emerging trends in real estate 2016 - microsoft...source: emerging trends in real estate 2016 1.1%...
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Emerging Trends in Real
Estate 2016
uli.org/et16u.
uuorg/et16
uli.org/et16
uli.org/et16
Coordinating Offense and
Defense in 2016
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• PwC – ULI
• Outlook on Trends
• 37th edition
• 404/1,465
• Who?
• A record total
• ULI Triangle–Thank You!
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Source: Emerging Trends in Real Estate 2015
Profitability outlook
21.6%
60.6%
17.7%
2010
Abysmal to Poor
Fair
Good to Excellent
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Source: Emerging Trends in Real Estate 2016
2.4%
41.8%55.9%
2013
Abysmal–poor
Modestly poor–modestly good
Good–excellent
Profitability outlook improving
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Source: Emerging Trends in Real Estate 2016
1.1%
24.9%
74.0%
2015
Abysmal–poor
Modestly poor–modestly good
Good–excellent
Profitability outlook still improving
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Expectations are high
Source: Emerging Trends in Real Estate 2016
1.1%
14.9%
84.0%
2016
Abysmal–poor
Modestly poor–modestly good
Good–excellent
Profitability outlook still improving
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Look what we found Expectations are high
1.1%
14.9%
84.0%
2016
Abysmal–poor
Modestly poor–modestly good
Good–excellent
1.6%
14.4%
84.0%
????
Abysmal–poor
Modestly poor–modestly good
Good–excellent
Source: Emerging Trends in Real Estate 2016
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Deja Vu all over again? Expectations are high
1.1%
14.9%
84.0%
2016
Abysmal–poor
Modestly poor–modestly good
Good–excellent
1.6%
14.4%
84.0%
2006
Abysmal–poor
Modestly poor–modestly good
Good–excellent
Source: Emerging Trends in Real Estate 2016
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9
2016 Emerging Trends Office: A Barometer
of Change
18-Hour cities 2.0
Next stop: The suburbs
A housing option for everyone
Parking for change
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10
Infrastructure: Network it! Brand it!
Food is getting bigger and closer
Consolidation breeds specialization
The return of the human touch
We raised the capital, now what do we do with it?
2016 Emerging Trends
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18-Hour Cities 2.0
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Source: Emerging Trends in Real Estate 2016
-30
-20
-10
0
10
20
30
Emerging Trends outlook ranking change 2010 - 2016
Survey respondents favor growth and competitive business and living costs
Markets moving up
Markets moving down
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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
Top ten markets in 2013?
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Dallas/Fort WorthAustin
CharlotteSeattleAtlantaDenver
NashvilleSan Francisco
PortlandLos Angeles
Raleigh/Durham
Out of the top 10 in 2016?
Washington D.C. (24)New York City (15)Orange County (14)
Miami (19)Houston (30)Boston (13)
Raleigh/Durham (11)
Source: Emerging Trends in Real Estate 2016
Top ten markets in 2016?
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Source: Moody’s Analytics, Real Capital Analytics
18-Hour cities 2.0
-150%
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
Ch
an
ge
fro
m P
rev
iou
s C
ycl
e
Recession: 2008-2009
Recovery:2010-2011
Expansion:2012-2015
Cost of doing business 112% | 99%
Cost of living
119% | 112%Top 10 markets
in 2016Top 10 marketsin 2010
||
Transaction Volume in Top 10 Markets 2010 v 2016
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Next stop: The suburbs…
Generations are on the move, with millennials the most footloose
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62%67%
71%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Millenials (18 to 35) Generation X (36 to 49) Baby Boomers (50 to 69)
Where Do People Currently Live?
City Suburb
Su
bu
rbs
Cit
y
Source: U.S. Census Bureau
Next stop: The suburbs…. Where do people currently live?
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TOTAL, 3 GENERATIONS:
6.33 MILLION PEOPLE
TOTAL: 6.28 MILLION
PEOPLE
TOTAL:2.27 MILLION
PEOPLE TOTAL: 1.51 MILLION
PEOPLE
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
BetweenSuburbs
Within City City to Suburb Suburb to City
Mil
lio
ns
of p
eo
ple
Metropolitan Mobility, 2013 to 2014
Gen
. X
Bo
om
ers
Mil
len
nia
ls
Source: U.S. Census Bureau
Next stop: The suburbs…. Metropolitan mobility by location
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TOTAL, 3 GENERATIONS:
6.33 MILLION PEOPLE
TOTAL: 6.28 MILLION
PEOPLE
TOTAL:2.27 MILLION
PEOPLE TOTAL: 1.51 MILLION
PEOPLE
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
BetweenSuburbs
Within City City to Suburb Suburb to City
Mil
lio
ns
of p
eo
ple
Metropolitan Mobility, 2013 to 2014
Gen
. X
Bo
om
ers
Mil
len
nia
ls
Source: U.S. Census Bureau
Next stop: The suburbs…. Metropolitan mobility by generation
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It may be all about the kids!
Source: City Observatory, National Vital Health Statistics, U.S. Census Bureau
25%
27%
29%
31%
33%
35%
37%
39%
41%
43%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Age
National probability of Living in city center by age of child
23.5
24
24.5
25
25.5
26
26.5
27
27.5
28
28.5
-
5.00
10.00
15.00
20.00
25.00
30.00
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
Female Millenials (Ages 25 - 35)
Average Age of First Birth
(millions)(average age)
Next stop: The suburbs….
It may be all about the kids!
