emerging trends in real estate 2019 - alberta.uli.org · benchmark home price november 2018,...

A Canadian Perspective

Reinvent Rebalance Rethink

Emerging Trends in Real Estate 2019 ®

Emerging Trends in Real Estate 2019

❑40th annual outlook – 12th Canadian annual outlook

❑Based on insights from over 2,400 personal interviews and survey responses across North America, with over 400 from Canada

❑ Sponsored jointly by PwC and the Urban Land Institute

❑Emerging Trends is the industry’s “most predictive forecast”


3

Market Sentiment

PwC

Expected profitability of your business

Poor, 1%

Fair, 22%

Good, 58%

Excellent, 19%

2018

Fair, 24%

Good, 58%

Excellent, 18%

2019

Emerging Trends in Real Estate 2019 4

PwC

Expected profitability of your business


Fair, 24%

Good, 58%

Excellent, 18%

Canada

Fair, 16%

Good, 75%

Excellent, 9%

Edmonton

6

Trends

2019 Trends

Rebalance: Real Estate Strategies Rely on

Creativity

❑ Reassess, rebalance, and redevelop

❑ Partnerships and opportunities

❑ Unlocking insights from predictive analytics

Reinvent: Accelerating Digital Transformation

❑ Embracing change and business transformation

❑ Meeting evolving tenant and customer expectations

❑ From awareness to action

❑ Unlocking the power of Proptech

❑ Getting the right skills

Rethink: Time to Rethink

the Affordability Puzzle

❑ The governments role

❑ Affordability drives mobility and lifestyle

❑ Rethinking will be required for all property types


8

RebalanceRebalance

Rebalancing portfolios to create advantage: Canada

SectorBuy

Recommendation

Moderate-income apts 56.8%

Fulfillment 56.0%

Age-restricted housing 52.9%

Warehouse 50.0%

Medical office 40.8%

SectorSell

Recommendation

Power centers 72.0%

Luxury hotels 50.0%

Outlet centers 46.9%

Regional malls 42.0%

Suburban office 39.5%


What to buy in 2019 What to sell in 2019

Rebalancing portfolios to create advantage: Edmonton

Sector Recommendation

Industrial 45.5%

Multi-family/Rental 23.8%

Niche 12.5%

Single-family/Owner 11.1%

Retail 8.7%

Sector Recommendation

Retail 39.1%

Niche 31.3%

Office 18.2%

Hotels 11.1%

Multi-family/Rental 4.8%


What to buy in 2019 What to sell in 2019

Rebalancing portfolios to create advantage

Sector Over Priced

All Property Type Avg. 32.2%

Luxury hotels 61.1%

High-income apartments 58.3%

Power centers 46.7%

Central-city office 42.9%

Urban/high-street retail 39.1%

Sector Under Priced

All Property Type Avg. 8.3%

Regional malls 19.6%

Flex 17.8%

Suburban office 17.5%

Affordable apartments 14.1%

Limited service hotels 11.1%


Opinion of current pricing

12

Reinvent

PwC

Accelerating Digital Transformation

41%Annual increase in global real estate tech investment over the past 4 years

Source: CB Insights13

$1.3

$5.2

208

454

0

50

100

150

200

250

300

350

400

450

500

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2014 2015 2016 2017 2018*

Real Estate Tech Financing

Disclosed funding ($Billion USD) Deals

Unlocking the power of Proptech


Fintech

Real Estate

FintechProptech

Contech Smart Real

Estate

Collaborative Economy

From awareness to action


Drone technology

Blockchain

Augmented/virtual reality

3D printing

5G implementation

CoWorking

Big data analytics

Workplace automation

Sharing/Gig economy

Cyber security

Internet of things (IoT)

Autonomous vehicles

Construction technology

None Little Moderate Considerable Great

How important could the following be to disrupting the real estate industry?

Unlocking insights with predictive analytics


Raw Data

Cleaned Data

Standard Reports

Ad Hoc Reports

Generic Predictive Analytics

Predictive Modeling

Optimization

Co

mp

etit

ive

Ad

va

nta

ge

Analytics Maturity

PwC

Getting the Right Talent

81%

Of employers feel that the right amenities are needed to attract employees

CBRE 2018 Occupier Survey17

19%

23%

25%

31%

31%

32%

36%

39%

63%

66%

71%

74%

Wellness Services

Healthy Snacks

Hospitality Services

Game Room

Fitness Classes

Dry Cleaning

On-Site Health Care

Green Space

Custom Coffee

Fitness Facilities

Showers

Full-Service Cafeteria

Amenities Provided

18

Rethink

Meeting evolving tenant and business transformation


70%The percent of survey respondents who felt technology would have no impact on the demand for retail space.

What does disruption look like ?


Their Biggest issues – people didn’t rewind these


Taking their eye off the ball


Time to Rethink the Affordability Puzzle


❑ Agree on what the problem really is

❑ Can’t be solved by just getting one side right

❑ Pieces have to be moved in coordination

❑ Watch out for unintended consequences

❑ Find a way to create the right amount of new supply

Edmonton net migration forecast

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000

2022

2021

2020

2019

2018

Province to Province International City to City

Conference Board of Canada24

Migration cycle


Still want

Leads to

and Potentially

Looking For

▪ More space

▪ Affordability

▪ School quality

▪ Proximity to Family

▪ Access to amenities (walkability)

▪ Available transit

▪ Close to city

▪ Residential

▪ Retail

▪ Services

▪ Entertainment

▪ Employers follow the workers

Impact on Destination

Thank you, and now our panel!

