Categories Narrative

The Real Estate Industry & Millennials

Below is a great infographic from UpNest on Millennials and buying residential real estate. Here are some stats that stand out:
–25% of all Americans are Millennials (between 18 and 34 years old)
–44.2% are minority or belong to an ethnic group
Within 10 years, 75% of the US workforce will be Millennials
–75% want to buy (when they buy) a single family detached home
–49% want to buy in the suburbs and only 21% want to buy in an urban area/city
This information is for residential real estate but here is what I found the most interesting—Millennials (and every other client we have) choose a broker based on these factors:
40% -Reputation
20% -Honesty and trustworthiness
10% -Market knowledge
Call us if you want a broker that is honest, trustworthy, has a great reputation and knows the market inside out.



Oct 19, 2015

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Categories Narrative

47% of Jobs Created by Companies with Under 50 Employees and 9 Other Trends

Want to know a disconnect between Commercial office developers and job creation? Developers are building bigger floorplates while job creation is coming from small companies. 
When I got into the business, office floorplates in Metro Phoenix averaged 10-15,000/sf. Today, new construction is looking at floorplates with a minimum of 25,000/sf all the way to 40,000/sf for multi-tenant office buildings.
Below is the annual top 10 trends affecting the commercial real estate industry from ULI. I normally wait and do a deep dive on the CRE top 10 list, but I thought this job creation stat was too valuable to not send now.  
Here are a couple others to watch. You can read about them in detail below.
–18 hour cities (like Phoenix) are in vogue for investors.
–Parking is on the front of everyone’s mind. This will be something I talk about in 2016. There’s a lot happening with technology and in the next 10-15 years what we do with building parking lots will become the most important topic.
I’ve highlighted some of the key points for your quick review. Staying on the inside of trends, that’s what we do for you and all of our clients. Sure tech companies are trying to disrupt our business. See trend #10 below. But we’re bringing back the human touch. Love it.   

P.S.- The Bachelor is back with our 3rd and final clip. In this preview, even the best decision makers need the opinion of others. The Bachelor needs help narrowing down his building choices. To see the final decision, watch the full video on our website by clicking here.

Bachelor 3 Video

If you are unable to play the video, please click here.

ULI Forecast: Small Business Job Growth is Altering Commercial Real Estate Industry

By: Haisten Willis
Date: 10/15/2015


Job growth at small firms employing fewer than 50 people is outpacing that of larger firms by nearly five to one.

SAN FRANCISCO — The commercial real estate industry is increasingly focused on the needs of small firms employing fewer than 50 people, where job growth is outpacing larger firms by nearly five to one, according to Emerging Trends in Real Estate 2016, an annual real estate report co-published by PricewaterhouseCoopers (PwC US) and the Urban Land Institute (ULI). The report was released during ULI’s fall conference held recently in San Francisco.

“Advancements in technology that are affecting how people live, work, learn, socialize, and get around are reflected in the rising popularity of cities other than the largest coastal markets as magnets for investment,” says Patrick Phillips, CEO of ULI. “More and more of these cities are gaining a competitive edge by positioning themselves as vibrant, more affordable places to live and work, with amenities that appeal to different generations.”

Below are 10 trends to watch, according to the report:

    1. 18-Hour Cities 2.0

The real estate industry has growing confidence in the potential investment returns in “18-hour markets,” which are mid-sized cities whose downtown areas are active in the morning, afternoon and evening, but not late at night. The growth in investor sentiment is evident in the 2016 top 10 rankings — with the exception of San Francisco and Los Angeles, the balance of the markets are 18-hour gateway cities.

    2. Next Stop: The Suburbs

As cost of living and housing prices have risen in the core gateway markets, it’s apparent that a fresh look at suburban opportunities is gaining investor favor. In the top 40 metro areas, 84 percent of all jobs are outside the city core — and that’s the basis for optimism for the suburban future.