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Source: U.S. Census Bureau, UDR/Lachman Associates Survey, Gen Y and Housing, Urban Land Institute, November 2014
0% 20% 40% 60% 80%
Downtown/near downtown
Other city neighborhoods
Where millennials live within cities
Next stop: The suburbs…. Millennials within cities.
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2000 2010 2020 ?
Number of workers per 1,000 sf
Source: Corenet Global, PwC
253 sf per worker 225 sf per worker 138 sf per worker
Offices: A Barometer of Change
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00’s
10’s
(894,136)
410,616
(483,520)
(1,000,000)
(800,000)
(600,000)
(400,000)
(200,000)
-
200,000
400,000
600,000
Leaving Joining Shortage
persons
10-year labor force poses the question…
44.3%
30.6%
13.8%
11.3%
Millennials Gen X
Boomers Gen Z
% of total labor market
…Who is in charge?
Source: U.S. Census Bureau, Bureau of Labor Statistics, PwC
2016 - 2026 2026
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90’s
10’s
Source: Bureau of Labor Statistics, PwC
46.5%
37.8%
6.0% 9.8%
Small business, big impact
1 to 49
50 to 499
500 to 999
1,000 +
% of total employment change by company size since 2013
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90s00s
10s
Source: U.S. Energy Information Administration, Bureau of Labor Statistics, PwC
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Total Office Employment (000s)
Percent of Total Office Inventory by Decade of Construction
Office Using Jobs as % of all jobs
40’s
50’s 60’s
70’s
80’s
90’s 00’s
10’s
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A Housing Option
for Everyone
Can you rent the American dream?
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Source: U.S. Census Bureau
69.2
43.6
70.1
77.482.4 81.8
63.4
34.6
58
69.9
75.4 77.2
25
35
45
55
65
75
85
95
U.S. - Total Under 35 -Millennials
35 to 44 - Gen X 45 to 54 - Gen X andBoomers
55 to 64 - Boomers 65 and Over -Boomers and Older
Decline in Home Ownership % by Generation
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Source: U.S. Census Bureau, Core Logic
A Housing Option for Everyone Rent and Income
25% 35% 45% 55% 65% 75%
New York-Brooklyn
Los Angeles
New York -other boroughs
Miami
Oakland/East Bay
New York-Manhattan
Fort Lauderdale
San Diego
San Francisco
Orange County
Palm Beach
San Jose
Boston
Inland Empire
Portland, ME
Honolulu
CapeCoral/Fort Myers/Naples
Providence
US
Detroit
Average Rent as % of Median Income
31.4% US
30% 60% 90% 120% 150% 180%
New York-Manhattan
San Francisco
Oakland/East Bay
San Jose
Honolulu
Orange County
New York-Brooklyn
San Diego
Los Angeles
New York -other boroughs
CapeCoral/Fort Myers/Naples
Miami
Westchester/Fairfield, NY/CT
Seattle
Palm Beach
Fort Lauderdale
Inland Empire
Boston
Washington DC-District
Northern New Jersey
Denver
Sacramento
Portland, OR
US
Detroit
Own as % of Median Income
27.6 % Raleigh/Durham
37.6% US
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Parking for Change
Parking was once a must-have….
….building owners will now have options
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00’s
10’s
Source: U.S. Census Bureau, U.S. Department of Commerce, Department of Transportation
64.0%
77.7%
84.1%
86.5%87.9%
86.7% 86.3% 85.8%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
1960 1970 1980 1990 2000 2006 2010 2013
Percent of Drivers Commuting by Automobile
-25.0%
0.0%
25.0%
50.0%
75.0%
100.0%
Parking- free commuting (change
2000 to 2013)
Parking for Change
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Delaying Licensure
Only 44% obtained a driver’s license within 12 months of the minimum age
Only 72% obtained a license before turning 18
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”
Top Reasons for not getting a drivers license:
Source: AAA Foundation for Traffic Safety
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We raised the capital,
now what do we do with it?
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Source: Prequin, Quarterly real estate update, Q2 2015, Federal Reserve Flow of Funds
We raised the capital …
Dry Powder
$0
$50
$100
$150
$200
$250
$300
2010 2011 2012 2013 2014 2015
$ m
illi
on
s
Institutional dry powder and REIT Cash
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Emerging Trends Barometer: Buy? Hold? Sell?
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
2010 2011 2012 2013 2014 2015 2016Buy Sell Hold
Peak Buy
Peak HoldPeak Sell
Source: Emerging Trends in Real Estate 2016
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Interest rates
Water
Gen X
The Fair Housing Act and the affordability crisis
Good jobs and income mobility
And a few other Issues….
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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
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Raleigh/Durham Investment Prospects
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2016 Local Outlook: Raleigh/Durham
-
1.00
2.00
3.00
4.00
5.00
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2016 Sector Outlook: Raleigh/Durham
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Housing Hotel Office Multifamily Retail Industrial
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2016 South: Local Economy
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2016 South: Investor Demand
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2016 South: Capital Availability
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2016 South: Development Opportunity
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2016 South: Public/Private Investment
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2016 South: Local Development Community
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2016 South: Local Outlook
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2016 Expected Best Bets
Go to Key Secondary
Markets
Take a Deep Dive into the
Data
Middle-Income Multifamily
Housing
Plan Your Parking For
Change
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Emerging Trends in Real
Estate 2016
uli.org/et16u.
uuorg/et16
uli.org/et16
uli.org/et16
Coordinating Offense and
Defense in 2016