U.S. OFFICE MARKET Economic & Market Overview Prepared for - - PowerPoint PPT Presentation

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U.S. OFFICE MARKET Economic & Market Overview Prepared for - - PowerPoint PPT Presentation

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U.S. OFFICE MARKET Economic & Market Overview Prepared for January 21, 2016 Cushman & Wakefield 1 Stock Markets are Falling China FTSE Xinhua A200 Index 13,500 12,500 11,500 10,500 9,500 8,500 7,500 6,500 US 5,500 Dow Jones

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Cushman & Wakefield 1

U.S. OFFICE MARKET

Economic & Market Overview Prepared for

January 21, 2016

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Cushman & Wakefield 2

Stock Markets are Falling

Sources: Moody’s Analytics, SIX Financial Information

5,500 6,500 7,500 8,500 9,500 10,500 11,500 12,500 13,500

China

FTSE Xinhua A200 Index

US

Dow Jones Industrial Average

15,500 16,000 16,500 17,000 17,500 18,000 18,500

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Cushman & Wakefield 3

Uncertainty is Rising

Moody’s Analytics Global Business Confidence Index

Source: Moody‘s Analytics

4-Week Moving Average 10 15 20 25 30 35 40 45 2010 2011 2012 2013 2014 2015 2016

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Cushman & Wakefield 4

Oil Prices Are Collapsing

Source: U.S. Energy Information Administration

$10.00 $30.00 $50.00 $70.00 $90.00 $110.00 $130.00 $150.00 Dollars per Barrel

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Cushman & Wakefield 5

Minimal

Impact on US Economic Growth?

“The Stock market has forecast nine of the last five recessions” Paul Samuelson “Every $10 decline in oil prices frees up $30 billion for spending on

  • ther goods over the next 12 months.”

Moody’s Analytics

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Cushman & Wakefield 6

U.S. Economy

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Cushman & Wakefield 7

Drivers of growth Consumer spending strengthens Wage growth finally increases Housing-positive, but modest impact Tech strength Potential headwinds Global volatility/China Fed policy: How fast will interest rates rise Oil patch weakness Long Island Economy Healthy for a Suburban Region Matching US but slow compared to the City Expect more of the same

US Economic Overview

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Cushman & Wakefield 8

U.S. GDP Growth in Recoveries After 6.25 Years

Source: U.S. Bureau of Economic Analysis, Cushman & Wakefield

Average Annual Growth Rate from Trough

3.6% 2.2% 2.6%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Previous 4 Recoveries 2009 Recovery 2016 Forecast

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Cushman & Wakefield 9

The Past Two Years Have Seen Extraordinary Job Growth

December to December Change in Total Employment

Source: U.S. Bureau of Labor Statistics

  • 6,000
  • 5,000
  • 4,000
  • 3,000
  • 2,000
  • 1,000

1,000 2,000 3,000 4,000 5,000

Thousands of Persons

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Cushman & Wakefield 10

Growth in Real After-Tax Income

  • 5.0%
  • 3.0%
  • 1.0%

1.0% 3.0% 5.0% 7.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percent Change from 1 Year Ago

National Recessions Income Growth

Source: U.S. Bureau of Economic Analysis

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Cushman & Wakefield 11

The Energy Bite

Source: U.S. Bureau of Economic Analysis

Spending on Energy Goods and Services as a Percent of After-Tax Income 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Percent

National Recessions Energy Bite

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Cushman & Wakefield 12

U.S. Motor Vehicle Sales

9 11 13 15 17 19 21

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Millions of Units

National Recessions Vehicle Sales

Source: U.S. Bureau of Economic Analysis

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Cushman & Wakefield 13

U.S. Weekly Unemployment Claims

250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

National Recessions Unemployment Claims Healthy Labor Market Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 14

U.S. Private Sector Job Openings

Source: U.S. Bureau of Labor Statistics

1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Thousands

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Cushman & Wakefield 15

Jobs Getting Harder to Fill

Share of firms with at least one job that is hard to fill

Source: National Federation of Independent Businesses

5 10 15 20 25 30 35 2000 2002 2004 2006 2008 2010 2012 2014

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Cushman & Wakefield 16

Millennials Are Now the Largest Component of the Labor Force

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69

Millions of Persons Age

Millennials: 90.8 Million Boomers: 79.1 Million

Source: U.S. Census Bureau

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Cushman & Wakefield 17

The Millennial Wave

U.S. Population by Age

10 20 30 40 50 60 70 Millions of Workers

Source: U.S. Bureau of Labor Statistics

Millennials: 53.1M Workers Boomers: 49.3M Workers Generation X: 49.5M Workers

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Cushman & Wakefield 18

Long Island Economy

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Cushman & Wakefield 19

Source: U.S. Census Bureau

LONG ISLAND POPULATION AT A RECORD HIGH

2.86

2.40 2.45 2.50 2.55 2.60 2.65 2.70 2.75 2.80 2.85 2.90

Millions

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Cushman & Wakefield 20

Manufacturing 14% Professional Services 11% Financial 8% Information 3% Education/Health 13% Leisure/Hospitality 8% Government 18% Transport/Utilitis 4% Retail 14% Wholesale 7%

1990

LONG ISLAND EMPLOYMENT STRUCTURE

1990 vs. 2014

Manufacturing 6% Professional Services 14% Financial 6% Information 2% Education/Health 21% Leisure/Hospitality 10% Government 17% Transport/Utilit is 4% Retail 14% Wholesale 6%

2014

T

  • tal: 1,125,000

T

  • tal: 1,290,700
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Cushman & Wakefield 21

EMPLOYMENT GROWTH SINCE NOVEMBER 2009

10.0% 7.6%

  • 0.5%

1.5% 3.5% 5.5% 7.5% 9.5% 11.5%

U.S. Long Island

Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 22

0.8% 1.6% 1.7% 1.8% 2.3% 1.7% 1.4% 1.2% 1.1% 1.7% 0.6% 1.3%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2010 2011 2012 2013 2014 2015-YTD

U.S. Long Island

EMPLOYMENT GROWTH

U.S. vs. Long Island

Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 23

TOTAL EMPLOYMENT: LONG ISLAND

1,000 1,050 1,100 1,150 1,200 1,250 1,300 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Thousands of Persons

Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 24

OFFICE-USING EMPLOYMENT: LONG ISLAND

220 230 240 250 260 270 280 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Thousands of Persons

Source: U.S. Bureau of Labor Statistics

Note: Office-Using employment = financial + professional & business services + information

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Cushman & Wakefield 25

HEALTH CARE EMPLOYMENT: LONG ISLAND

100 120 140 160 180 200 220 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Thousands of Persons

Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 26

LONG ISLAND RECESSION/RECOVERY PERFORMANCE BY INDUSTRY

Employment Change Since January 2008

  • 25.0%
  • 20.0%
  • 15.0%
  • 10.0%
  • 5.0%

0.0% 5.0%

Total Financial Professional Services Information

Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 27

41.0% 41.5% 42.0% 42.5% 43.0% 43.5% 44.0% 44.5% 45.0% 45.5% 46.0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

NYC EMPLOYMENT

Ratio of City to MSA

Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 28

Total Job Growth January 2004 to November 2015

NYC vs. Suburbs

100 200 300 400 500 600 700

2004-2015

THOUSANDS OF PERSONS

732.8 123.5

Today, 54% of the world’s population lives in urban areas, a proportion that is expected to increase to 66% by 2050. Urbanization, combined with the overall growth of the world’s population, could add another 2.5 billion people to urban populations by 2050. New York City has been the focal point of the job growth in the Metro Area over the past decade. Of the 856,300 jobs added in the Metro Area 732,800 are in the City and only 123,500 in the suburbs.

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Cushman & Wakefield 29

24.0% 24.2% 24.4% 24.6% 24.8% 25.0% 25.2% 25.4% 25.6% 25.8% 26.0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

LONG ISLAND EMPLOYMENT

Ratio of LI to Suburbs

Source: U.S. Bureau of Labor Statistics

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Cushman & Wakefield 30

TOTAL JOB GROWTH JANUARY 2004 TO NOVEMBER 2015

LI

  • Vs. Other Suburbs

77.9 45.6 10 20 30 40 50 60 70 80 2004-2015

Thousands of Persons

Long Island Other Suburbs

Within the Suburbs, Long Island has outperformed. Of the 123,500 jobs added in the metro area 77,900 (63%) are on the Island while the rest of the suburbs have added 45,600. Long Island accounts for only 25.7% of total suburban employment