    3. Offices: Barometer of Change

The office sector has been benefiting from the strengthening employment numbers and a rethinking of how employees can maximize their productivity through improved workspaces that are seen as more open and that promote collaboration. Some surveyed respondents see the redesign as a way to accommodate an alteration in work style itself, while others view it as a way to attract and keep desired talent.

    4. A Housing Option for Everyone

Economic and demographic factors are influencing the housing market as it deals with providing the type of housing desired by the peak of the baby boom generation and aging Millennials and finding a way to provide affordable housing to support a vibrant workforce. Developing improved housing options for everyone is passing from the realm of “nice to do” to “must do” — and that will be shaping the housing trends going forward.

    5. Parking for Change

Miles traveled by car for people 34 years old or younger are down 23 percent (United States Department of Transportation — Federal Highway Administration), while the percentage of high school seniors with driver’s licenses declined from 85 percent to 73 percent between 1996 and 2010, according to the American Automobile Association. The urbanization trend and gen-Y preferences already suggest that existing parking represents a suboptimal use in land and in both 24- and 18-hour cities, that’s creating change.

    6. Infrastructure: Network It! Brand It!

In light of urban population growth, cities are looking to urgently prioritize repair and maintenance, and at the same time tackle critical needs in areas such as water supply and distribution, public education, aviation, vehicle and pedestrian traffic and rail safety. This is leading to creative solutions such as high-frequency bus networks and green infrastructure. As the need to do more with less becomes more acute, innovative solutions to infrastructure needs is likely to mark the latter half of this decade and beyond.

    7. Food is Getting Bigger and Closer

There are many cities where neighborhood land is cheap or older buildings sit idle, and where median incomes are low and the need for fresh food is high. What is trending is the new vision that has urban land as the most precious and flexible of resources. Just as the reinvention of the suburbs is an emerging story for the decade ahead, so is the creative adaptation of inner city uses.

    8. Consolidation Breeds Specialization

The evolutionary trends in development, equity investment and lending are showing that “small can be powerful.” Developers may find it difficult to access sufficient capital unless they have scale, but this means fitting the quality demands of conservative lenders. That requires finding niche lenders and investors willing to fund the smaller projects; and small developers with their lenders may be accessing the most innovative parts of the business. Firms may find themselves in the middle and will need to choose which side — smaller or larger — they wish to be on.

    9. We Raised the Capital; Now, What Do We Do With It?

New capital will be invested in: additional markets (capital is expected to flow more freely in 18-hour cities), alternative assets (what constitutes real estate will continue expanding), old is new again (older space is being embraced and it’s making the market consider a wider range of potential investments), and alternative property types (medical office and senior housing may see a benefit from changing demographics — and data centers and lab space may be in demand due to technical changes).

    10. Return of the Human Touch

The industry is trending toward more intensive active management. Risk management of hacking issues is of critical concern — and attention to cyber security will penetrate more deeply into the real estate business. Attention to individual decision-making is needed as much as ever.


Categories Narrative

State By State Business Tax Climate

Below are a couple of handy charts. First, a graphic that shows the top 10 and bottom 10 states for taxes. I have also pulled a chart that shows state-by-state comparisons well. Not too many surprises, but here are a few highlights:
–California and New York have the highest taxes.
–Arizona is in the middle, ranked 24th.
–Texas has been at the center of job growth this cycle. Certainly, having one of the lowest tax burdens is one of the reasons why.
Take a minute to glance at the graphic and chart. If you have any questions or comments on them feel free to reach out.



State Business Tax Climate Index

State Business Tax Climate
By: Jared Walczak, Scott Drenkard & Joseph Henchman

State Business Tax Climate 2

Tax Chart 3
Tax Chart 4

Please click here to see the full report.



Categories Narrative

Coppola-Cheney: A Review of a Strong 2015

2015 was another great year for our team. Please see below for a recap of our year by the numbers.

As we head into our 25th year at Lee & Associates Arizona, we are excited about new opportunities and blessed to have great clients. Thank you for being a part of our future.


