NJ Future Forum 2012 Barbell Effect Otteau

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New Jersey Redevelopment Forum www.otteau.com 800.458.7161

Transcript of NJ Future Forum 2012 Barbell Effect Otteau

Page 1: NJ Future Forum 2012 Barbell Effect Otteau

New Jersey Redevelopment Forum

www.otteau.com 800.458.7161

Page 2: NJ Future Forum 2012 Barbell Effect Otteau

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

Page 3: NJ Future Forum 2012 Barbell Effect Otteau

Changed Circumstances

Page 4: NJ Future Forum 2012 Barbell Effect Otteau

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

Page 5: NJ Future Forum 2012 Barbell Effect Otteau

Financial Realities Confirm Inadequacy of Current Development Model

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-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

Page 6: NJ Future Forum 2012 Barbell Effect Otteau

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

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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

Page 7: NJ Future Forum 2012 Barbell Effect Otteau

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

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Page 8: NJ Future Forum 2012 Barbell Effect Otteau

Changing Household Dynamics Fewer Households with Children

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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

Page 9: NJ Future Forum 2012 Barbell Effect Otteau

50+ Divorce Wave

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Page 10: NJ Future Forum 2012 Barbell Effect Otteau

Demand Cohorts An Unusual Cast of Characteristics

• Affluent & Childless • Gen Y – Millennials • Baby Boomers • Relocated Employees

• Student Housing • Upscale Rental Apts

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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

Page 11: NJ Future Forum 2012 Barbell Effect Otteau

Urbanization of Real Estate

Demand

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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

Page 12: NJ Future Forum 2012 Barbell Effect Otteau

Current Trends Just Beginning

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Page 13: NJ Future Forum 2012 Barbell Effect Otteau

Bringing Clarity to Real Estate

• All information is Copyright protected

• Content may not be reproduced, or disseminated without express prior written consent

• Managers may not reproduce, disseminate or present content to sales associates.

• Content is licensed for individual use and may not be replayed or replicated for group presentation

• Session may not be recorded in audio or video

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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.

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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.