NJ Future Forum 2012 Barbell Effect Otteau
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Transcript of NJ Future Forum 2012 Barbell Effect Otteau
New Jersey Redevelopment Forum
www.otteau.com 800.458.7161
Barbell Demographics Shifting Demand Patterns Real Estate Demand
78 Million Baby-Boomers ▫ Turning 65 @ 10k/day
▫ Childless, Downsizing & Lifestyle Oriented
48 Million Gen-X ▫ Suburban-Centric Families
79 Million Gen-Y • Turning 35 @ 11k/day
▫ Childless & Seeking Lifestyle
Changed Circumstances
Financial Realities Constrained Income Drives More Efficient Lifestyles
© Copyright 2011 Otteau Valuation Group, Inc.
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
-3.7%
-6.4%
-10.4%
-3.8%
Household Income Decline 2006-2010
Middle Class Retirement Funding
Underfunded
Adequately Funded
Source: Ernst & Young
46.0%
-3.3% -15.0%
-5.0%
5.0%
15.0%
25.0%
35.0%
45.0%
55.0%
House Prices HH Income
US Standard of Living 2000-2005
$3,
449
$3,
349
$3,
249
$3,
100
$3,
500
$3,
900
$4,
293
$4,
400
$4,
450
$4,
500
$4,
800
$5,
050
$5,
414
$5,
250
$5,
025
$4,
800
$5,
200
$5,
700
$6,
255
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
Ave
rage
Cre
dit
Car
d D
ebt
Credit Card Debt for 25-35 Yr HH
25-35 Yr. Olds
Financial Realities Confirm Inadequacy of Current Development Model
© Copyright 2011 Otteau Valuation Group, Inc.
-80,000
-70,000
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
-23,759
-33,225
-45,045
-56,989
-72,547 -69,160
-56,208
-31,690
-66,603
NJ Net Domestic Migration
Financial Realities US Economy Less Dominant in Global Economy • Labor Markets Will Employee Fewer People • Industrial Revolution Has Shifted to Emerging Low-Cost Labor Market
• Off-Shoring of Jobs due to High Labor & Tax Rates • Technology Advances Require Fewer ‘hands-on-deck’
• Job Growth Relocating to Urban Places
© Copyright 2011 Otteau Valuation Group, Inc.
129,000
130,000
131,000
132,000
133,000
134,000
135,000
136,000
137,000
138,000
139,000
12,600.0
12,700.0
12,800.0
12,900.0
13,000.0
13,100.0
13,200.0
13,300.0
13,400.0
13,500.0
Tot
al N
on-F
arm
Job
s in
Th
ousa
nd
s
GD
P in
Bil
lion
s
US GDP vs. US Non-Farm Jobs
US GDP (2005 $) US Non-Farm Employment
Oil Prices Reshuffle the Deck New Dynamics of Locational Efficiency
• Cheap Oil Supply About to Peak • Recession’s End Increases Demand • Emerging Economies Consume More • Middle East in Crisis • National Conscience Rising • Transportation = 15% of HH Spending • Economic Growth Moves Inward
© Copyright 2011 Otteau Valuation Group, Inc.
Changing Household Dynamics Fewer Households with Children
© Copyright 2011 Otteau Valuation Group, Inc.
65.9 65.2 65.1
66.2 66.5 66.9
68.9 69.6
68.5
66.7
64.7
62 63 64 65 66 67 68 69 70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Births per 1,000 Women
US Birth Rates Declining
Source: Pew Research Center
796,958
75,601 258,685
5,588 1,670 862,721 73,715
156,262
438,102
551,262
NJ Total Households by Type Married-Couple Family, with children
Other Family, Male Householder, with children
Other Family, Female Householder, with children
Nonfamily, Male Householder, with children
Nonfamily, Female Householder, with children
Married-Couple Family, no children
Other Family, Male Householder, no children
Other Family, Female Householder, no children
Nonfamily, Male Householder, no children
Nonfamily, Female Householder, no children
50+ Divorce Wave
© Copyright 2011 Otteau Valuation Group, Inc.
Demand Cohorts An Unusual Cast of Characteristics
• Affluent & Childless • Gen Y – Millennials • Baby Boomers • Relocated Employees
• Student Housing • Upscale Rental Apts
© Copyright 2012 Otteau Valuation Group, Inc.
A Different Cast of Characters Downtown Residents with Greater Spending Power
63.5
65.5
67.5
69.5
71.5
28.0
30.0
32.0
34.0
36.0 Rental Inversion
NJ Rentership Rate
Urbanization of Real Estate
Demand
© Copyright 2011 Otteau Valuation Group, Inc.
Population Growth & Job Creation More Urban-Centric
24%
32%
49%
-5%
5%
15%
25%
35%
45%
55%
1990-1999 2000-2009 2008-2010
NJ Rail Towns Share of BP's
Current Trends Just Beginning
© Copyright 2011 Otteau Valuation Group, Inc.
Bringing Clarity to Real Estate
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© Copyright 2012 Otteau Valuation Group, Inc.
About OTTEAU Valuation Group Bringing Clarity to Real Estate
© Copyright 2012 Otteau Valuation Group, Inc.
About Us: The lightning strike speed of today's information flow has accelerated The pace of change for real estate markets. As a result, trends that previously took Years to develop can now unfold in a few short months. Our mission is to assist our clients In keeping pace with that change by providing insightful analysis and cutting edge pricing skills. To accomplish this we have assembled a team of skilled professionals specializing in the complex field of real estate market analysis. With broad based experience in real estate valuation and consultation, our firm engages in a diversified practice encompassing all property types. Appraisal Services are provided to financial & lending institutions, developers & builders, attorneys, investors, relocation management service companies, governmental agencies, corporations and the public. Our Consulting Group provides a wide array of services with respect to market analysis, project feasibility, demographic trends, project valuation and municipal entitlement proceedings. Litigation support is provided for matters requiring the valuation and corresponding expert testimony for eminent domain proceedings, contractual disputes, bankruptcy, tax appeals, equitable distribution, estate valuation and stigma related issues. OTTEAU.com offers a wide range of informational content and analysis of real estate trends including published and live session formats. MarketTRAC is an online market data service available for subscription on www.otteau.com.
Bringing Clarity to Real Estate As President of Otteau Valuation Group Mr. Otteau manages facets of the firm's business including serving as General Manager of www.otteau.com which is an information provider on real estate trends. He has been actively engaged in real estate consultation and valuation since 1974 and holds the State Certified General Real Estate Appraiser certification, the highest level offered. His practice is concentrated in providing project feasibility, marketing analysis, redevelopment guidance and valuation analysis to developers, financial institutions, Governmental entities and investors. Frequently quoted in the New York Times and Wall Street Journal, and having made television appearances on CNBC, Bloomberg and NBC, Mr. Otteau is widely respected for his knowledge and insight into real estate trends. His attention to detail and comprehensive fact finding has made him the go-to person for industry professionals seeking to enhance their competitive position in the marketplace. Jeffrey has provided testimony as an expert witness at the municipal, county and state levels, authored several texts on property Valuation techniques and has lectured throughout the United States and in Canada. He served on the Appraisal Standards Advisory Council, which consulted with the Appraisal Foundation in Washington, D.C. on its agenda of projects and major technical issues. Mr. Otteau served as a past Chairman of the Employee Relocation Council's Appraisal Standards Council and was inducted into their distinguished Hall of Leaders in 1995.
© Copyright 2012 Otteau Valuation Group, Inc.