P.S.- In this week’s preview of the second Bachelor video, we see that every Landlord needs a hug every now and then. Find out if that hug leads to more by watching the full video on our website – click here.

Bachelor 2 VideoIf you are unable to play the video, please click here.

C2-Stats 2


Categories Narrative

Work in 2025

In 10 short years, what will work look like? Gensler interviewed four futurists on this topic and below is the outcome. I have highlighted my biggest insights including these:

–45% of Millennials are nonwhite. How will that affect the commercial real estate industry? Certainly the retail sector will be turned around as will all marketing campaigns.
–How do real estate developers create an urban experience without the negatives associated with living in an urban area?
–The world is changing with self-driving vehicles. This will have a huge impact on office building development and parking lots. Probably the biggest change I see coming.

Read below for more. Seeing around corners (one thing we do for our clients) requires us to think about these kinds of issues on a daily basis. Please reach out to me if you need some thoughts on the future of your industry and its relationship to office space.


Roundtable: Work in 2025

How will the world of 2025 impact work and the workplace? Four experts in demographics, economics, transportation, and technology share what they foresee and its possible implications.


is a senior fellow of the Brookings Institution and deputy director of its Metropolitan Policy Program, based in Washington, DC.

What will the US workplace look like in 2025?

Alan Berube: In 10 years, the Millennial generation will be the workforce’s largest cohort. It will make a significant imprint on the workplace in the same way that the Boomers did when they were coming of age. While Millennials will be the largest segment, they won’t necessarily be the most productive. Research on the link between growth and demographics suggests that 40- to 50-year-olds are actually the most productive workers. Many Boomers will have reached retirement age by 2025, but a lot of them will still be in the workforce. They have a lot to offer. To sustain economic growth and productivity, and take full advantage of what older workers can contribute, the workplace of 2025 is likely to be age-diverse in makeup and designed accordingly.

The workplace will be more diverse, since 45 percent of the Millennial cohort is non-white, while the cohort aging into retirement is 25 percent non-white. So we’ll see the growth of groups that have missed out on economic opportunity historically. Rising income inequality is a near- and medium-term threat to the idea that our cities should be diverse. It puts political pressure on cities to do something about it—raising the minimum wage, for example, the way Los Angeles, San Francisco, and Seattle just did. The threat is to middle-class aspirations—a very powerful narrative in American society. People sense that the rules of the game for becoming middle class have changed over the past 30 to 40 years. In 2025, more people may view being middle class as an aspiration, not a reality, but they’ll still need to feel they have a shot at it.

Do you see technological disruption as a threat to the workforce?

AB: Conventional wisdom has always been that technology is a net positive for any advanced economy. It may destroy a few things in the short run, but it very quickly creates new forms of value, new companies, and new opportunities. But if you look today, post-recession, the rate of slower job growth and slower corporate investment has even the neoclassical people a little bit worried: “Whither goes the American labor market in the face of increasingly rapid technological innovation?” There is potentially much more massive dislocation of a broad swath of workers out of not just the kind of blue-collar occupations that have been leaving us for a long, long time, but even the white-collar occupations that artificial intelligence and machine learning really threaten.

This is where the demographic transformation of the US workforce is a real challenge. The cohort that’s coming of age includes more people from groups who, in the past, had less access to good schools and universities. In 2025, higher levels of education will be a prerequisite for economic success. Given the threat that technological disruption poses, especially to middle-class jobs, ensuring that every part of the Millennial cohort can attain those levels is imperative.

How like the US is the rest of the world, demographically?

AB: The US and Europe are fairly similar, but those parts of the world where people younger than 30 are the majority of the population look quite different. China actually has a demographic pyramid more like the advanced economies than the developing ones. China is an exception because its population growth was slowed by the one-child policy.

Developing countries are undergoing rapid urbanization. China is already a majority urban country. By 2025, it could be two-thirds urban. Africa and India are headed in that direction—they will be majority urban in 10 years. It’s only by moving to cities, moving up the economic value chain, that you become more demographically stable, so building sustainable cities in these societies is a real key to their future health and prosperity.

