that another major is taking place with the demographic shifts we're experiencing. Berman said the Millennials will be the majority of the workforce by 2020; what are their real estate patterns? With 30% of the workforce being made up of private contractors and 20% of the workers being remote contractors, what impact will this have on the office sector? Dennard said, “Everything will become more efficient in the future.”

Dennard asked about digital technology and how this will impact real estate. Stoffers said, “You can put in 20% to 30% more headcount in 30% less office space. The pendulum swings, so there could be a trend back to private offices,” particularly in some of the oil-producing regions.

With regard to the retail sector, shifts are still taking place. Berman said Amazon recently hired 100,000 new employees, while Macy's is closing 100 stores, Sears is closing even more than that and the Limited is closing all its stores. “These are evolutionary changes—there will be winners and losers” in the retail sector, Berman said. Stoffers said last-mile industrial will be very active in the next few years as companies work to deliver product to consumers ever faster.

In discussing Airbnb—another disruptor, particularly for the hotel sector—Dennard noted that some developers are joining the fray by setting aside spaces for this type of business in their multifamily developments. Berman compared Airbnb—which started in 2008 and offers one million rooms added at virtually zero cost—to Marriott, which started in 1957 and has 1.1 million rooms, with a market cap at approximately 12% to 15% more than Airbnb. “It's the shared economy. Based on the network they've put together, the capital markets have rewarded them. To what extent does real estate want to take advantage of that?” Stoffers cautioned about the tech bubble of 2000.

Dennard asked the panelists how technology as a disruptor has impacted real estate. Stoffers said the ability to configure space on the spot is a monumental advancement. Berman said lenders can get direct access to 100% of the data an environmental consultant can get with regard to EIRs, which shortens the length of loan transaction times to as little as a one-day turnaround. Lenders can also tap into information about crime, flooding, etc. via big data in order to help them underwrite loans.

Lastly, Berman said rising water is an emerging disruptor for real estate. More than 15 500-year floods have taken place in the country over the last five years, prompting a city proposal to spend $100 million to raise the streets in Miami in order to put in a pumping system. At high tide, there can be 7 inches of water in the streets there even when it's sunny. He sees this as an issue that will continue to worsen over time and one that will require major infrastructure changes in other cities to stem.