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