Presented By: A District Council of the Urban Land Institute

Transcription

1 Presented By: A District Council of the Urban Land Institute

2 A District Council of the Urban Land Institute Project Awards: Infill Influence Innovation Inspire Personal Awards: Legacy Rising Star Save the Date! April 6, 2017 Mile High Stadium Project and Personal Applications due: January 27, 5 pm Register and learn more at Colorado.uli.org/impact-awards

3 A District Council of the Urban Land Institute Thank you to our sponsors! Title Sponsor: Corporate Sponsors:

4 A District Council of the Urban Land Institute Moderator: Patricia Gage, Executive Vice President, Colorado Business Bank

5 Presented By: A District Council of the Urban Land Institute

6 Emerging Trends in Real Estate 2017 Playing for Advantage, Guarding the Flank

7 Rational Opportunities Competitive

8 PwC ULI Outlook on Trends 38th 500/1,500 Who? A record total Thank You!

9 ? How would you characterize the expected profitability of your real estate business in 2017? A. Good-Excellent B. Fair C. Abysmal-Poor

10 How would you describe the 2017 real estate market? Here is what 900 respondents said Measured Treacherous Uncertain Content Competitive Balanced Risky Confusing Troublesome Cautious Opportunity Growing Frenzy Neutral Overheated Emerging Trends in Real Estate 2017

11 Expectations hitting a plateau? 100.0% 90.0% 80.0% Good - excellent 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Fair Abysmal - poor Abysmal poor Fair Good excellent 11

12 Expected profitability % 16.8% 81.3% Abysmal - poor Fair Good - Excellent Emerging Trends in Real Estate

13 Emerging Trends in 2017 A Kinder Gentler Real Estate Cycle? Optionality: the new Flexibility Labor Scarcity reflected in Construction Costs Housing affordability: Local Government Steps Up How to Gain Entry Beyond the Velvet Rope Ready for Augmented Reality? Blockchain for 21 st -Century Real Estate 13

14 A Kinder, Gentler Real Estate Cycle? 14

15 A Kinder Gentler Real Estate Cycle? Where is the new commercial supply? Vacancy % Vacancy Completions % average average Completions Vacancy % Completions as % of Inventory Average Average Reis, Inc : Sum of industrial, office and retail property 15

16 A Kinder Gentler Real Estate Cycle? A Kinder Gentler Real Estate Cycle? Market begins to moderate on its own Banks and CRE Lending CRE Transaction Volume 30% 25% 20% % of Banks reporting Stronger Loan Demand 60% 50% 40% 15% 30% 10% 20% 5% 0% -5% % of Banks Reporting Tightening Underwriting Standards 10% 0% -10% Y/Y change in $ volume -10% -20% -15% -30% Federal Reserve Board: Survey of Current Lending Conditions, Real Capital Analytics 16

17 A Kinder Gentler Real Estate Cycle? Is the real estate market autocorrecting? A Kinder Gentler Real Estate Cycle? bird call Buzzfeed.com 17

18 Optionality: the New Flexibility 18

19 Optionality-the New flexibility Optionality Not just one user profile 19

20 Optionality-the New flexibility Optionality At the same time, not just one use E(verything)-loft Washington Post 20

21 Labor Scarcity reflected in Construction Costs 21

22 Labor Scarcity reflected in Construction Costs Declining Labor Force Participation Rate Labor scarcity in construction costs Male Forecast Total Female Bureau of Labor Statistics, Current Population Survey ; Moody s Analytics forecasts. 22

23 Labor Scarcity reflected in Construction Costs Construction employment volatility Labor scarcity in construction costs million jobs added in 168 months 2.28 million jobs lost in 56 months 1.21 million added in 67 months Recession Construction Emp Bureau of Labor Statistics 23

