Weekend Interview: ULI's Anita Kramer On Small Cities And Where To Find Opportunity

This series goes deep with some of the most compelling figures in commercial real estate: the deal-makers, the game-changers, the city-shapers and the larger-than-life personalities that keep CRE interesting.

After the most difficult year for commercial real estate in more than a decade, data and ideas around what lies ahead for the industry are a hot commodity, with CRE professionals of all stripes looking for help to turn the tide in the coming year.

The Urban Land Institute and PwC’s 2024 Emerging Trends in Real Estate report says that next year will be the beginning of a “great reset” for the industry, in which the moving pieces that began to shift with the pandemic’s arrival settle into place and have long-term impacts.

Anita Kramer, senior vice president of the Urban Land Institute Center for Real Estate Economics and Capital Markets, has been co-editor of the Emerging Trends report for 11 years, experiencing the evolution of commercial real estate through the lens of hundreds of conversations with market leaders across the country. 

Kramer spoke to Bisnow about her experiences assembling the report and how the industry has changed in her time as co-editor.

This interview has been edited for length and clarity.

Bisnow: Let’s get started by talking about your background. How did you come to work for ULI and take on the responsibility of serving as co-editor of the Emerging Trends report?

Anita Kramer: My foundational professional experience is as a market analyst, working with consulting companies. I was a consultant, and it was a great experience. The projects were really looking at a wide range of markets or a wide range of products. I was involved in retail, hotel, office, industrial, museum, casinos, anything for which you had to figure out, “What is the market and where do you go from there?”

Also, part of that was looking for public clients, where it was often a question of a whole area of a city that maybe was once thriving and maybe no longer is. So the big question would be, “Given all the uses that are there or not there, given what the market is, what could be there again now?” and how to make it happen.

All of that gave me a very broad background in the commercial real estate industry. I came into ULI as the director of retail, which at that time meant publications and research around retail and in our events. I then expanded into mixed-use and retail because that’s when mixed-use was coming onto the center stage, and retail is what really made it mixed-use, so that was a natural progression there.

From that, I went into our Center for Real Estate Economics and Capital Markets, and one of the main products is our Emerging Trends, which covers all kinds of property types, all kinds of markets and really talks about the big picture of what will be impacting the commercial real estate industry over time.

Bisnow: OK, so kind of a full circle.

Kramer: Yeah, full circle. It’s been nice.

Bisnow: From your perspective, as someone who has put together this report 11 years in a row, what changes have you seen in the marketplace? How have outcomes changed?

Kramer: I would say there are many different ways to answer that. One thing that has truly changed over the last 11 years, and [I] started to notice this in maybe 2013, 2014, 2015, is the recognition of the smaller markets. So there were the primary markets and everything else was secondary, tertiary, and that was all there was to it. Tertiary wasn’t touched that much. Secondary, certain ones were considered to be OK. Over time, we noticed that the primary markets were not staying in the top 10 and that the somewhat smaller markets, relatively smaller markets and growing markets, were kind of emerging up into their own.

And that was the genesis of our first name for those markets. That was the 18-hour city. We came up with that to juxtapose that to the 24-hour cities. What would it be in a smaller city that doesn’t have everything open all the time? We kind of looked at the hours of the bars and kind of figured out how late and how early, and that’s how we came up with 18 hours. The prototypical 18-hour city would be Nashville or Austin. Then we went for a while with that.

But then we realized that was too broad-brush. We had been doing our presentations to these district councils and going out to these very small cities and realized that [there] was something, almost in every single city, that was — to use a nontechnical term — cool and different. And that maybe they weren’t attracting institutional money because the market wasn’t deep and wide and liquid. But there were reasons to recognize each market. To me, it’s been a wide arc. 

Bisnow: What surprised you as you were putting together this year’s report?

Kramer: What I’ve noticed over the last few years and what really made a jump this year is that the ratings at the top have become very tight, much tighter. 

[Editor's Note: In its Emerging Trends report, ULI ranks the property types in terms of investment and development prospects for the coming year. In this year’s ranking, multifamily housing was ranked highest for investment possibilities, followed by single-family housing and industrial. The three categories were within one-tenth of a point of each other.]

It doesn’t look like any one market is overall the strongest market. It seems like there’s opportunity. There are markets that are attractive to look at but not so much better than others overall. But in each one, you have to find the opportunities in the submarkets. So that was something that just continued from previous years, and I thought that was fairly significant. Pretty much fit into the whole picture of a fairly subdued outlook.

There isn’t this strong sense of any one sector or any one place. There’s challenges across the board, but there are strengths across the board. The strengths are the fundamentals. The challenges, as we all know, are the high interest rates and things like that. 

Bisnow: Was there anything you were expecting to find when putting together this year’s report that didn’t turn up?

Kramer: We try not to have any preconceived notions. We don’t have a hypothetical. We try to really stick to that, and what our trends come from are primarily our one-on-one interviews. We’re able to hear how people talk — not just what they’re saying but how they’re saying it — and tease out some of the nuances.

Another surprise, I’ll just get back to the surprise, is the sustainability group at ULI has been saying for a number of years that the cost of insurance is going to be a big pivot point. We hadn’t been hearing that. This year, we heard so much about that. It’s coming to bear. It may be not yet clear that the decisions are being made differently, but there’s great concern, and that’s usually a precursor to different decisions.

Bisnow: So one of the big themes in this year’s report is that “core” isn’t core anymore in terms of real estate investing. There are so many shifts happening. How are you adjusting your process to account for that? Are you taking into consideration some of these new ideas and new asset classes that maybe you weren’t paying as much attention to before?

Kramer: So we have structured the property type chapter with the core property types. For years, that’s the way it’s been. And then we have brought in the subsectors, the niche sectors, the alternative sectors, whatever you want to call it, by having what we call sidebars. That’s helped us cover everything. But I think a big question is: Should we restructure the whole chapter and maybe make office a sidebar? There’s different ways to think about it. Because industrial could be expanded. The notion of core could be expanded to include cold storage and self-storage. I think it’s becoming not correctly reflected.

Bisnow: Do you have a favorite part of putting this report together? What is it?

Kramer: I love the one-on-one interviews. They’re great. They’re fantastic. These are leaders in the industry. They’re incredible thinkers. They are willing to talk. That is where we hear most of what we eventually see as emerging trends. That is the guts of it. And it’s fun to sit back — and challenging, really — to sit back and say, “OK, we’ve talked to all these people. What’s really new this year? What’s really emerging?” Because it’s typically a slow-moving industry. So every year, to really hear what’s new is a challenge. But that’s, in the end, satisfying. 

Bisnow: We usually ask for a bold prediction for the rest of the year, but since there are only a couple of weeks left, let’s expand that into next year too. What’s your bold prediction?

Kramer: For the rest of the year, all three weeks that we have left, I think we’re not going to see a lot of change. [In 2024,] I think we’re going to get more direction in the office sector. I think the next phase of whatever that will be will start playing out in a more obvious way. It’s a little bit on hold right now.

Bisnow: This is the weekend interview. What’s your favorite thing to do on the weekend? 

Kramer: My latest favorite is I’m taking improv classes. I just heard enough about it and I thought I’d give it a try. And I love it.