Megatrends, Mega impacts: Implications for Maine, 2035 Maine Real - - PDF document

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Megatrends, Mega impacts: Implications for Maine, 2035 Maine Real - - PDF document

5/19/2011 Megatrends, Mega impacts: Implications for Maine, 2035 Maine Real Estate & Development Association Portland, ME May 18, 2011 Susan M. Wachter Richard B. Worley Professor of Financial Management Co Director, Penn Institute for


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Megatrends, Mega‐impacts: Implications for Maine, 2035

Susan M. Wachter

Richard B. Worley Professor of Financial Management Co‐Director, Penn Institute for Urban Research The Wharton School University of Pennsylvania

Maine Real Estate & Development Association Portland, ME May 18, 2011

Global Megatrends 2035

  • 1. Global Population and Income Surge and the

Earth’s Build‐Out

  • 2. The New Normal: Environmental and Natural

Resource Limits

  • 3. Global Competition and Governance: The

Great Challenge of the 21st Century

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3

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Maine Least Dense State East of Mississippi

http://www.nrcm.org/gallery.asp?gallery=11&image=251

Additional 1.5 billion 2035

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America Grows

200 million in 1968 300 million in 2006 400 million in 2032 500 million in 2050 America adds 100 million people faster than any other nation except India and Pakistan – But faster than China.

Source: Arthur C. Nelson, Metropolitan Research, University of Utah.

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Build‐Out of United States: Consequences for Maine

  • United States

population 2011 309 million

  • 1% population growth =

95 million people over next 25 years

  • Maine’s population

growth 2000‐2010 v US, .4% v 1%

Build‐Out of United States: Consequences for Maine

  • Maine’s pop 1.3 million
  • 10% growth
  • ver 25 years =

139,000 people

  • Equivalent of adding

two cities the size of Portland

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Envisioning Maine Spatially

  • 70% of population in cities
  • Much of population growth

will be concentrated in cities

  • Portland metro population

516,000, city 66,000

  • Density of Portland: 3,000

people/sq. mi., metro (3 counties) 248

  • Population growth likely to

double urban population

  • Albany, 5500 density; 7,000

Hartford; 12,000 Boston

US Census Bureau 2000

Maine’s Home Prices: 10 years >50%

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13 90 100 110 120 130 140 150 199901 199903 200001 200003 200101 200103 200201 200203 200301 200303 200401 200403 200501 200503 200601 200603 200701 200703 200801 200803 Price Index Explainable with CC

House Price Indexes By State

100 200 300 400 500 600 700 800 1983 1983 1984 1985 1986 1986 1987 1988 1989 1989 1990 1991 1992 1992 1993 1994 1995 1995 1996 1997 1998 1998 1999 2000 2001 2001 2002 2003 2004 2004 2005 2006 2007 2007 2008 2009 2010 2010

HPI for Comparable States

Maine Mass.

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House Price Index By State

100 200 300 400 500 600 700 800 1983 1983 1984 1985 1986 1986 1987 1988 1989 1989 1990 1991 1992 1992 1993 1994 1995 1995 1996 1997 1998 1998 1999 2000 2001 2001 2002 2003 2004 2004 2005 2006 2007 2007 2008 2009 2010 2010 Maine Mass. Ariz. Florida

Real Home Prices

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House Price Indexes By City

50 100 150 200 250 300 350 400 1983 1983 1984 1985 1986 1986 1987 1988 1989 1989 1990 1991 1992 1992 1993 1994 1995 1995 1996 1997 1998 1998 1999 2000 2001 2001 2002 2003 2004 2004 2005 2006 2007 2007 2008 2009 2010 2010 Las Vegas Phoenix Miami Portland, ME Boston

Increased Population Density May Result in Even Higher Appreciation

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  • 2. The New Normal:

Environmental and Natural Resource Limits

  • 30% of the environment will be built or

re‐built in the next 30 years

  • Maine is resource‐sensitive

– Cold weather = high heating costs

  • Energy solutions to mitigate rising commodity

prices and carbon dioxide emissions

  • Maine’s resources are energy dependent
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Emerging Economy Growth: Unprecedented Income Convergence

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China and India Are Becoming the Dominant Forces in Global Oil Demand

GDP Growth = CO2 Growth

Source: World Resources Institute

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Emerging Economies Will Put Pressure

  • n World’s Energy Supplies

China and India Will Dwarf the U.S. in Oil Consumption Growth

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The Bottom Line: Oil Prices Will Continue to Rise Emerging Market Growth = Extreme Pressure on Natural Resource Demand

Source: International Energy Agency

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Commodity Prices Will Continue to Rise

  • Purchases in developing countries rose to 45m hectares in 2009, a ten‐fold

jump from the last decade.

