2013 Market Forecast

advertisement

Leadership & Strategy

2013 Market Forecast

1 st Quarter Update

Kiley Advisors LLC ASHRAE Meeting April 17, 2013

Leadership & Strategy

Looking Back

• • • •

2012 Market Begins to Transform

Employment Growth (119,000) Net Positive Absorption McGraw Hill Contracts $3.7B - $3.9B

Surge Felt by All Parties

Leadership & Strategy

Looking Back

CBRE

Office (Q4) Industrial (Q3) Retail (Q3) Multifamily (Q3)

Q4 SF Under Construction

8.5 msf 3.8 msf 1.4 msf 12,000

Net Absorption (YOY)

4.3 msf 1.5 msf 225k sf 3,195 units • • •

Office Houston recovered all square footage lost during recession by the end of 2011, so 4.3 msf is true growth Houston had the most absorption in a single year since 2006.

Overall rates have increased by almost $1 and Class A rates have risen $2.25 over the year

Leadership & Strategy

Looking Back

• • • • Home Sales Up 16.1% in 2012 Auto Sales – 325,000 units Commercial Real Estate “White Hot”

Looking Ahead

International Picture Positive Growth – All Regions

Leadership & Strategy

Leadership & Strategy

A Deeper Look

• • •

International Picture China 8.6%; India 6.5% Western Europe, Greece and Spain Mongolia, Macau and Libya – The Stars

Looking Ahead

National Picture • • • • Fiscal Cliff Averted GDP Growth 2 – 2.5% 2M Jobs 7.5% Unemployment

Leadership & Strategy

Looking Ahead

National Picture • • • • Construction Starts Increasing McGraw Hill 6% FMI 8% Commercial 5% • Home Building Returns

Leadership & Strategy

Leadership & Strategy

Looking Ahead

• • • • Texas and Houston Population and Employment Growing Shale Boom Cost of living remains reasonable All markets increasing

Shale Plays

Leadership & Strategy

Source: www.Angus.us

Leadership & Strategy

Shale Gas - The Game Changer for American Manufacturing

• •

Reshoring

1-3M Jobs (2025-2030)

Deloitte & Bain Studies

Trends/Issues

Leadership & Strategy

Trends/Issues

Leadership & Strategy

Leadership & Strategy

What Will Drive Construction?

• • • • • • • • Job and Population Growth 85,000 jobs; 115,000 people Construction adding 16,200 Oil and Gas Prices remain favorable Vacancy levels low Quick delivery/value building Tenant Financed/HR Driven Financing available but tight parameters Panama Canal Expansion

Leadership & Strategy

What Will Drive Construction?

CBRE

Office (Q4) Industrial (Q3) Retail (Q3) Multifamily (Q3)

Vacancy (Total)

12.9% 5.2% 7.8% 89.6% occupancy • • • EIA Projections WTI $88.29 per barrel average Henry Hub $3.49 average

Leadership & Strategy

Sector and Segment Highlights

Residential

• • • 27,500 new single family dwellings 10,000 new multi-family units Lot supply scarce?

Leadership & Strategy

• • •

The Industrial Picture

10 billion in Houston Area 56 billion from Corpus to Baton Rouge Significant for our workforce picture

Leadership & Strategy

• • •

Leadership & Strategy

Public Work - Commercial

Harris County slightly up due to the new medical examiners building City of Houston down 23% from a year ago Port of Houston $200M Department Aviation Facilities Fire Protection Facilities General Government Facilities Homeless & Housing Facilities Library Facilities Parks and Recreation Facilities Police Facilities Public Health Facilities Solid Waste Management Facilities

Total

Amount $135 M $14.6 M $2.8 M $0 $7.2 M $20.2 M $10.5 M $1.5 M $3.6 M

$195.4M

Leadership & Strategy

Institutional Institution

University of Houston Lone Star College System University of St. Thomas Houston Community College

2013 Construction

$200M (subject to approval) $200M $0 $400M bond ($100M in 2013)

Leadership & Strategy

Churches

• • • $200M market historically • Archdiocese of Galveston-Houston 28M over 10 projects Market seems to be flat or slightly down

Leadership & Strategy

Commercial and Light Industrial Segments Private Work

• • • •

Leadership & Strategy

Office & Light Industrial Picture

More alive than any time in the past 30 years “Children of Exxon” – 40+ projects; 15 million square feet • • Employment growth plus changing requirements driving Quick delivery/value buildings Accommodating the knowledge worker • • • Light Industrial picture Oil field companies Port expansion Vacancies small/rents improving

• •

Leadership & Strategy

The Retail Picture

• Slow steady growth – 5% increase over 2012 2.27 million square feet in 2013 • • • • • New retail player Aldi (a discount concept) Sprouts (health food) • Fresh Market (specialty produce market) Taking the Rice Epicurean space Healthcare taking retail space (Texas Children’s, Memorial Hermann, Kelsey-Seybold) 2014-2015 should be boom years

• • •

Hotels

• • • • Lots of activity that drives hotels Convention Activity Oil & Gas 2013 NBA All Star Game Dynamo Stadium • • • RevPAR moving in the right direction 2011 - $90 2012 - $95 2013 - $100 anticipated • • • Occupancy will continue to increase 2011 = 59.8% 2012 – 64% 2013 – 66%

Leadership & Strategy

• • • • •

Leadership & Strategy

Healthcare

Mainly smaller community projects Memorial Hermann 4 POBS • Bigger work being considered MD Anderson/ Methodist/ Memorial Hermann Perhaps some bio science expansions (new med center CEO) • • Concerns: St. Luke’s ACA

• • •

Leadership & Strategy

K-12

(24 districts reporting)

District Alief Alvin Cy-Fair HISD Hull-Daisetta Budget $5,000,000 $13,500,000 $87,000,000 $148,000,000 $350,000 Klein Pasadena Sheldon $18,000,000 $87,000,000 $15,000,000 Splendora $10,500,000 Spring Branch $18,000,000

Total $402,350,000

Anahuac, Channelview, Clear Creek*, Cleveland, Conroe, Damon, Danbury, Dayton, Deer Park, Dickinson, Katy, La Porte, Santa Fe and Texas City all reported no construction in 2013 2012 had 28 districts reporting $749M in work The “caboose” of construction markets

Leadership & Strategy

Industry Issues

• • • • • • Immigration Reform Margins and Fees remain low Bonding lines being cut/capped Concerns of Failures Still Exist- Overall Bonding Environment Easing, However.. Texas Lures Skilled craft worker shortage Talent management remains critica l

Other Global Issues

Leadership & Strategy

• • • Infrastructure - $57 Billion/2020 • • • Financing Infrastructure Banks Sovereign Wealth Pension Streamlining Standardizing • • • Mega Projects 0 in 2008 1004 in 2011 Bonding/Impact on Resources

Longer Range?

• • • Perryman Population Projection 10.25M by 2040 Scenario 2040 • 8-12M

Leadership & Strategy

2013 Forecast

• New Contracts Awards $4 Billion total expected in 2013

Leadership & Strategy

Leadership & Strategy

Sources

The information contained in this report was obtained from various publications and sources. Special thanks to CB Richard Ellis, American Metro Studies, O’Connor & Associates, Accenture, ENR Magazine, Grubb & Ellis, Greater Houston Partnership, Ken Simonson - National AGC economist, Industrial Info Resources, University of Houston Institute for Regional Forecasting, Reed Construction Data, McGraw-Hill, PKF Consulting, the Houston Chronicle, and other sources mentioned who supplied information and assistance for this forecast.

© Kiley Advisors, LLC

Download