NJ Future Forum 2012 Barbell Effect Otteau
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NJ Future Forum 2012 Barbell Effect Otteau

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An overview of the changing demographics in New Jersey, including the rise in the number of childless households, and what the influx into urban areas of both Baby Boomers and Millennials will mean ...

An overview of the changing demographics in New Jersey, including the rise in the number of childless households, and what the influx into urban areas of both Baby Boomers and Millennials will mean for real estate development.

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NJ Future Forum 2012 Barbell Effect Otteau NJ Future Forum 2012 Barbell Effect Otteau Presentation Transcript

  • New Jersey Redevelopment Forumwww.otteau.com800.458.7161
  • Barbell DemographicsShifting Demand Patterns Real Estate Demand 78 Million Baby-Boomers ▫ Turning 65 @ 10k/day ▫ Childless, Downsizing & Lifestyle Oriented 48 Million Gen-X ▫ Suburban-Centric Families 79 Million Gen-Y • Turning 35 @ 11k/day ▫ Childless & Seeking Lifestyle
  • Changed Circumstances
  • © Copyright 2011 Otteau Valuation Group, Inc. Financial Realities Constrained Income Drives More Efficient Lifestyles Household Income Decline US Standard of Living 2006-2010 2000-2005 55.0% 46.0% 45.0% 35.0% 0.0% 25.0% -2.0% 15.0% -4.0% -3.7% -3.8% 5.0% -6.0% -5.0% House Prices HH Income -6.4% -3.3% -8.0% -15.0% -10.0% -10.4% Middle Class Retirement -12.0% Funding Credit Card Debt for 25-35 Yr HH $6,255 $5,700 $6,500 Average Credit Card Debt $5,414 $5,250 $5,200 $6,000 $5,050 $5,025 $4,800 $4,800 $5,500 $4,500 $4,450 $4,400 $4,293 $5,000 $3,900 Underfunded $4,500 $3,500 $3,449 $3,349 $3,249 Adequately Funded $4,000 $3,100 $3,500 $3,000 Source: Ernst & Young 25-35 Yr. Olds
  • Financial Realities Confirm Inadequacy of Current Development Model NJ Net Domestic Migration 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 -10,000 -20,000 -30,000 -23,759 -33,225 -31,690 -40,000 -50,000 -45,045 -60,000 -56,989 -56,208 -70,000 -66,603 -69,160 -80,000 -72,547© Copyright 2011 Otteau Valuation Group, Inc.
  • Financial Realities US Economy Less Dominant in Global Economy • Labor Markets Will Employee Fewer People • Industrial Revolution Has Shifted to Emerging Low-Cost Labor Market • Off-Shoring of Jobs due to High Labor & Tax Rates • Technology Advances Require Fewer ‘hands-on-deck’ • Job Growth Relocating to Urban Places US GDP vs. US Non-Farm Jobs 13,500.0 139,000 13,400.0 138,000 Total Non-Farm Jobs in Thousands 137,000 13,300.0 GDP in Billions 136,000 13,200.0 135,000 13,100.0 134,000 13,000.0 133,000 12,900.0 132,000 12,800.0 131,000 12,700.0 130,000 12,600.0 129,000© Copyright 2011 Otteau Valuation Group, Inc. US GDP (2005 $) US Non-Farm Employment
  • Oil Prices Reshuffle the DeckNew Dynamics of Locational Efficiency • Cheap Oil Supply About to Peak • Recession’s End Increases Demand • Emerging Economies Consume More • Middle East in Crisis • National Conscience Rising • Transportation = 15% of HH Spending • Economic Growth Moves Inward© Copyright 2011 Otteau Valuation Group, Inc.
  • © Copyright 2011 Otteau Valuation Group, Inc.Changing Household DynamicsFewer Households with Children 70 US Birth Rates Declining 69.6 68.9 69 68.5 68 66.9 66.7 67 66.2 66.5 65.9 66 65.2 65.1 64.7 65 64 63 62 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Births per 1,000 Women Source: Pew Research Center NJ Total Households by Type 551,262 Married-Couple Family, with children 796,958 Other Family, Male Householder, with children Other Family, Female Householder, with children Nonfamily, Male Householder, with children 438,102 75,601 Nonfamily, Female Householder, with children 258,685 Married-Couple Family, no children Other Family, Male Householder, no children 156,262 Other Family, Female Householder, no children 5,588 Nonfamily, Male Householder, no children 73,715 862,721 1,670 Nonfamily, Female Householder, no children
  • © Copyright 2011 Otteau Valuation Group, Inc. 50+ Divorce Wave
