ULI Cleveland February 1, 2018

Transcription

1 ! " ULI Cleveland February 1, 2018

2 # REAL ESTATE FORECASTS FROM OTHERS o MULTIFAMILY o COMMERCIAL o RETAIL o INDUSTRIAL # RESULTS OF ULI TRENDS SURVEY

3 ! Longer view: recessions in 1974 (oil shock) (more oil and stagflation ) 1982 (double dip); (real estate only tax code driven); 1991 (economic exhaustion) and 2001 (9-11)! Expansion from 2002 until recession (Financial rules and liquidity driven, FNMA, FMC, AIG)! 7 recessions in 47 years=a recession every 6.6 years.! Since 1999=average cycle: 2 recessions in 17 years! It s been 9 years since beginning of last recession! Housing construction leads us out of a recession: NOT!

4 Homebuilding in the U.S. has traditionally led the country out of recessions Expect slow recovery as housing supply and demand re-equilibrate

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6 Source S&P Dow Jones Housing NOT repeating bubble period

7 BUT DEFAULTS HAVE LESSENED PEOPLES DESIRE TO OWN A HOME, EVEN IF THEIR CREDIT HAS BEEN FIXED

8 Source: Downtown Cleveland Alliance Q3 2017

9 e.g e.g e.g e.g e.g. 2014

10 2018 Forecast

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14 EXECUTIVE SUMMARY Prepared by Robert Simons, Ph.D. Alexandra Malkin Levin College of Urban Affairs Cleveland State University Prepared for ULI Cleveland February, 2018

15 # Takes the pulse of the region s real estate market, including capital markets, various property types, and geographic submarkets. # Survey complements the national PWC/Urban Land Institute s Emerging Trends in Real Estate, adding in-depth local perspective. # In September, 2017, ULI Cleveland distributed a link to an online survey to its contact list. The survey was available online between September 20 and October 25, 2017 and 77 non-random responses were collected, a response rate of about 9%. Additionally, 16 in-person interviews were conducted with key local experts from the private and public sectors across a range of professional disciplines, in particular real estate development, management, finance, and planning.

16 # Generally, the Cleveland and Northeast Ohio RE market is good,and consensus is about the same next year. # Respondents expect to see a good profitability in real estate businesses in 2018, especially in multifamily, with a focus on townhomes # The most important financial issues for real estate investment and development in 2018 will be: o job, income and wage growth, follow closely by o o interest rates, inflation, and state and local budget problems. # The top potential needs for land development are o o o more economic growth (a greater demand for real estate), infrastructure, more workforce for construction and skilled trades, and better transportation. # Residential rental and office sectors are still strong, even with a little decline, especially in residential-rental. The industrial and distribution sector has increased in percentage growth compared to last year. # The majority of respondents (68%) feel the real estate capital markets through 2018 are in balance, and half the respondents felt that some increase (34%) is expected in the availability of equity capital.

17 ACTIVE'SECTORS,' 'CHANGES' 80%# 60%# 40%# 2014# 2015# 20%# 2016# 2017# 0%#

18 # Compared with last years survey, it is evident that respondents agree that the apartment sector and the residential for-sale sector have been growing. However, respondents expressed concern that there has been too much focus on high-end rental units. # Respondents agree that the office sector has been in a steady recovery/growth stage. # The industrial sector has picked up significantly compared to last year. # The general view is that most of the markets are currently moving from a recovery/growth stage to growth stage potential, while retail continues on a declining trend with regional malls in advanced decline. # Hospitals lead the growth of the institutional/public sector, with higher education following close behind. Such institutions are investing in the market, which contributes to the jump from last year. # Hottest submarkets with good-excellent prospects continue to be University Circle and Downtown Cleveland. # All respondents regard the economic health of the region as vital to continued growth

19 CURRENT'STAGE'OF'REAL'ESTATE'CYCLE0APARTMENT'(N=25029)' All#Apartments# Luxury#Apartments# Moderate#Apartments# Tax#Credit#Apartments# Student#Housing# 16# 14# 12# Number'of'Respondents' 10# 8# 6# 4# 2# 0# Peak' Early'Decline' Advanced'Decline' Bottomed'Out' Recovery/Growth' Growth'

20 CURRENT'STAGE'OF'REAL'ESTATE'CYCLE0RETAIL'(N=23025)' All#Retail# Regional#Malls# Power#Centers# Neighborhood/Community#Shopping#Centers# 16# 14# 12# Number'of'Respondents' 10# 8# 6# 4# 2# 0# Peak' Early'Decline' Advanced'Decline' Bottomed'Out' Recovery/Growth' Growth'

21 CURRENT'STAGE'OF'REAL'ESTATE'CYCLE0OFFICE'(N=30031)' All#OfKice# Central#City#OfKice# Suburban#OfKice# Medical#OfKice# 16" 12" Number'of'Respondents' 8" 4" 0" Peak' Early'Decline' Advanced'Decline' Bottomed'Out' Recovery/Growth' Growth'

22 CURRENT'STAGE'OF'REAL'ESTATE'CYCLE0INDUSTRIAL'(N=19021)' All#Industrial# Bulk/Distribution#Space# General#Industrial# R#&#D#Industrial# SelfSStorage# 18# 16# 14# Number'of'Respondents' 12# 10# 8# 6# 4# 2# 0# Peak' Early'Decline' Advanced'Decline' Bottomed'Out' Recovery/Growth' Growth'

23 University#Circle# Downtown#Cleveland# ClevelandSWest# Cuyahoga#County#Eastern#Suburbs# Summit#County# Medina#County# City#of#Akron# Cuyahoga#County#Southeastern# 2018# 2017# Cuyahoga#County#South#Central#and# Geauga#County*# Lake#County# Portage#County# Lorain#County# ClevelandSEast# *#No#comparable#data#available#from#2017# 1# 2# 3# 4# 5# ABYSMAL''''''''''''POOR'''''''''''FAIR''''''''''''''GOOD''''''''''EXCELLENT'

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25 # Executive in Residence at CSU, Levin College # Director of NEOSCC, Vibrant NEO 2040 # Former Planning Director at City of Cleveland o Civic Vision 2000: 1992 APA National Planning Award for Comprehensive Planning # Former Director of the Center for Urban and Regional Studies at YSU # Degrees from Yale College (City Planning & Political Science), Harvard Graduate School of Design (City Planning), & CSU (Bus. Admin.)