  • Sovereign wealth funds from the Mid‐East, as well as state‐entities from

China, the Pacific Rim, and even India are trying to lock up chunks of the world’s future food supply.

  • Western agribusiness is trying to beat them to it.
  • Hedge funds that struck rich ‘shorting’ US sub‐prime have rotated into the

next great play of our era: ‘long’ soil.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7997910/The‐backlash‐ begins‐against‐the‐world‐landgrab.html

  • 3. Global Competition and Governance:

The Great Challenge of the 21st Century

  • Globalization and global competition will

intensify

  • Maine must increase focus on competing

globally

– Government efficiency – Education

  • Maine must maintain the assets it is known

for, especially quality of life and recreational amenities, to sustain demand

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Governance Issues and Challenges for Maine

  • High energy costs and taxes
  • Workforce educated, skilled and low poverty

but aging population

  • Must invest in scientific research

– Marine technology – Renewable energy – Environment preservation

  • Natural beauty = competitive edge

Change in Ownership of Traditional Timberlands

  • 95% of Maine’s North Woods

are privately owned

  • In mid 1990’s just a few large

industrial owners held 60%

  • f the land
  • Since June 1998, 2/3’s of

Maine’s North Woods (7.1 million acres) have changed hands

  • By 2005, only 1 industrial
  • wner, Irving Paper Co.,

remained, owning 15%

  • REIT’s and Timber

Investment Management Organizations are now the majority owners

flickr.com/photos/bp1971

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Change in Ownership of Traditional Timberlands

  • 95% of Maine’s North Woods

are privately owned

  • In mid 1990’s just a few large

industrial owners held 60%

  • f the land
  • Since June 1998, 2/3’s of

Maine’s North Woods (7.1 million acres) have changed hands

  • By 2005, only 1 industrial
  • wner, Irving Paper Co.,

remained, owning 15%

  • REIT’s and Timber

Investment Management Organizations are now the majority owners

http://www.nrcm.org/gallery.asp?gallery=11&image=258

Maine Growth Management Enacted in 1989

  • Comprehensive

Planning

  • Funding for projects

support goals

  • 250 municipalities

have adopted comprehensive plans

  • Incentives rather

than mandates

flickr.com/photos/picsofmaine/

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Questions: 25 Years into the Future

  • How can Maine compete in the next 25 years?
  • What does Maine need to do to compete with
  • ther states to attract funds?
  • Where are developers going to be investing their

money?

  • What changes in the landscape will we see where

developers/brokers will be making their money

  • ver the next 25?
  • What will be the key ingredients of decision‐

making for future development in Maine?

State Goals: (1) To encourage orderly growth and development in appropriate areas of each community and region while protecting the State's rural character, making efficient use of public services, and preventing development sprawl; (2) To plan for, finance, and develop an efficient system of public facilities and services to accommodate anticipated growth and economic development; (3) To promote an economic climate which increases job opportunities and overall economic well‐ being; (4) To encourage and promote affordable, decent housing opportunities for all Maine citizens; (5) To protect the quality and manage the quantity of the State's water resources, including lakes, aquifers, great ponds, estuaries, rivers, and coastal areas; (6) To protect the State's other critical natural resources, including without limitation, wetlands, wildlife and fisheries habitat, sand dunes, shorelands, scenic vistas, and unique natural areas; (7) To protect the State's marine resources industry, ports, and harbors from incompatible development and to promote access to the shore for commercial fishermen and the public; (8) To

safeguard the State's agricultural and forest resources from development

which threatens those resources; (9) To preserve the State's historic and archeological resources; and (10) To promote and protect the availability of

  • utdoor recreation opportunities for all Maine citizens, including access to

surface waters.