  • A Different CastCohorts Demand of Characters Downtown Residents with Greater Spending Power An Unusual Cast of Characteristics • Affluent & Childless • Gen Y – Millennials • Baby Boomers • Relocated Employees • Student Housing • Upscale Rental Apts Rental Inversion 71.5 36.0 34.0 69.5 32.0 67.5 30.0 65.5 28.0 63.5 © Copyright 2012 Rate Valuation Group, Inc. NJ Rentership Otteau
  • Urbanization of Real Estate Demand 55% NJ Rail Towns Share of BPs 49% 45% 35% 32% 24% 25% 15% 5% 1990-1999 2000-2009 2008-2010 -5% Population Growth & Job Creation More Urban-Centric© Copyright 2011 Otteau Valuation Group, Inc.
  • © Copyright 2011 Otteau Valuation Group, Inc.Current Trends Just Beginning
  • Bringing Clarity to Real Estate• All information is Copyright protected• Content may not be reproduced, or disseminated without express prior written consent• Managers may not reproduce, disseminate or present content to sales associates.• Content is licensed for individual use and may not be replayed or replicated for group presentation• Session may not be recorded in audio or video © Copyright 2012 Otteau Valuation Group, Inc.
  • About OTTEAU Valuation Group Bringing Clarity to Real Estate About Us: The lightning strike speed of todays information flow has accelerated The pace of change for real estate markets. As a result, trends that previously took Years to develop can now unfold in a few short months. Our mission is to assist our clients In keeping pace with that change by providing insightful analysis and cutting edge pricing skills. To accomplish this we have assembled a team of skilled professionals specializing in the complex field of real estate market analysis. With broad based experience in real estate valuation and consultation, our firm engages in a diversified practice encompassing all property types. Appraisal Services are provided to financial & lending institutions, developers & builders, attorneys, investors, relocation management service companies, governmental agencies, corporations and the public. Our Consulting Group provides a wide array of services with respect to market analysis, project feasibility, demographic trends, project valuation and municipal entitlement proceedings. Litigation support is provided for matters requiring the valuation and corresponding expert testimony for eminent domain proceedings, contractual disputes, bankruptcy, tax appeals, equitable distribution, estate valuation and stigma related issues. OTTEAU.com offers a wide range of informational content and analysis of real estate trends including published and live session formats. MarketTRAC is an online market data service available for subscription on www.otteau.com. © Copyright 2012 Otteau Valuation Group, Inc.
  • © Copyright 2012 Otteau Valuation Group, Inc.Bringing Clarity to Real Estate As President of Otteau Valuation Group Mr. Otteau manages facets of the firms business including serving as General Manager of www.otteau.com which is an information provider on real estate trends. He has been actively engaged in real estate consultation and valuation since 1974 and holds the State Certified General Real Estate Appraiser certification, the highest level offered. His practice is concentrated in providing project feasibility, marketing analysis, redevelopment guidance and valuation analysis to developers, financial institutions, Governmental entities and investors. Frequently quoted in the New York Times and Wall Street Journal, and having made television appearances on CNBC, Bloomberg and NBC, Mr. Otteau is widely respected for his knowledge and insight into real estate trends. His attention to detail and comprehensive fact finding has made him the go-to person for industry professionals seeking to enhance their competitive position in the marketplace. Jeffrey has provided testimony as an expert witness at the municipal, county and state levels, authored several texts on property Valuation techniques and has lectured throughout the United States and in Canada. He served on the Appraisal Standards Advisory Council, which consulted with the Appraisal Foundation in Washington, D.C. on its agenda of projects and major technical issues. Mr. Otteau served as a past Chairman of the Employee Relocation Councils Appraisal Standards Council and was inducted into their distinguished Hall of Leaders in 1995.