A year ago we looked ahead to 2023 with a mix of dread and a hint of optimism. Sure Covid was in the rearview mirror, but with war raging in Ukraine, high inflation and looming recession hope was in short supply. Investors, developers and the placemaking ecosystem were heading for or already on the sidelines.
Placemaking optimists will find reasons for hope in 2024. They point to recovering demand, falling interest rates, inflation and unemployment. Fingers are crossed that distress will yield realistic valuations and investors hoarding cash smell the opportunity.
Yet it’s hard to ignore the dark clouds in 2024. Another tragic war, consumers´ hangovers from post-Covid and Black Friday spending binges. Add hundreds of billions of maturing CRE debt and scary elections and you have the recipe for a perfect storm.
While we root for the optimists, why should place makers pay attention to pessimists? The short answer is risk, uncertainty and disruption curb investor enthusiasm. Sure there will be capital for prime assets in great locations but what about everything else?
Even in good times investors and lenders are slow to embrace placemaking innovation. Funding for exciting new ideas (read risky) will be scarce in 2024. The sectors in most investor crosshairs, logistics, data centres etc are hardly known for placemaking brilliance. An absence of courageous capital will frustrate innovative place makers.
And yet 2024 is exactly when placemaking urgently needs to innovate. Amazon, Zoom, Uber Eats, Netflix et al will continue investing in technologies that undermine demand for place. The placemaking industry must ally with its customers to have a chance the war between experience and convenience.
This will be hard for those raised in the ‘hardware’ of bricks and mortar. It means partnering with ‘software’, the operators that deliver memorable experience. Great placemaking requires a fusion of the hardware and the software. It means rethinking investment, business and operating models. 2024 will reward the brave contrarian! Visit urban-ovation.com to meet them.
William Kistler
William Kistler is Founder and Managing Partner of UrbanOvation.