24 Labor Scarcity reflected in Construction Costs Construction labor gets hard to find Labor scarcity in construction costs 12-Month moving average % Construction unemployment rate $1,200 $1,150 $1, Weekly earnings $1,050 $1,000 $950 $900 $ Dec 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Recession Construction Unemployment rate Weekly Earnings Dec 2015 $800 Bureau of Labor Statistics 24

25 Labor Scarcity reflected in Construction Costs So what is the solution? Labor scarcity in construction costs

26 Housing affordability: Local Government Steps Up 26

27 Housing affordability: Local Government Steps Up Housing affordability Income growth just can t keep up with existing home prices Y/Y Change 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% Affordability Median HH Income Median Existing Home Prices Affordability National Association of Realtors, Bureau of Economic Analysis 27

28 Housing affordability: Local Government Steps Up Shortage of homes will make it difficult for affordability to see significant improvement 000s SAAR 1,600 Housing affordability Cumulative (000s SAAR) 4,000 1,400 1,200 1, ,000 - (2,000) (4,000) (6,000) (8,000) Cumulative Surplus/Deficit Hhouseholds Housing Completions US Census Bureau 28

29 Housing affordability: Local Government Steps Up Housing affordability Household formation > new supply Shortfall of 7 million 29

30 Housing affordability: Local Government Steps Up Housing affordability Housing costs are an increasing burden in more markets: Success can have a price Payment < 30% of HH Income Payment >30% and < 45% of HH Income Payment > 45% of HH Income National Association of Realtors, Bureau of Economic Analysis, PwC Research 30

31 Housing affordability: Local Government Steps Up So what is the solution? Labor scarcity in construction costs No one solution 14% 14% 14% 14% 14% 14% 14% Local government: Rediscoveries Innovations with NOAH

32 How to Gain Entry Beyond the Velvet Rope 32

33 How to gain entry beyond the velvet rope 33

34 Ready for Augmented Reality? 34

35 Ready for Augmented Reality? Ready for augmented reality? 35

36 Blockchain For 21 st -Century RE 36

37 Blockchain for 21 st -Century Real Estate Blockchain technology continues to gain momentum Global interest Research Bank experimentation Real estate Venture capital Central banks World Economic Forum 37

38 Blockchain for 21 st -Century Real Estate It could be here before you know it Blockchain 38

39 2017 potential best bets Be a problem solver in the middle of the capital stack Adjacencies Place yourself in the shade of the growing tree Take advantage of enhancements in construction technology Solve the e-commerce last mile equation Emerging Trends in Real Estate

40 Markets to watch 40

41 Markets to watch The top Market Classification 2 1 Austin 18 - Hour 1 2 Dallas/Fort Worth 18 - Hour 9 3 Portland 18 - Hour 4 4 Seattle 18 - Hour 10 5 Los Angeles Gateway 7 6 Nashville 18-Hour 11 7 Raleigh/Durham 18-Hour/Suburban 14 8 Orange County 18-Hour/Suburban 3 9 Charlotte 18 - Hour 8 10 San Francisco Gateway 6 11 Denver 18 - Hour Emerging Trends in Real Estate

42 Markets to Watch A story in every market Good Fair Challenged Emerging Trends in Real Estate

43 2017 Property Type Investment Outlook Fulfillment Center Warehouse Urban/high street retail Age-restricted housing/multifamily Medical office Moderate/workforce apartments Affordable apartments Central city office Neighborhood shopping centers Student housing Lifestyle/entertainment centers Midscale hotels Upscale hotels R&D High-income apartments Economy hotels Flex Single-family rental Luxury hotels Manufacturing Outlet centers Suburban office Power centers Regional mall Emerging Trends in Real Estate 2017 Poor Fair Excellent 43

44 2017 Local Outlook: Denver % Investor Demand Development Redevelopment Opportunities Public Private Investment Local Economy Capital Availability Average National Average

45 2017 Sector Outlook: Denver 4 Denver National Multifamily Housing Retail Industrial Office Hotel

