Urbanization Reimagined

Increasing and changing urban density continues to shape real estate markets, as anticipated by LaSalle’s DTU+E framework of secular drivers. In this short white paper, we look beyond the simple story of more tenant demand in urban places and consider how its repercussions on land prices and rents will change metropolitan areas in the future – and our investments in them.

The interaction of more demand for urban places and limited space – which varies based on each market’s regulations, existing buildings, and natural barriers – has driven up rents and land values in city centers to varying degrees.

The developed world’s gateway cities in particular have become much less affordable, relative to prior decades, especially to first-time job seekers. In the city of San Francisco, the median home sales price increased 59% in just the last five years, to USD1.3 million. In Hong Kong, home prices have surged by 232% since 2008. Faced with being priced out of their location of choice, residents, corporate occupiers, and retailers are reacting in a variety of different ways.