Emerging Trends in Real Estate 2015 Sustaining Momentum but Taking Nothing for Granted
PwC-ULI Outlook on trends 36th edition 368 interviews 1,055 survey responses 1,400+ participants, a record Who? District Councils-thank you!
New Markets for 2015 More investor interest in local markets Identify markets that are part of larger consolidated areas High growth areas Manufacturing resurgence Energy exposure Midwest stability Northwest growth
Average Length of Economic Cycles Trough to trough average economic cycle length 1854-2009 (33 cycles) Average of the 3 cycles since 1990: 105 months Currently at 63 months and counting Is the current cycle nearing an end? 1854-1919 (16 cycles) 1919-1945 (6 cycles) 1945-2009 (11 cycles) 1990-2014 (3 cycles) 0 25 50 75 100125 Months Source: NBER
Firm Profitability Prospects for 2015
Sales of Large Commercial Properties in the United States Source: Real Capital Analytics
Moody s/rca Commercial Property Price Index, by Major/Nonmajor Markets Sources: Moody s and Real Capital Analytics Notes: Major markets are defined here as Boston, Chicago, LA, SF, NYC, DC. Data through 6/14
2015 Emerging Trends 18 Hour City Comes of Age
U.S. Markets to Watch Category Rank Total Rank Market (Category Rank) Investment Development Homebuilding 1 Houston 1 1 2 2 Austin 2 4 1 3 San Francisco 3 2 5 4 Denver 5 5 4 5 Dallas/Ft. Worth 9 8 3 6 Los Angeles 6 6 6 7 Charlotte 7 7 7 8 Seattle 4 3 17 9 Boston 8 9 14 10 Raleigh/Durham 16 17 9 11 Atlanta 17 15 10 12 Orange County 13 14 15 13 Nashville 21 12 13 14 New York-Manhattan 15 10 22 15 San Jose 19 19 11 16 Portland, OR 26 21 8 17 Oakland-East Bay 11 20 24 18 Chicago 14 13 28 19 Miami 10 16 40 20 San Diego 20 33 16
18 Hour City Comes of Age 3-Year Urban Population Growth: 2010-2013 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% New Orleans Cape Coral-Ft. Myers-Naples Orlando Deltona-Daytona Richmond Las Vegas Virginia Beach/Norfolk Sacramento Memphis Milwaukee Spokane Providence Cincinnati Buffalo Portland, ME Hartford Cleveland Washington, DC San Antonio New York-Manhattan Chicago Austin Charlotte Denver Seattle Atlanta Raleigh/Durham Dallas/Ft. Worth Houston Boston San Francisco Los Angeles -4.0% Detroit Poor Fair Good 2015 Market Survey Score Source: US Census Bureau, 2015 Emerging Trends in Real Estate
18 Hour City Comes of Age Two-Year Job Growth, by Market Costs of Doing Business Los Angeles 103% Seattle 101% Austin 101% Houston 99% Chicago 99% Dallas/Fortworth 94% Denver 94% Atlanta 90% Charlotte 86% Raleigh/Durham 85% Boston 120% San Francisco 118% Source: US Bureau of Labor Statistics; Moody s Analytics, as of June 30, 2014
San Jose Honolulu San Francisco Wash DC - MD Raleigh/Durham Seattle Wash DC - Northern Wash DC - District Charleston Houston Austin Oakland-East Bay Dallas/Ft. Worth Salt Lake Orange County Greenville San Diego Madison Albuquerque Portland Northern New Jersey Denver Indianapolis Minneapolis/St. Paul Philadelphia Kansas City Atlanta Baltimore Boise Chicago Oklahoma City Pittsburgh Cincinnati New Orleans Charlotte San Antonio Las Vegas Percent of total employment Jobs created 18 Hour City Comes of Age 30.0% 300,000 25.0% 250,000 20.0% Technology/energy jobs as % of total employment Jobs created in last 2 years 200,000 15.0% 150,000 10.0% 100,000 5.0% 50,000 0.0% -
2015 Emerging Trends The changing age game
