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The new city spencer levy keynote

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PRISM 2019 Keynoe

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The new city spencer levy keynote

  1. 1. PRISM NASHVILLE, TENNESSEE | MAY 8, 2019 | PRESENTED BY: SPENCER LEVY CHAIRMAN SENIOR ECONOMIC ADVISOR AMERICAS RESEARCH THE NEW CITY
  2. 2. Bill Miller
  3. 3. WHY WAS 6 AFRAID OF 7?
  4. 4. WHY WAS 6 AFRAID OF 7? BECAUSE 7, 8, 9
  5. 5. THE MEGATRENDS THAT MATTER DEPEND ON YOUR TIME HORIZON
  6. 6. AND A LITTLE BIT OF COURAGE
  7. 7. MEGATRENDS The New City Local v. National Politics Demographics Economics & You Death of Retail Transportation
  8. 8. MEGATRENDS #1 THE NEW CITY
  9. 9. PITTSBURGH, PA THE NEW CITY
  10. 10. LOS ANGELES, CA THE NEW CITY
  11. 11. THE NEW CITY NEW YORK, NY
  12. 12. THE NEW CITY AURORA, CO
  13. 13. THE NEW CITY HELSINKI, FINLAND
  14. 14. THE NEW CITY WHAT CITY?
  15. 15. THE NEW CITY MOSCOW, RUSSIA
  16. 16. THE NEW CITY BETHESDA, MD
  17. 17. WHY DO WE DO THIS? DISNEYLAND
  18. 18. NATIONAL PERFORMANCE Source: NCREIF, Q4 2018. 6.7 6.1 14.3 6.9 2.2 9.3 8.3 13.6 8.6 9.0 7.5 7.5 9.2 6.4 8.2 0 2 4 6 8 10 12 14 16 All Property Types Apartment Industrial Office Retail Total Return (%) 1 Year 5 Year 10 Year All Property Types • Total returns: 6.72% • Capital appreciation: 2.08% • Income return: 4.56% US RETURNS TRENDING DOWN
  19. 19. GLOBAL REAL ESTATE RETURNS ARE NO DIFFERENT Source: CBRE Research & MSCI, Q3 2018. Real Estate Investment Returns, All Property Types, Fixed Exchange Rates, Percent -15 -10 -5 0 5 10 15 20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capital Growth Income Return Total Return
  20. 20. SURVEY: WHICH CITY IN THE AMERICAS DO YOU BELIEVE TO BE THE MOST ATTRACTIVE FOR PROPERTY INVESTMENT PURCHASE? METRO 2019 RANK 2018 RANK Los Angeles 1 1 Dallas/Ft. Worth 2 2 Washington D.C. 3 6 San Francisco 4t 4t Seattle 4t 3t Denver 5t 7 Atlanta 5t 5 Orlando 6 13t New York 7 3t Nashville 8t 9t Houston 8t 4t Chicago 8t 13t 2019 2018 Phoenix 9 11t Boston 10t 9t Miami 10t 8 Minneapolis 10t 11t Las Vegas 11t 12t Toronto 11t 10t Austin 11t 10t San Diego 12 11t Mexico City 13t 13t Tampa 13t 10t Portland 14 9t Tier I Tier II Tier III Canada Latin America TOP RANKED METROS FOR INVESTMENT Source: CBRE Research, Americas Investor Intentions Survey, 2018 and 2019.
  21. 21. SUN BELT MARKETS EXPECTED TO ADD JOBS AT FASTEST PACE Top 20 Markets for Forecasted Office- Using Employment, Average Annual Growth (%) – Q4 2020 vs. Q4 2018 Note: Ranking includes markets with at least 200,000 office-using jobs as of Q4 2018. Source: CBRE Econometric Advisors, Q4 2018. SAN FRANCISCO 3.37 AUSTIN 3.13 DALLAS/FT. WORTH 2.61 ORLANDO 2.20 TAMPA 1.68 PORTLAND 1.65 SAN ANTONIO 1.84 HOUSTON 2.24 MINNEAPOLIS 1.39 RALEIGH 1.30 SEATTLE 1.30 MIAMI 1.19 PHOENIX 1.19 CHARLOTTE 0.98 NASHVILLE 1.19 SALT LAKE CITY 1.21 ATLANTA 0.91 BALTIMORE 0.81 DENVER 0.81 CHICAGO 0.80
  22. 22. TECH TALENT SCORECARD Source: CBRE Research; CBRE Econometric Advisors; U.S. Bureau of Labor Statistics; Statistics Canada; Moody’s Analytics; The National Center of Education Statistics; National Science Foundation; Axiometrics.
