The Beatles’ song “All you need is love” was the central theme at this year’s Capital Stack event, which provided a commercial real estate update and economic overview using macro and micro perspectives.
Intermingled with his nostalgic song mix, however, was a powerful message delivered by Spencer Levy, CBRE’s Global Client Strategist and Senior Economic Advisor. “Despite its troubles, there are great things happening in Baltimore and plenty to be optimistic about.”
Levy explained this view with research showing Baltimore ranking #21 among all U.S. cities on the Tech Talent Scorecard.
“When making site selection decisions, companies heavily weigh the quantity and quality of available labor and Baltimore scores extremely well in this metric,” he said. “The same can be said for the infrastructure in the Baltimore-Washington, D.C. market with three major airports, modern highways, and the AMTRAK rail system.”
People do not realize how lucky we are to have AMTRAK, Levy added.
“Some of the best commercial real estate people I know work and live in Baltimore and the City has undeniable upside potential. We can and will reinvent the City,” he said.
Other takeaways from the presentation included:
- Real estate is a want, not a need. Companies that do not think about real estate in that manner and consider why people want to go to a particular place will be left behind.
The number one amenity for office buildings is “other people.” If there is something at the building or place of work that will make people better, then workers will want to be there. Being surrounded by other like-minded people, rather than working alone at home, is the ideal example.- Data centers are the hottest real estate asset class currently. They have tremendous fundamentals, and “my clients are backing up their truck to invest in this sector.”
- Some of the best properties out there right now are the most unattractive (Levy wove in the song “I am the walrus” to hammer home this point). He pointed to the popularity of the Industrial Outdoor Storage sector. “Investors want to become involved in this asset class because the locals hate it, and they don’t want more properties like it. Being supply-constrained with no sites coming online makes it even more valuable.”
- Cap rates are not coming down anytime soon, and if they do, it will only be about 50 basis points. So, what should building operators do to make higher profits? Answer: Operate better.
- Kansas City used to have the worst airport in the United States, but the opening of a new airport more than two years ago has completely changed the way businesses view the city. That investment will pay long-term dividends with the growth of that market. Nashville and Salt Lake City also have poor airports. It is vital to have modern infrastructure to attract outside companies and airports are a significant part of the equation.