In the US, I’ve always regarded the sustainable urbanization of midcentury suburbia as the next big challenge. Some see urbanization as either/or, as in, “Everybody’s got to move back to cities” or “Leave the suburbs alone and let people live there.” I think it’s less about where people live and more about their desire for a more urban experience.

People recognize the growing economic value of urbanity for innovation, and for attracting and creating talent and human capital. There’s something real there that goes to the nature of innovation and growth today. It doesn’t have to occur in a downtown, but it’s harder for it to occur on a 1970s suburban campus. So we need more of what characterizes our established central-city downtown to be available in more of our suburban communities. It’s what people and firms are demanding. So the question is, how much of a barrier will existing public policies and modes of investment in the suburbs pose to making that shift happen?

of the Institute for the Future in Palo Alto, California, directs its annual 10-Year Forecast program, focused in 2015 on “the seven economies.”

What does the economic landscape of 2025 look like?

Kathi Vian: It’s actually seven economies—the seven Cs. We will still have the traditional corporate and consumer economies, but there’s the emerging collaborative economy that includes things like micro-work platforms and sharing economy platforms. There’s also the creative economy, which will absorb the growing freelance workforce—an engine for the innovation that will drive future economic growth overall. There’s the civil economy, which decides what’s legitimate and what’s not. The corporate economy is sanctioned by the values it encodes, but the criminal economy doesn’t play by these rules. Unfortunately, the criminal economy will be an increasing proportion of the global economy, integrated with the other six. Finally, there’s the crypto economy, which could take peer-to-peer transactions out of the intermediary hands of governments and institutions.

If we look across these seven economies, they suggest that the risk of owning assets is shifting from corporations to individuals. That shift is the headline of economic news in 2025. I’m using asset very broadly. It may be a ladder you can rent out or a car you use to give rides; it may be your intellectual skills or physical labor, or a space that you have access to and sublet. All this points to the collaborative economy—one method corporations use to shift or share risk with individuals.

One way to think about this is to recognize that the corporate economy has seen its return on assets decline steadily over the last 40 years. It’s vulnerable, and the potential for stranded assets is part of its vulnerability. There are many ways for assets to get stranded. Technological innovation is a typical cause: new technologies make old ones less valuable. Assets like proven oil reserves can also become stranded if demand dries up—often as a result of innovation.

Corporations also respond to volatility by automating their work processes. Automation is rapidly moving beyond where you would typically expect it, like in manufacturing, where robots can do the mechanical tasks. Using a micro-work model, it’s possible to break a complex project down into parts and then use software algorithms to replace human managers—the automated platform itself organizes and runs the work needed to complete the project. This displaces workers, undermining the consumer economy by depriving some people of a steady income.

The crypto economy challenges the corporate economy’s role as a trusted intermediary by automating business transactions between parties—including computers—that don’t know each other. It will allow self-driving cars to operate as self-owned corporations, and digital autonomous organizations to own and run businesses the way people do now.

How will people in the workforce cope with these changes?

KV: The Millennial generation, the core of the workforce in 2025, has the largest debt in history, much of it in the form of student loans. To keep the flow of income going when the corporate and consumer economies are unstable, they will also turn to the collaborative economy. But in 2025, as much as half of the workforce will consist of freelancers, not full-time employees. And freelancers in particular will turn to the collaborative economy, which can feed them work or help them find it, and let them get added value from an apartment or a car by sharing it.

There’s already a kind of leveling up taking place in the collaborative economy, with new platforms building on top of the currently established ones. One platform lets people who don’t own a car lease one so they can drive for the ride-sharing services. Another helps freelancers manage the uneven flow of micro-work and make decisions about what projects to take on. A third acts as a virtual union hall, giving those workers an alternative to waiting by the side of the road. A motive for all three platforms is to help the workforce keep more of the revenue it earns.