46 Download your copy of Emerging Trends in Real Estate 2017 uli.org/et PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

47 Google ULI Demographic Strategies or

48 Biggest Problem: Generations 5,000,000 Peak Birth Years 4,000,000 NUMBER OF BIRTHS 3,000,000 2,000,000 1,000,000 0 SILENT GENERATION BABY BOOMERS YEAR GENERATION X MILLENNIALS

49 What do these two have in common? 32 year old Working Father 16 year old High School Junior MILLENNIALS

50 Solution: New Generational Definitions by Decade 2016 US POPULATION 4,500, M 43 M 41 M 44 M 44 M 41 M 4,000,000 3,500,000 US Born Alive Foreign Today 27 Born M 3,000,000 2,500,000 2,000,000 1,500, M 1950s Innovators 1960s Equalers 1970s Balancers 1980s Sharers 1990s Connectors 2000s Globals Age 58-67Age 48-57Age Age Age Age ,000, , s Savers Age s 0 Savers 1940s Achievers 1940s Achievers Age s Innovators Age s Equalers Age s Balancers Age s Sharers Age s Connectors Age s Globals Age 8-17 Age

51 Denver s has a high percentage of those born in the 1980s (27 to 36) 2015 Population by Generation Denver-Aurora-Lakewood, CO MSA 500, , , ,000 Foreign Born US Born 329K 378K 402K 452K 356K 374K 300, , , K 215K 150, ,000 84K 50, s Savers 1940s Achievers 1950s Innovators 1960s Equalers 1970s Balancers Generation 1980s Sharers Source: John Burns Real Estate Consulting, LLC calculations of US Census Bureau 2015 Population Estimates * 2010s represents population born from only 1990s Connectors 2000s Globals 2010s*

52 Solution: The Rule THE 4 BIG INFLUENCERS 1.Government Policies 2.Economic Conditions 3.Technological Advances 4.Societal Shifts DURING 5 MAIN LIFE STAGES 1. Childhood 2. Early Career 3. Family Formation 4. Late Career 5. Retirement HELP ANSWER THE 6 KEY CONSUMER QUESTIONS 1. Who? 2. What? 3. When? 4. Where? 5. Why? 6. How?

53 Societal Shifts

54 Government Homeownership Policies 70% Homeownership Rate 66% 67% 62% 63%64%64% 60% 50% HUD Fannie Mae GI Bill 47% 46%46% 48% 55% 44% 40%

55

56 Technologies impact each Generation

57 Opportunity #1: Shift in Household Composition 12,000,000 HOUSEHOLD GROWTH Age ,000,000 8,000,000 6,000,000 4,000,000 2,000,000 Under Age M Age M 4.3 M 5.4 M 0-2,000, M 0.01 M -0.8 M -0.2 M

58 Opportunity #2: Surban living Stapleton Lowry Flats at Bethesda Avenue

59 Opportunities 3 through 8 +8 million WOMEN +8 million IMMIGRANTS +18 million RETIREES million more HOUSEHOLDS +5.3 million more HOMEOWNERS +7.2 million more RENTERS

60 Presented By: A District Council of the Urban Land Institute

61 A District Council of the Urban Land Institute Patrick Phillips, Global CEO, ULI Patricia Gage, EVP, Colorado Business Bank Mike Kercheval, Executive Director, CU Real Estate Center Ann Sperling, Senior Director, Trammell Crow Company John Burns, CEO, John Burns Real Estate Consulting John Jugl, Vice Chairman, Newmark Grubb Knight Frank Thomas Toomey, CEO, President, UDR, Inc.

62

63 Gold Miner Kitty Cat Mattress Tester Pop Princess Fixer And the Gold Medal winner. Taller. American Ninja Warrior Beast Master Hedge Fund Manager Dinosaur

64 A District Council of the Urban Land Institute Thank you to our sponsors! Title Sponsor: Corporate Sponsors: