Emerging Trends in Real Estate 2016
PwC ULI 12 Month Outlook on Trends 37 th Edition 1,800+ Real Estate leaders surveyed 75 Cities
Profitability outlook 2010 17.7% 60.6% 21.6% Abysmal to Poor Fair Good to Excellent Source: Emerging Trends in Real Estate 2015
Profitability outlook 1.1% 2015 74.0% 24.9% Abysmal poor Fair Good excellent Source: Emerging Trends in Real Estate 2016
Profitability outlook still improving 1.1% 2016 Expectations are high 84.0% 14.9% Abysmal poor Fair Good excellent Source: Emerging Trends in Real Estate 2016
Look what we found Expectations are high 2016 1.1% 14.9%???? 1.6% 14.4% 84.0% 84.0% Abysmal poor Modestly poor modestly good Good excellent Abysmal poor Modestly poor modestly good Good excellent Source: Emerging Trends in Real Estate 2016
Deja Vu all over again? Expectations are high 2016 1.1% 14.9% 2006 1.6% 14.4% 84.0% 84.0% Abysmal poor Modestly poor modestly good Good excellent Abysmal poor Modestly poor modestly good Good excellent Source: Emerging Trends in Real Estate 2016
2016 Emerging Trends 18-Hour cities 2.0 Next stop: The suburbs what is a suburb? Office: A Barometer of Change A housing option for everyone Parking for change 9
Infrastructure: Network it! Brand it! 2016 Emerging Trends Food is getting bigger and closer Consolidation breeds specialization We raised the capital, now what do we do with it? The return of the human touch 10
18-Hour Cities 2.0
Emerging Trends outlook ranking change 2010-2016 30 20 Markets moving up Survey respondents favor growth and competitive business and living costs 10 0-10 -20-30 Markets moving down Source: Emerging Trends in Real Estate 2016
2013 San Francisco New York City San Jose Austin Houston Boston Washington D.C. Dallas/Fort Worth Orange County Source: Emerging Trends in Real Estate 2016
Out of the top 10 Washington D.C. (24) New York City (15) Orange County (14) Miami (19) Houston (30) Boston (13) Raleigh/Durham (11) 2016 Dallas/Fort Worth Austin Charlotte Seattle Atlanta Denver Nashville San Francisco Portland Los Angeles Source: Emerging Trends in Real Estate 2016
Change from Previous Cycle 18-Hour cities 2.0 Dollar Transaction Volume 600% 500% 400% Expansion Recovery Cost of Doing Business Cost of Living 300% 200% Expansion 2010 112% 2010 119% 100% 0% -100% Recession 2002-2007 2008-2009 2010-2011 2012-2015 2016 99% 2016 112% -200% 2010 top 10 Markets 2016 to 10 Markets Source: Moody s Analytics, Real Capital Analytics
Next stop: The suburbs what is a suburb? Generations are on the move, with millennials the most footloose
Next stop: The suburbs. what is a suburb? 80% 70% 60% 62% Where Do People Currently Live? 67% 71% 50% 40% 30% 20% 10% 0% Millenials (18 to 35) Generation X (36 to 49) Baby Boomers (50 to 69) City Suburb Source: U.S. Census Bureau
Who is likely to move? Somewhat or Very Likely to move in 5 years All Adults 48% Millennials 73% Gen Xers 42% Baby Boomers 37% War/Silent 25% Homeowners 34% Renters 73%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Next stop: The suburbs. what is a suburb? It s all about the kids! 30.00 25.00 20.00 15.00 10.00 5.00 - (average age) (millions) 28.5 28 27.5 27 26.5 26 25.5 25 24.5 24 23.5 43% 41% 39% 37% 35% 33% 31% 29% 27% National probability of Living in city center by age of child Female Millenials (Ages 25-35) Average Age of First Birth 25% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Age Source: City Observatory, National Vital Health Statistics, U.S. Census Bureau
Office: Barometer of Change Source: CoreNet Global, PwC
2000 2010 2020? 253 sf per worker 225 sf per worker 138 sf per worker Number of workers per 1,000 sf Source: Corenet Global, PwC
10-year labor force poses the question Who is in charge? Persons 600,000 400,000 410,616 2016-2026 2026 200,000 - (200,000) (400,000) (600,000) (483,520) 11.3% 13.8% 44.3% 30.6% 00 s 10 s % of total labor market (800,000) (1,000,000) (894,136) Leaving Joining Shortage Millennials Boomers Gen X Gen Z Source: U.S. Census Bureau, Bureau of Labor Statistics, PwC
It s 2026 Who s in charge? Millennials 44.3% Gen X 30.6% 13.8% Boomers 11.3% Gen Z Source: U.S. Census Bureau, Bureau of Labor Statistics, PwC
Small Business, Big Impact Company size: 1-49 employees Company size: 50-499 employees 46.5% 37.8% Company size: 6.0% 9.8% Company size: % of total employment growth since 2013 500-999 employees 1,000+ employees Source: Bureau of Labor Statistics, PwC
A Housing Option for Everyone Can you rent the American dream?