The creative economy has also been absorbing the displaced workforce. Like the collaborative economy, it will be reshaped as peer-to-peer channels proliferate. The big distribution channels are gatekeepers that filter content strongly. Using the infrastructure of the collaborative economy to build a richer ecosystem of channels can set in motion a virtuous cycle that lets both the distributors and the freelancers prosper. The collaborative economy builds on the creative economy’s innovation. The danger is that this won’t happen—that both economies will condemn the workforce to a subsistence lifestyle.

Which brings us to the criminal economy. Along with exploiting the crypto economy, criminals use online collaborative and coordination networks to organize low-tech and labor-intensive tasks—sometimes at a massive scale. As more people work in the criminal economy, some will get a firsthand education in these new ways of thinking and organizing, and many more will gain valuable leadership, entrepreneurial, and technical skills. The criminal economy is constantly probing the legitimate ones, unconstrained by regulation, so it’s a growing source of innovation for them—as important in this respect as the creative economy.

of Autodesk in San Francisco is a principal research scientist who helps cities make urban development decisions by projecting where growth is likely to occur.

How do you work?

Fletcher Foti: We forecast transportation patterns 30 or 40 years into the future, to the best of our ability. We do this by making assumptions on demographic and economic growth in a region. We look at transportation because it has a massive impact on where people live and work. They choose based on how they want to travel. They’re not just picking a neighborhood, but picking one region over another. I think that’s true regardless of the technologies involved.

To develop our forecasts, we look at recent trends on how demographics affect people’s preferences and how that affects the real estate market. We predict where buildings will be built and how people will travel from home, work, and all the fun places they go. We also analyze things like the travel diaries of tens of thousands of people, cellphone data, and GPS traces to find out how people are moving around now—the current trends.

Is transportation the only factor?

FF: Some companies seek what we call agglomeration economies. They cluster near other companies of the same type in order to attract talent and share knowledge. The people who work for them can easily meet up and share their experience with the latest tools and methods. That’s an obvious competitive advantage for their companies. If a startup outside the cluster hears the news significantly later, that delay could be the difference between making it or not. You miss out on the ethos if you’re not right there, and that ethos can be an incredibly narrow band.

How is transportation changing?

FF: What’s new are self-driving cars and sharing platforms that give you more flexibility in your personal transportation. You don’t have to own a car, you don’t have to maintain it or garage it, you don’t have to park it or figure out routes—the cars or services do it all for you. Automated cars will give you more flexibility. You get picked up and dropped off whenever you want. Self-driving cars may make certain things easier, but most people are still unwilling to sit in a car for long stretches. Even if they’re not driving, 90 minutes at a stretch is probably their limit. Self-driving cars will have a huge land-use impact, because they support compact development. Inner-city travel will benefit the most, because short trips will be so much easier.

Self-driving, neighborhood-serving vans and buses are a logical extension of this, letting transit riders self-select their vehicles. That means that their fellow passengers are likely to be from their own neighborhoods. So the option may be more efficient and sustainable, but it comes with a social equity price that goes against our sense of public transportation as a democratic place where the rich, the poor, and everyone in between interact. Some people avoid it now for that reason, but that’s not actually new: streetcars that served residential neighborhoods had a higher class of riders than buses and subways, despite being slower.

What’s interesting here is that you can solve for the transportation problem—with the goals of higher efficiency and sustainability—and end up with social inequity. You can solve the traffic problem by charging people to drive on roads—congestion by definition is inefficient space. And some people would willingly pay for a clear road, but that’s politically untenable in the US.

Are there other solutions?

FF: In theory, leveraging commute patterns should have a big impact. If you could spread out the commute, that shift could save billions of dollars in transportation infrastructure upgrades. Transit is completely overloaded during commute hours, but half full 80 percent of the time. Startups have proposed apps that can help people shift their commutes, but the nine-to-five workday is still the cultural norm. So, for the foreseeable future, this idea won’t work.

And cars are here to stay?

FF: The car was the greatest innovation of our grandparents’ generation. The Internet and mobile phones were the greatest innovations of our parents’ generation. For the Millennial generation, it might be transportation. We could take the cars—with their noise, emissions, traffic congestion, and fatalities—off our streets. Solving the transportation problem could be our defining innovation, but we may need our children to finish the job.

