May 11, 2012
Two Portman Holdings team members attended ULI’s Spring Meeting at The Westin Charlotte (one of our own hotels) May 8 through 10. Here, they provide what they each think are the key pieces of information from the event.
Jeff Warwick – Managing Director, US:
- Generation Y is now larger than the Baby Boomer generation.
- Emerging US markets will see growing education and healthcare sectors (“Eds and Beds”).
- In 1945, each retiree was supported by 42 active workers; in 2009 each retiree was supported by only three active workers.
- Eighty percent of US GDP and population is concentrated in urban areas.
- The average office space per employee continues to decline: 400 square feet in 1985, to 250 square feet in 2011, to 150 square feet in 2020 (estimated).
Charles Pinkham, III – Vice President, Development:
- Core funds and international monies are pouring into gateway cities and driving up prices on almost every opportunity that hits the market. Opportunistic returns will be very difficult to come by unless builders and investors open themselves up to tier two and tier three markets.
- Investors are highly focused on local market expertise. If you are working in a market where you don’t have an office, find a local partner to work with.
- In 2007 there were approximately 1 million real estate professionals in the US. Currently there are about 650,000.
- The office market will be a very difficult investment for the foreseeable future due to continuing increases in technology and telecommuting. Newer, core urban products with strong energy efficiency and load, strong wireless connectivity and ample amenities will still “flourish.” Older buildings, those in suburban markets, and those in the B and C class will struggle.
- The United States traditionally supports its road system via a tax on gasoline. As cars become more fuel efficient and these funds decrease, our road systems are suffering more and more and Congress is not looking to increase gas taxes any time in the near future. Alternative action will be necessary, as no hotel can survive if guests can’t get to the property. This is especially true for drive-to vacation markets.