Long term, I believe that more and more affluent people are going to choose to live in cities rather than in suburbs because of the greater economic and cultural opportunities available in cities.
As a business person seeking to service this continued demand, there are basically two options:
1. Build ground up. This means finding some under-used parcel, purchasing it, going through the 1+ year zoning / permitting / approval process, going through a year-long construction process, and hoping at the end that the pojections you made at the start of the project are still valid (in other words, that the market hasn’t tanked).
2. Rehab. This means finding a building that’s beat up, buying it, spending 6-8 months renovating, and then leasing-up in 1-2 months.
Bottom line: Rehabbing is less risky, with a much faster time-line to completion.