Most of the pollution comes from about 3 percent of the cars. The big car-sharing services will generate much less, because they set high standards and are moving toward zero-emission vehicles. These companies control enormous fleets of vehicles, and it’s much easier to regulate them—to impose even higher standards—than to regulate the individual car owners.

is a senior fellow of the New Cities Foundation and the Atlantic Council’s Strategic Foresight Initiative. His topics include the intersection of the office, the cloud, and big data.

In 2025, will we all be working on projects?

Greg Lindsay: Like Hollywood? There’s definitely the trend. What’s missing is the kind of coordination platforms that would allow people to do this in an empowered way. The sharing economy as it exists now is based on centralized work platforms where the benefits of coordination accrue to an app’s owners, not its users. But what if the Hollywood model merged with the coworking model, for example? You’re not just renting space there—and paying quite a premium for it—but joining a potentially deep roster of talent that can be assembled into ad hoc teams depending on your availability. There have been some interesting experiments with this, but no one’s been able to make it work at scale. While I think it would work best if someone assembled these teams in person, face to face, it may be LinkedIn’s true calling to become the world’s largest talent agency, harnessing all that Big Data about people’s skills and interests. I don’t think the entire future will work this way, but with 40 percent of the US workforce already “contingent,” it’s really just a question of how big a piece it will be.

Does the Internet of Things figure here?

GL: I’m a lot less interested in an Internet of Things than an Internet of People. I’m more interested in an office that knows who I should work with and is happy to make introductions than one that dims the lights.

Most of the discussion about the Internet of Things revolves around the notion that we’re going to make work 10 percent more efficient. I think that’s a dead end. The Internet of Things is already telling people to deliver packages or restock shelves quicker, even if they burn out. Robotic efficiency should be the goal for robots, not for people. But the prevailing logic is the same as what led us from the expensive personal empowerment of Robert Propst’s Action Office II, to the deadening efficiency of the cubicle. What’s the equivalent of the cubicle in the Internet of Things? That’s the question we need to be asking.

What would I like it to do? First, I’d like it to increase our sense of agency and control over our work environment. Second, I’d like it to bring buried or invisible people and resources to our attention. And when it finds them, how will they be presented? Will our days consist of being thrown together with new coworkers by artificial intelligence fiat? Or will we have a choice?

What does this mean for organizations?

GL: That they should stop prizing hierarchy and secrecy. The greatest lie that Frederick Winslow Taylor ever told is that management always knows best. We need to encourage and empower people to “work out loud,” to share what they’re doing, what they have to offer, and what they need help with.

Tools can help with this. One that interests me is Hylo, which offers a goal-oriented social network overlay on top of real communities—whether coworking spaces, alumni networks, or neighborhoods. Hylo lets people work out loud in the cloud by posting so-called “seeds” to it—as in, “Here’s what I have to offer” and “Here’s what I’m looking for.” The software does the sorting by running in the background and looking for opportunities to match your needs and abilities with others. Hylo calls it a “serendipity engine.” Tools like these will change organizational culture as people see the benefit of making public what’s often kept hidden or secret now, so others can find it and respond to it.

Have you experienced the Internet of Things?

GL: I was part of an experiment at Fast Company, where we wore sensor-packed badges that tracked our movements and conversations. One thing we learned is that the best-connected person in the office wasn’t the editor in chief or his deputies, but a new hire whose job touched multiple departments. The next question, which we didn’t ask, is how a person like this affects everyone’s performance. What if she makes everyone 10 percent better in their jobs? How do you compensate her for it?

My personal Internet of Things nightmare is that my employer-issued Fitbit forces me to work at a standing desk after it decides I’ve been sitting for too long. I probably do too much sitting for my health, but I’ve decided that this will be my vice in life. If sitting is the new smoking, I’m going to slouch my way through whole cartons of unfiltered cigarettes.