Energy industry trends and outlook

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Energy industry trends and outlook

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The energy industry is growing fast, adding jobs 2.5 times faster than the North American average. This presentation explores energy industry growth trends and the outlook for the future, with a......

The energy industry is growing fast, adding jobs 2.5 times faster than the North American average. This presentation explores energy industry growth trends and the outlook for the future, with a focus on real estate impacts for energy companies, investors and developers.

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  • 1. A look at Energy in North America 2014
  • 2. 12-month employment growth Energy employment The rate of energy job growth is 2.5xfaster than the national average during the same time period. 1 Source: Moody’s Economy.com, BLS -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Total non-farm Energy
  • 3. Industry insight U.S. oil production continues to surge ahead. According to the IEA, the U.S. will surpass Russia and Saudi Arabia as the world’s top oil producer by 2015. 2
  • 4. Company insight Energy workers are expensive to employ- with an average salary 58.6% higher than the U.S. average, 3 $0 $20,000 $40,000 $60,000 $80,000 U.S. average annual salary Energy average annual salary but they lead other industries in revenue generation per worker. Source: JLL Research, BLS $ $
  • 5. Real Estate insight Development around airport in Calgary, build-to-suit activity in Denver, energy demand driving rents up in North America’s second largest industrial park in Edmonton 4 Direct demand Office Industrial Top-tier class A space in Denver, Calgary, and Dallas-Fort Worth Suburban office or build- to-suit campus in Houston, Edmonton and Pittsburgh
  • 6. Real Estate insight 5 Indirect demand Retail Multifamily increase in population Hotel increase in spending power more demand for retail good / services increase in population rural areas with shortage of housing options opportunity for apartment construction growing global energy industry increase in business travelers to energy hubs increasing RevPAr
  • 7. The U.S. shale story 6 Bakken Little industry diversification and growing on all cylinders Marcellus The largest and most developed of all the shale plays Woodford Fewer energy jobs but higher household income and a need for real estate Fayetteville Positive employment data but lowest household income Haynesville Flying under the radar, this heavily populated shale play has momentum Eagle Ford A young workforce poised for more energy jobs and spending power 1,236,797 (Mcf/d) Bismarck Municipal Airport 1,052,388 (bbl/d) 6,915,506 (Mcf/d) San Antonio International Airport Austin-Bergstrom International Airport 1,379,994 (bbl/d) 1,415,672 (Mcf/d) Will Rogers World Airport 32,817 (bbl/d) 3.0 mil s.f. 17.2 mil s.f. Fayetteville Executive Airport 1.9 mil s.f. 16.0 mil s.f. Pittsburgh International Airport 41,232 (bbl/d) 14,445,375 (Mcf/d) 26.6 mil s.f. 83.6 mil s.f. 54,262 (bbl/d) 6,862,632 (Mcf/d) Shreveport Regional Airport 11.4 mil s.f. 38.4 mil s.f. Source: JLL Research, Energy Information Administration Niobrara The engine behind Denver's energy boom Permian All about energy with record-low unemployment Denver International Airport 322,000 (bbl/d) 4,441,000 (Mcf/d) 13.9 mil s.f. 3.2 mil s.f. Midland International Airport 1,566,000 (bbl/d) 5,623,000 (Mcf/d) 7.6 mil s.f. 3.6 mil s.f. Local airport Shale area attributes: Oil (bbl/d) Office stock Industrial stock Natural gas (Mcf/d)
  • 8. Month 00, 2014 7 The U.S. shale story- real estate readiness 0 15,000,000 30,000,000 45,000,000 60,000,000 75,000,000 90,000,000 Niobrara Marcellus Shale Haynesville Permian Eagle Ford Woodford Office Industrial Square feet Source: Costar, JLL Research *Office and industrial supply not available for Bakken and Fayetteville Marcellus Shale produces the most natural gas of all the shale areas. This has helped support the development of 83.6 m.s.f. of industrial space.
  • 9. Top 10 metros – 12 month unit absorption Multifamily & Energy Houston’s development pipeline is growing rapidly ; nearly 25,000 units are currently under construction. 8 Source: REIS, JLL Research 4.4 4.6 4.6 5.0 5.5 5.7 5.8 7.5 13.6 14.6 - 5 10 15 20 New York Denver Phoenix Austin Los Angeles Seattle South Florida Wash-… Dallas-Ft.… Houston Units absorbed (thousands)
  • 10. Retail will follow rooftops: As population rises, so will retail demand Retail & Energy The average retail square footage per person in the U.S. is 23.8 s.f. For North Dakota, that number sinks almost 50% to 12.02 s.f. 9 Source: NCG, Claritas 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 200000 2014 2017 2019 2021 2024 2030 2036 Permanent population Temporary worker population
  • 11. Office & Energy 10 New construction is attractive to energy companies as a way to gain workplace features that promote employee health and output. ample natural light shorter commute times fitness facilities
  • 12. Industrial & Energy Warehouse space (10,000 – 20,000 s.f.) 11 Demand for Shop space for repairs (25,000 s.f.) Land for storage (3+ acres) Build-to-suit to accommodate highly specific space needs “Cracker” plants in Houston and Pittsburgh
  • 13. Hotels & Energy 12 Energy-related business travel aiding the construction of a conference center and 525 hotel rooms in Calgary. Growth in Denver’s hotel market exceeds the national average due to energy investment in the region Houston sees the highest growth in RevPar of any large urban market in 2013 Energy contributes to Philadelphia's status as a secure investment destination for hotel REITs
  • 14. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. Contacts 13 For more information, please contact: Research: Lauren Picariello Industry Research +1 617 531 4208 lauren.picariello@am.jll.com John Sikaitis Office Research +1 202 719 5839 aaron.ahlburn@am.jll.com Dain Fedora Industrial Research +1 424 294 3444 dain.fedora@am.jll.com Aaron Ahlburn Retail Research +1 424 294 3437 aaron.ahlburn@am.jll.com Brady Titcomb Multifamily Research +1 954 653 3222 brady.titcomb@am.jll.com Lauro Ferroni Hotels Research +1 312 228 2566 lauro.ferroni@am.jll.com Local markets: Thomas Forr Canada Research +1 416 304 6047 thomas.forr@am.jll.com Walter Bialas Dallas Research +1 214 438 6228 walter.bialas@am.jll.com Thomas Jaroszewski Denver Research +1 303 260 6523 thomas.jaroszewski@am.jll.com Graham Hildebrand Houston Research +1 713 888 4044 graham.hildebrand@am.jll.com Andrew Batson Pittsburgh Research +1 216 937 4374 andrew.batson@am.jll.com Geoff Wright Philadelphia Research +1 215 399 1825 geoff.wright@am.jll.com
  • 15. © Copyright 2014 Jones Lang LaSalle If you enjoyed this preview, >> Click here to download the complete 2014 Energy Outlook