Rent as % of Median Income US Nashville 31.4% Denver Greenville Westchester/Fairfield, NY/CT Deltona/Daytona New Orleans Washington DC-District Tacoma Providence CapeCoral/Fort Myers/Naples Portland, ME Boston Palm Beach Orange County San Francisco Fort Lauderdale New York-Manhattan Miami Los Angeles New York-Brooklyn 20.0% 40.0% 60.0% 80.0% Own as % of Median Income Nashville 32.8% Tampa Bay/St. Petersburg Greenville Jacksonville Richmond Charlotte Madison Austin Tacoma US Charleston Portland, OR Denver Washington DC-District Boston Palm Beach Miami Los Angeles San Diego San Francisco New York-Manhattan 30.0% 70.0% 110.0% 150.0% 190.0% Source: U.S. Census Bureau, Core Logic
Parking for Change Parking was once a must-have..building owners will now have options
Parking for Change 100.0% Parking- free commuting (change 2000 to 2013) 90.0% 85.0% Percent of Drivers Commuting by Automobile 87.9% 86.5% 86.7% 86.3% 84.1% 85.8% 75.0% 50.0% 25.0% 80.0% 75.0% 77.7% 00 s 10 s 70.0% 0.0% -25.0% 65.0% 64.0% 60.0% 1960 1970 1980 1990 2000 2006 2010 2013 Source: U.S. Census Bureau, U.S. Department of Commerce, Department of Transportation
Delaying Licensure Only 44% obtained a driver s license with in 12 months of the minimum age Only 72% obtained a license before turning 18 Top Reasons for not getting a drivers license: 1. Not having a car 2. Ability to get around without driving 3. The cost of gasoline 4. Driving was too expensive 5. just didn t get around to it Source: AAA Foundation for Traffic Safety
We raised the capital, now what do we do with it?
$ millions We raised the capital, now what do we do with it? $300 $250 Institutional dry powder and REIT Cash $200 $150 $100 $50 $0 2010 2011 2012 2013 2014 2015 Source: Prequin, Quarterly real estate update, Q2 2015, Federal Reserve Flow of Funds
Prospects for Commercial/Multifamily Subsectors in 2016 Fulfillment Center Warehouse industrial Medical office Apartment rental moderate Apartment rental high Limited-service hotels Neighborhood/comm. shopping centers Central city office R&D Industrial Student housing Full-service hotels Apartment rental affordable Suburban office Institutional rentals of SF houses Power centers Regional malls Warehouse industrial Fulfillment Center Medical office Apartment-high income Limited-service hotels Apartment rental moderate Student housing Central city office R&D Industrial Neighborhood/community shopping centers Apartment rental affordable Full-service hotels Institutional rentals--sf houses Suburban office Power centers Regional malls
2016 Local Outlook: Nashville 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 - Local Economy Investor Demand Capital Availability Development Opportunity Local Development Community Public Private Investment Average National Average
2016 Comparison among markets in the South: Local Development Community 5.00 4.00 3.00 2.00 1.00 -
2016 South: Development Opportunity 5.00 4.00 3.00 2.00 1.00 -
Nashville Investment Ratings Emerging Trends 2004-2016
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