The Changing Age Game 2015 U.S. Population by Age
The Changing Age Game 2015 U.S. Population by Age
The Changing Age Game 100.0 Population that will be 80.0 making lifestyle decisions in the next five years 60.0 40.0 20.0 millions - Millennial (30 plus) Baby Boomers (55-64) Source: US Census Bureau
New York-Manhattan San Francisco Pittsburgh Portland, ME Washington, DC - District New Orleans Portland Seattle Cleveland St. Louis Louisville Albuquerque Birmingham Buffalo Madison Deltona-Daytona Milwaukee Richmond Spokane Denver Detroit Charleston Minneapolis/St. Paul Baltimore Oakland-East Bay Cincinnati Chicago Las Vegas Austin Atlanta San Antonio Dallas/Ft. Worth The Changing Age Game 25.0% Millennials (early 30 s) and Boomers (55-64) as % of Total Market Population 20.0% 15.0% 10.0% 5.0% 0.0% Source: U.S. Census Bureau, December 31, 2013
2015 Emerging Trends Labor Markets Trending Toward Tipping Point
2015 2016 2025 Labor Markets Trending Toward Tipping Point U.S. Labor Force Growth Sources: U.S. Bureau of Labor Statistics; Moody s Analytics (Economic & Consumer Credit Analytics) forecast
Labor Markets Trending Toward Tipping Point 200 (000 s) 150 100 50 0-50 -100-150 -200-250 2015 2016 2017 2018 2019 2020 Growth in population turning 65 outpaces the growth in population turning 16 Leaving Entering Labor Force Impact Source: US Census Bureau
2015 Emerging Trends Technology: Love it or Lose out
Technology Disruption is Everywhere 38 Years 75 Years 13 Years 4 Years 3.5 Years 3 Years Reaching 50 Million Users 2.5 Years 3 Days Source: Kofi Annan
Technology Disruption is Everywhere Industrial Office Retail Hotel Multifamily Same day delivery Shared workspace Omnichannel Shared lodging Enhanced amenities 3-D printing Flexible layout 3-D printing Personal systems Mobile ordering maint. RFID Advanced building systems Onsite electronic marketing Electronic check-in Automated services
2015 Emerging Trends Event Risk is Here to Stay
Global Investment in the US as % of Total Property Sales
Global Office Investment, by US Markets (billions) Source: Real Capital Analytics, as of 7/31/14
Global Industrial Investment, by US Markets (billions) Source: Real Capital Analytics, as of 7/31/14
Global Retail Investment, by US Markets (billions) Source: Real Capital Analytics, as of 7/31/14
2015 Emerging Trends Darwinian market keeps squeeze on companies 900 pound gorilla swings into view Time for the U.S. to get serious about infrastructure Housing steps off the roller coaster Keeping an eye on the bubble emerging concerns Efficiencies $300 billion $2.0 trillion Equilibrium?
900 pound gorilla swings into view DC Assets $6.0T Pension Real Estate Allocation 5.0% Potential Real Estate Investment - $300Billion? Source: ICI, PREA
Prospects for Commercial/Multifamily Subsectors in 2015
Rating 2015 Local Outlook: Raleigh/Durham 5.00 4.00 +19% 3.00 2.00 1.00 0.00
2015 Emerging Trends Raleigh/Durham, by Sector Investment 4.00 3.00 #9 #20 #4 #26 #42 #10 2.00 1.00 0.00 Housing Industrial Office Multifamily Hotel Retail
2015 Emerging Trends Investment Ratings
2015 Emerging Trends Investment Ratings
2015 Expected Best Bets Seek Alpha Exploit Technology Refinance Develop Industrial Rediscover the Suburbs
I ll Stop Here so You Can Let This Information Sink in!
Emerging Trends in Real Estate 2015 Sustaining Momentum but Taking Nothing for Granted