Post on 11-Jun-2020
transcript
The MarketMillennials Move
how
PDX state of the market 2015
3.3%3.0%
2.6% 2.5%2.3%
2.0% 1.9%
1.4%
0%
1%
2%
3%
4%
San
Jose
Portl
and
Seat
tle
San
Die
go
Los A
ngel
es
Bost
on
San
Fran
cisc
o
New
Yor
k
projected to be leading among tech hubs
PDX employment growth
2.2%nationalaverage
Source: Moody’s Analytics, US Census Bureau, ULI’s Emerging Trends
Tech Hub Cities
Forecast Employment
Growth % 2015-2016
3.2%3.0% 3.0% 2.9%
2.6% 2.6% 2.5% 2.5% 2.5% 2.5%2.3% 2.3%
0%
1%
2%
3%
4%
Atla
nta
Nas
hville
Port
land
Rale
igh/
Dur
ham
Gre
envil
le
San
Anto
nio
Aust
in
Char
lotte
Salt
Lake
City
San
Die
go
Char
lest
on
Den
ver
projected to be among top for 18-hour cities
PDX employment growth
Source: Moody’s Analytics, US Census Bureau, ULI’s Emerging Trends
18-hour Cities
Forecast Employment
Growth % 2015-2016
2.2%nationalaverage
-5
0
5
10
15
2010
2011
2012
2013
2014
2015
2016
by sector
Portland YOY office employment growth3.0%
overall growth
Source: Moody’s Analytics, JLL Research
Financial Activities
Professional and Business Services
Information
Government
-10
-5
0
5
10
15
2010
2011
2012
2013
2014
2015
2016
Portland YOY industrial employment growth
Source: Moody’s Analytics, JLL Research
Mining and Logging
Construction
Trade, Utilities, and Transportation
Manufacturing
Other Services
by sector 3.0%overall growth
MarketOfficepdx
NOW MEANS
PORTLAND CBD PORTLAND urban MARKETSCBDUrban
PORTLAND CBD
CBD
CBD
OLD TOWN
NORTH WATERFRONT
CONVENTION AREA/LLOYD DISTRICT
CLOSE IN EASTSIDE
SOUTH
CLOSE IN EASTSIDE
NORTH
SOUTH WATERFRONT
NORTH END
ALPHABET DISTRICT
WEST END
SOUTH END
PSU
PEARL DISTRICT
GOOSE HOLLOW
BROADWAY RETAIL CORE
NW INDUSTRIAL
0%
2%
4%
6%
8%
10%
12%
14%
-500
-300
-100
100
300
500
700
900
1,100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 E 2016 F
SF in
tho
usan
ds
Supply Demand Vacancy
Urban office markets are among the tightest in the US
8.9%PROJECTEDVACANCY
2016
Source: JLL Research
An increasing development pipeline
will deliver 1.1 MSF in 2016 and bump
vacancy up slightly
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
-1,200
-700
-200
300
800
1,300
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 E 2016 F
SF in
tho
usan
ds
Supply Demand Vacancy
Suburban office markets have recovered dramatically
9.6%PROJECTEDVACANCY
2016
Source: JLL Research
Five years of demand far outpacing
supply has led to dropping vacancy
and rent growth
$15
$17
$19
$21
$23
$25
$27
$29
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Urban Rent Suburban Rent
Rent growth has been strong in urban markets
suburban markets have seen their rents surpass their pre-recession peak
Source: JLL Research
$28.56
$21.32
urban
suburban
But rent growth has been most robust in urban markets
Suburbs have joined the recovery
10.8%
6.5%
7.4%
14.6%Source: JLL Research
urban vacancy
yoy rent growth
suburban vacancy
yoy rent growth
Source: JLL Research
rise of the creative class... urban leasing driven by creatives... who will pay the price
Impact of Millennialson Portland s office market
$20
$22
$24
$26
$28
$30
$32
$34
$36
2012 2013 2014 2015
Class A/B Creative Class A/Non Creative
$33.37
$24.50
35.6% GAP
Betweeneffectiverents
creative
effectiverents
creativenon
AND
creative
non-creative
Source: JLL Research
Creative leasing has comprised an
increasingly larger portion of activity
in the market
Creative leasingdominates urban leasing
0
200
400
600
800
1,000
