Portland State University’s Center for Real Estate hosted their 13th Annual Real Estate Conference with keynote speaker Spencer Levy, Head of Research, Americas & Senior Economic Advisor for CBRE. Mr. Levy’s talk, “History of the Future”, touched on many topics but the most important takeaway was what he called the 2018 Real Estate Word of the Year: Agility – and the importance of being agile in the market we have today.
A common theme people discuss is how brick and mortar retail is dead. Mr. Levy believes this may no longer be the case due to the recent tax reform. Most of the direct benefits are going to households earning less than $75,000. These households tend to spend almost 100% or more of their income on consumables. Households earning more than $75,000 tend to save or invest rather than spend.
There are some areas of concern Mr. Levy wants us to be aware of. At the moment tech companies are creating jobs in large numbers. The lightening fast advancements of A.I. could lead to tech companies automating, and thus eliminating a large number of jobs in the near future. While brick and mortar retail does have its upsides, there are some hurdles to jump – and it’s not just eCommerce. Demographics are the main disruptor to brick and mortar retail. There are fewer people, or not the right demographic, for the retail located in their area. Placing the right type of retail around the target demographic for that area is crucial to success.
As we move forward in this cycle there are some things to keep front of mind:
Local is the new global. A great example of this is Portland’s micro-breweries and successful headquartered companies.
Capital is key to growth. Portland is made up of only 13% foreign capital. To keep this trending upwards that percentage will need to grow, much like Portland’s job growth which is ranked 6th in the nation. Continued growth will lead to an increase in the office market, retail, and housing. One way to spur growth in Portland is by creating demand.
“New is the new, new”. Nashville, for example, built spec offices to coincide with their current boom. New supply can create demand.
In closing, Mr. Levy touched on how our bias can disrupt the way we see the future. Our opinions have nothing to do with the value that something may hold – it’s just a bias we have, especially if we are invested in it. Challenge assumptions. You may be wrong or you may be right – either way it starts a conversation.