In a wide-ranging discussion before attendees of NAIOP
Maryland’s annual Capital Stack, 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.    

“Every city has the chance to come back including Baltimore,
as long as they do the right thing,” Levy said. “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.”

The existence of Tech
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.

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
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.”

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 percent of all vehicles will be self-driving
with an emphasis on trucks,” and great infrastructure will attract more
businesses and more money,” he said.

Taylor Jacoby, Michael Rodriguez, Jen Nowakowski and Spencer Levy

More Spencer Levy tidbits:

  • 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.