  23. 23. Source: CBRE Research; CBRE Econometric Advisors; U.S. Bureau of Labor Statistics; Statistics Canada; Moody’s Analytics; The National Center of Education Statistics; National Science Foundation; Axiometrics. SMALL MARKETS BIG TALENT
  24. 24. MEGATRENDS #2 LOCAL VS. NATIONAL POLITICS
  25. 25. G L O B A L
  26. 26. Alexandria Ocasio-Cortez
  27. 27. G L O B A L THIS IS WHAT DEMOCRACY SHOULD LOOK LIKE
  28. 28. The Notorious RBG
  29. 29. Ronald Reagan and “Tip” O’Neill “ALL POLITICS IS LOCAL”
  30. 30. Source: Census American Community Survey, 2016 5-Year Estimates. • OPPORTUNITY ZONES • LOCAL TAXES • TALENT ATTRACTORS & CREATORS • AFFORDABLE HOUSING LAWS • LOCATION INCENTIVES • EASE OF REGULATORY BURDEN ALL REAL ESTATE IS LOCAL
  31. 31. MEGATRENDS #3 DEMOGRAPHICS
  32. 32. IS THIS WHAT MILLENNIALS LOOK LIKE?
  33. 33. US POPULATION BY AGE, 2017 DEMOGRAPHICS ARE SHAPING DEMAND Source: CBRE Research, U.S. Census Bureau. Total Population by Age, July 1, 2017 0 1 2 3 4 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100+ TBD / Gen Z Millennial Gen X Baby Boom Silent Greatest in millions
  34. 34. THE AVERAGE AGE OF A MILLENNIAL IN 2019 IS 31 _____________ YOUR OLD ASSUMPTIONS ON GENERATIONAL STRATEGY NEED TO CHANGE
  35. 35. HAPPINESS IS MOTIVATING
  36. 36. HAPPINESS?
  37. 37. HAPPINESS?
  38. 38. HAPPINESS?
  39. 39. THE SHAPE OF HAPPINESS RELATIONSHIP BETWEEN HAPPINESS (OR LIFE SATISFACTION) AND AGE ACROSS SEVEN MAJOR SURVEYS WHO IS LEAST HAPPY? Note: Trend lines are scaled to a common minimum and maximum range Source: Blanchflower and Oswald, 2017
  40. 40. THE SHAPE OF HAPPINESS RELATIONSHIP BETWEEN HAPPINESS (OR LIFE SATISFACTION) AND AGE ACROSS SEVEN MAJOR SURVEYS WHO IS LEAST HAPPY? US! Note: Trend lines are scaled to a common minimum and maximum range Source: Blanchflower and Oswald, 2017
  41. 41. WELCOME TO THE PARTY MILLENNIALS!!!
  42. 42. TOP WORKPLACE AMENITIES
  43. 43. THE CITY IS THE AMENITY
  44. 44. H2 2017 Agile Space Sq Ft H1 2018 Agile Space Sq. Ft. 2 2017 to H1 2018 % of Total Inventory Atlanta 1,715,895 1,944,262 13.3% 1.44% Chicago 2,569,448 2,917,442 13.5% 1.24% Denver 1,736,698 1,899,394 9.4% 1.65% Los Angeles 3,593,911 3,777,494 5.1% 1.70% Manhattan 8,959,792 10,145,540 13.2% 2.49% San Diego 883,698 949,398 7.4% 1.23% San Francisco 1,895,182 2,231,235 17.7% 1.81% Seattle 1,182,006 1,536,490 30.0% 1.43% Washington DC 2,655,682 2,796,341 5.3% TBD Boston 2,322,962 2,647,723 14.0% 1.22% HOW MUCH AGILE (CO-WORKING) SPACE? Source: CBRE Econometric Advisors, October 2018.