1,200
1,400
2012
35.1% 36.3% 78.7%
78.2%
2013 2014 YTD 2015
SF in
Tho
usan
ds
Traditional Class A/B Creative
35.1%in 2012
78.2%in 2015
Creative TI s maintain their value significantly
Source: JLL Research
vs
TI’s for second generation Creative space vs. traditional Class A space for 5-year deals
creative non-creative
$11.45/sf $45.30/sf
[ ]
MarketIndustrial
pdx
SF in
tho
usan
ds
Supply Demand Vacancy 0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 E 2016 F
Portland s industrial marketin year six of the recovery
4.3%PROJECTEDVACANCY
2016
Source: JLL Research
Five years of demand outpacing supply has
led to low vacancy and a filling pipeline
of construction
$0.53
$0.52
$0.53
$0.48
$0.49
$0.44
$0.48 $0.49
$0.53
$0.57
$0.40
$0.45
$0.50
$0.55
$0.60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Industrial net effective rentshave jumped, driven by construction
7.5%rent jump from 2014
to 2015
Source: JLL Research
Net effective rents for industrial leases
have surpassed their previous peak, up
7.5% in 2015
Source: JLL Research
Food and Beverage as well as
ecommerce logistics are
driving demand in Portland
market
Demand in industrial marketdriven by millennial shifts
21.0%
16.3%
14.5%
Food and Beverage
Logistics and Distribution
Computing/Tech/Media
Construction Materials and Building Fixtures
Industrial Supplies and Machinery
Paper and Packaging
Bio/Healthcare
Manufacturing
Storage and Warehousing
Consumer Products
Retailer
Auto, Auto Parts, and Tires
Professional & Business Services
Food and Beverage
Logistics and Distribution
Computing/Tech/Media
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2013 2014 2015
Squa
re fe
et
Average size industrial lease
Source: JLL Research
Number of tenants looking
for spaces in excess of
100,000 SF is also increasing
Size of industrial tenants growing up 53% in 2 years
2013
21,249 sf
2014
23,855 sf
2015
32,540 sf
53%increasein 2 years
MarketMultifamily
pdx
0
2,000
4,000
6,000
8,000
10,000
Single Family Multifamily
12,000
14,000
16,000
18,000
20,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Housing starts ramping up with multifamily making up an increasing share
Source: us census bureau, JLL Research
13,03520 year
average
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2009 2010 2011 2012 2013 2014
# of housing units permitted Change in population
Population changeand change in housing stock
Source: us census bureau, JLL Research
13,03520 year
average
33,500Population growth has been outpacing housing stock while
the number of permitted housing
units remains below the 20-year
average
$856 $906
$968 $974 $983 $997 $1,007 $1,042 $1,146 $1,185
$1,278
$1,575
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Atla
nta
Nas
hville
Port
land
Rale
igh/
Dur
ham
Gre
envil
leSa
n An
toni
o
Aust
in
Char
lotte
Salt
Lake
City
San
Die
go
Char
lest
on
Den
ver
but not among 18-hour cities
Cost of housing has been a strong advantage
Source: PPR, JLL Research
Average monthly apartment rent
Outlookpdx
Portland property clockstill room to run
MARKET
PEA
KING FALLIN
G
RISING BOTTOM
ING
MULTIFAMILY
CBD OFFICE
INDUSTRIAL
HOTEL
RETAIL
SUBURBAN OFFICE
Top take aways 1. Economic advantages of creative space2. CBD now means Urban3. Opportunity in the suburbs4. Bullish on industrial5. Multifamily affordability advantage at risk6. Sticky investors / sticky tenants7. Buyer pool deepens8. Information is key – can’t look in rearview