Download your copy of


uli.org/et19

pwc.com/ca/emergingtrends


January 2018

Edmonton: Re-Inventing and Re-Thinking

ULI Emerging Trends Breakfast9 January 2019

Wendy Waters

Sr. Director, Research Services & StrategyGWL Realty Advisors

gwlra.com

Reinventing the economy: Edmonton has experienced economic shifts

since 2014

1.791.58

0.981.13 1.13

1.30

0.00

0.50

1.00

1.50

2.00

2.50

Natural Resources Construction Transportation Education Other Services Public Admin

Edmonton Economic Drivers (Location Quotients)>1.05 = Noteworthy Driver

2002 2014 2018

28

gwlra.com

Edmonton added a net 13,000 jobs in 2018. Not evenly distributed.

-15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0

Natural Resources

Construction

Manufacturing

Trade

Transport & Whse

FIRE Industries

Education

Health & Social

Info Culture Rec

Accommodation and Food

Other services

Public Administration

Professional & Business Services

Edmonton Employment Trends

1 Year Since 201429

gwlra.com

Re-inventing, Rethinking: Youthful population key for future economic

growth

90

95

100

105

110

115

120

125

2012 2013 2014 2015 2016 2017

Growth in 25-39 Year Old Population, Compared

Calgary Edmonton Vancouver

Toronto Montreal

25.9% 26.1%

22.3%21.9%

22.4%

Calgary Edmonton Toronto Montreal Vancouver

Percent of population age 25-39 (July 2017)

30

gwlra.com

Re-Invention: More computer and information science degrees being

awarded. But Alberta enrollment below rates seen in 2002.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Computer & Information Science (includes Mathematics) Degrees Awarded

QC Ontario AB BC

Statistics Canada. Table 37-10-0012-01

3.9%

2.1%

3.2%

2002-2003 2008-2009 2016-2017

Percent Enrolled in Computer Science / Math in Alberta. Statistics Canada. Canadian average = 3.8%

31

gwlra.com

$1,276,500

$860,100

$441,600$374,300

$654,300$506,700

$251,700 $192,600

Lower MainlandBC

GTA Calgary Edmonton

Benchmark Home Price November 2018, Compared

Single Family Condo Apartment

Alberta’s advantages and challenges

Advantages

• Youthful population

• Housing affordability and availability

• Livability

• Low taxes

• High wages (good for workers)

• Land and talent availability

Challenges

• Low levels of computer science graduates

• High wages (detractor for attracting employers)

32

gwlra.com

Tourism and food are growth drivers within the province

33

$9,370

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

Oct

-01

Oct

-02

Oct

-03

Oct

-04

Oct

-05

Oct

-06

Oct

-07

Oct

-08

Oct

-09

Oct

-10

Oct

-11

Oct

-12

Oct

-13

Oct

-14

Oct

-15

Oct

-16

Oct

-17

Oct

-18

AB Food and Drinking Places Receipts ($M)Annualized to October 2018

40% increase

since 2010

Source: Statistics Canada, Conference Board of Canada

1,083,956

700,000

750,000

800,000

850,000

900,000

950,000

1,000,000

1,050,000

1,100,000

1,150,000

Oct

-01

Oct

-02

Oct

-03

Oct

-04

Oct

-05

Oct

-06

Oct

-07

Oct

-08

Oct

-09

Oct

-10

Oct

-11

Oct

-12

Oct

-13

Oct

-14

Oct

-15

Oct

-16

Oct

-17

Oct

-18

Alberta International Tourist Entries -PersonsAnnualized to October 2018

5 Million

Visitors last

five years

80

90

100

110

120

130

140

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 (Y/Y

Q3)

Indexed Retail Sales Last 10 Years2008=100

CanadaAlbertaEdmontonCalgary

CMAs on Par

Nationally

gwlra.com

Albertans are spending more on food and beverages

34

Average spending per household:

2017 compared to 2012

GroceryAlcohol &

Tobacco

Home

Operations

Recreation equipment

Household Appliances &

Equipment

Clothing & Accessories

$ 5,855 $ 1,568 $ 5,032 $ 835 $ 1,430 $ 4,580

$ 6,424 $ 1,915 $ 5,344 $ 549 $ 1,118 $ 3,803

+$ 569 +$ 347 +$ 312 $ (286) $ (312) $ (777)

2012

2017

NET

Top 3 Bottom 3

Source: Statistics Canadian Survey of Household Spending

gwlra.com

E-Commerce growth generating logistics real estate demand

35

$1 Billion Cdn

e-commerce

sales

1.25Million SF

Net Industrial

Demand

=

CBRE Research:

Metro Area Industrial Availability

Net Rental Rate

Calgary 8.2% $7.54

Edmonton 7.9% $9.52

Vancouver 2.3% $11.86

gwlra.com

Edmonton office space trends

36

gwlra.com

Office space is changing. WeWork and Co-Working is demonstrating alternative options and what is possible

Found at www.convene.com/realestate Source: CBRE 37

gwlra.com

38

Edmonton: Fantastic Example of Re-Invention, Re-thinking

The Ice District & 104thNorth American Emerging Trends

• Re-thinking urban spaces

• 24 X 7 Environments

• Compact, efficient living

• Facilitate the consumption of experiences

gwlra.com

39

Questions, Comments

Wendy Waters

Sr. Director, Research Services & Strategy

GWL Realty Advisors

[email protected]

@Wendy_Waters (Twitter)

mailto:[email protected]

emerging trends in real estate 2019 - alberta.uli.org · benchmark home price november 2018,...

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