  45. 45. MEGATRENDS #4 THE ECONOMY & YOU
  46. 46. INFLATION REMAINS SUBDUED Source: Federal Reserve Bank of St. Louis, CBRE Research, Q1 2019. 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CORE CPI CORE PCE(%)
  47. 47. G L O B A L Alfred Kahn
  48. 48. -3 -2 -1 0 1 2 3 4 5 6 Percent Jan-19 Oct-18 THE BANANA: US GDP GROWTH FORECAST
  49. 49. LIGHTNING ROUND
  50. 50. HAPPY
  51. 51. LOCAL VS. NATIONAL
  52. 52. GREEN
  53. 53. MEGATRENDS #5 THE DEATH OF RETAIL
  54. 54. 39% 50% 37% 20% 10% 14% 9% 10% 4% 2% 2% 4% 2019 2018 Industrial Multifamily Office Retail Hotel/Resorts Other SURVEY: WHICH CITY IN THE AMERICAS DO YOU BELIEVE TO BE THE MOST ATTRACTIVE FOR PROPERTY INVESTMENT PURCHASE? PREFERRED PROPERTY SECTOR FOR INVESTMENT Source: CBRE Research, Americas Investor Intentions Survey, 2018 and 2019.
  55. 55. 5.43% 8.42% 6.95% 5.80% 5.85% 6.57% 6.73% 6.68% 6.20% 4% 5% 6% 7% 8% 9% 6.46 % 6.43% 6.55% 6.40% 6.24% Alternatives Alternatives Alternative Alternatives Office Medical Office Tech Life Sciences Retail Data Centers Net Lease Industrial Self-Storage Multifamily Hotels Senior Housing Student Housing Manufactured Housing 1-Year NCREIF Return 6.85% 10.18% 2.18% 14.3% 11.15% 6.07% 7.57% 9.54% Source: Real Capital Analytics, NCREIF, Q4 2018. PROPERTY TYPES & THEIR ALTERNATIVES CAP RATE AS OF Q4 2018
  56. 56. 30% 26% 16% 11% 7% 5% 5% Third-Party Logistics E-Commerce Manufacturer Food & Beverage Others Retailer Technology BREAKDOWN OF TENANT DEMAND BY INDUSTRY Note: Based on 100 largest warehouse leases in H1 2018. Source: CBRE Research, 2018.
  57. 57. MEGATRENDS #6 TRANSPORTATION
  58. 58. SPENCER LEVY, COME ON DOWN!
  59. 59. SINCE THE WORLD IS FLAT… SHOULD YOUR CRE CECISIONS ALSO BE? TRANSPORTATION
  60. 60. Drone Delivery TRANSPORTATION
  61. 61. TRANSPORTATION Grandma Bess
  62. 62. AUTONOMOUS VEHICLE ADOPTION PROJECTIONS Source: 99MPH, July 2018
  63. 63. 300% Turnover Rate Driver Shortage – 100K by 2020
  64. 64. Casino Pick-Up/ Drop-Off TRANSPORTATION
  65. 65. Miami, Florida TRANSPORTATION
  66. 66. Atlanta, Georgia TRANSPORTATION
  67. 67. Dublin, Ireland TRANSPORTATION
  68. 68. CONCLUSION
  69. 69. ACT NOW Local vs. Global Airport industrial Foreign capital Co-Working Big box retail
  70. 70. ACT LATER Parking ratios Exterior automation: Self-driving cars/trucks Data analyst or psychologist? Going without a broker!!!!
  71. 71. HAVE A NICE YEAR!
  72. 72. THANK YOU SPENCER LEVY CHAIRMAN SENIOR ECONOMIC ADVISOR AMERICAS RESEARCH T +1 443 794 5341 SPENCER.LEVY@CBRE.COM

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