Spencer Levy, Chairman of Americas Research and Senior Economic Advisor for CBRE, presenting at the recent NAIOP Capital Stack breakfast event.

In a wide-ranging discussion before attendees of NAIOP Maryland’s annual Capital Stack breakfast meeting, Spencer Levy, Chairman of Americas Research and Senior Economic Advisor for CBRE, predicted the arrival of the next national recession (he actually does not forecast one to occur in the foreseeable future); the timing of the conclusion of trade talks between the United States and China; and provided a prognostication on the state of the commercial real estate market based on the identity of the next President. Along with three CBRE colleagues, he invested the bulk of the two-hour presentation to discuss his “five pillars of awesome,” while explaining why Baltimore ranks favorably in each category.

Vince Bagli, NAIOP Maryland President and Merritt Properties; Robin Michael, Wilhelm Commercial Builders; Kat Sabo, Budova Engineering; Dennis Boyle, The MacKenzie Companies.

“Every city has the chance to come back including Baltimore, as long as they do the right thing,” Levy began. “The United States is moving towards becoming a collection of mega-cities with the strongest metropolitan areas contained along the Northeast corridor. This places Baltimore directly in that path. I also advocate for the merging of Baltimore City and Baltimore County, as there is strong evidence nationally that this places the area in the best position for success.”

Brennan Tolstoi, M&T Bank; Eric Balderson, First National Bank; Brooke Harlander, St. John Properties; Drew Enstice, ARCO Design/Build Industrial.

The existence of Tech Talent constitutes his first pillar of awesome and Baltimore City ranks 14th nationally in this category in a CBRE analysis that compares the presence of employees suited to assume jobs in the high technology sector. The volume and quality of college students available for employment in the area significantly impacts this equation and Baltimore remains in excellent shape, Levy explained. Next is the measurement of Foreign Money flowing into the region and, according to CBRE research for the second quarter, Baltimore had the second highest rise in the amount of foreign capital. Levy pointed to the acquisition of multifamily communities such as Morningside Heights in Owings Mills, as well as the continued investment in industrial buildings, which was the second most popular product for investment.

Dominique Threatt, Continental Realty Corporation; Blake Dickinson, Continental Realty Corporation; Noah Schettini, JP Morgan Private Bank; Delfina Kelly, Merritt Construction Services.

The quality and existence of a Live-Work-Play environment represents the next factor and Levy cited several cities that utilize the same slogan to describe a particular metropolitan region. An example is: Keep Nashville weird. “What they are really saying is ‘keep (insert city here) unique’ and Baltimore needs to strive for factors that differentiates itself from other areas,” Levy said. “We have this now with our livable downtown areas but it is important to not lose focus.” The Ease of Doing Business speaks to the level of regulations in place that make it difficult for companies and businesses to succeed, which launched Levy into a discussion about the merger between the City and County. “Competition between the two causes all form of flight, including money and people, and that causes harm for both jurisdictions. Merging the two in Baltimore will create public services efficiencies and diminish the reasons why some are fleeing the City including schools, taxes and crime.”

The CBRE team: Taylor Jacoby, Michael Rodriguez, Jen Nowakowski and Spencer Levy.

Infrastructure is the final pillar and Levy explained that he moved his grandmother to a nursing home in Connecticut when she lost her mobility. “The key is getting around and Baltimore is near a great airport, has tremendous highways and is close to a significant port. In a few years, 15% of all vehicles will be self-driving with an emphasis on trucks,” and great infrastructure will attract more businesses and more money,” he said.

Owen Rouse, The MacKenzie Companies; Jim Goodrich, Saul Ewing Arnstein & Lehr; John Hermann, Corporate Office Properties Trust.

Other Spencer Levy tidbits included:

President Donald Trump can be described in one word and that word is “leverage.” The most significant thing on his agenda is completing the trade deal with China and this is something he intends to accomplish before the 2020 election.

Every five years I predict that a recession is two years away, but I don’t even see that on the horizon for now. We are removing all projections for the arrival of a national recession period.

No matter who becomes our next President, and that includes Trump being re-elected, the prospects for the United States real estate industry is favorable. The fact is that no President has that much power to significantly alter the course of the economy.

The construction pipeline in 2010 in the Baltimore metropolitan region was approximately 2.3 million square feet of space in 2010 and it is projected to be more than 4.6 million in 2020. This includes office, industrial and re-purposed projects in Baltimore City.

More than 10 million square feet of industrial space was positively absorbed locally in 2019 which is record-breaking. The previous record was 6.6 million square feet of space.