Press Release: PricewaterhouseCoopers
November 1, 2001
NEW YORK, NY -- Real estate investment prospects for all major metropolitan areas will decline next year, according
to Emerging Trends in Real Estate® 2002.
Although the ``24-hour markets'' have ``peaked'' New York, Washington D.C., Boston, Southern California and San
Francisco will provide the best opportunity for investors in 2002.
Despite the World Trade Center attack, New York ranks as the country's number one market because of supply constraints.
Perennial survey leader San Francisco dropped to sixth place in the 2002 survey as a result of the ``dot com bomb''
and the ensuing rent declines and vacancy rate increases.
Emerging Trends calls particular attention to Southern California - from Los Angeles south to San Diego - and boldly
states that this ``powerhouse'' deserves recognition as a ``galvanized market'' capable of ``feeding off its diversity,
climate and ideal Pacific Rim location.''
The report sounded a decidedly cautious note for other markets: Seattle, Miami, Denver, Philadelphia and Minneapolis
are predicted to soften in the wake of the recession. ``Hot'' growth cities - Houston, Dallas, Atlanta and Phoenix
- continue to rank as least favored in the annual forecast.
Although the ``24-hour'' markets retain their ``iron grips'' as the favored commercial real estate locations, Emerging
Trends identifies five issues that will diminish outlooks for 24-hour cities in 2002 and beyond:
1. Souring economy: The economic downturn is sure to test local governments as cutbacks force tax hikes and cuts in key city services. In-migration could drop off if crime increases and job opportunities diminish. 2. Federal indifference: Big-city mayors can expect little support from the new administration. Congress has not adopted an urban agenda either. Exception: New York will have a claim on funds to rebuild downtown. 3. Public school decline: A failure to improve public school systems will force a growing number of Echo Boomers back to the suburbs as they begin raising families in larger numbers. 4. Housing shortages: Cities continue to be plagued with affordable housing shortages. Resuscitating and replacing dilapidated housing stock must become a priority if city neighborhoods are to thrive and support business. 5. Fear factor: The recent terrorist attacks have cast a shadow on big city life and suburbs are perceived as much safer again.
Emerging Trends in Real Estate®, the 62-page annual forecast published by PricewaterhouseCoopers and Lend Lease
Real Estate Investments, makes these projections in its just released 2002 report, the first major industry outlook
completed since the September 11th terrorist attacks.
The top ten rankings of major U.S. cities for investment in 2002 are:
1. New York - ``Most supply constrained of all markets.'' 2. Washington, D.C. - ``Always a safe haven when the economy sags.`` 3. Boston - ``Financial district doesn't have room to grow...not enough construction to throw office market out of balance.`` 4. Southern California - ``Development activity never got hot enough to cause overbuilding.`` 5. Chicago - ``Downtown has held up 'surprisingly well' despite concerns about new office projects...but overall rents are softening.`` 6. San Francisco - ``Sanity returns to this overheated market, but at a price...abrupt rent declines and the flood of sublease space.`` 7. Seattle - ``Despite recent hard knocks, this market has strong legs for longer-term growth... Investors like the geographic barriers.`` 8. Miami - ``Continues its transformation from a retirement community into a Latin business center.`` 9. Denver - ``Underlying growth control sentiment and Rocky Mountain environmentalism help investors rationalize that this agglomeration is somehow less wide open.`` 10. Philadelphia - ``Local economy is relatively well diversified and markets are somewhat supply constrained.``
Now in its 23rd year, Emerging Trends in Real Estate® is published by PricewaterhouseCoopers and Lend Lease
Real Estate Investments. It is based on in-depth interviews of more than 150 leading real estate authorities, conducted
by PricewaterhouseCoopers. Lend Lease writes the report. Both companies provide additional research and executive
insights.
Copies of Emerging Trends in Real Estate® 2002 are available for $95 by emailing emergingtrends@lendleaserei.com
or susan.m.tromp@us.pwcglobal.com. Alternatively you may call
Susan Tromp, 631-234-5143 or Bonnie White, 212-554-4168.
As part of the Lend Lease Group, Lend Lease Real Estate Investments (www.lendleaserei.com)
is one of the largest real estate investment managers in the world and a leading U.S. real estate advisor to pension
funds. The company has $36 billion in real estate and commercial mortgages under management for institutional and
private clients in the U.S.
Listed on the Australian Stock Exchange (ASX: LLC), the Lend Lease Group is an integrated global real estate organization,
operating in 38 countries on five continents. In addition to investment management, Lend Lease also is a leading
worldwide provider of project management, construction, development, capital structuring and consulting services.
PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional
services organization. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help
our clients solve complex business problems and measurably enhance their ability to build value, manage risk and
improve performance in an Internet-enabled world.
PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization.
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Contact:
Lend Lease Real Estate Investments, Inc.
Mary Beth Lally, 212/554-1613
mlally@lendleaserei.com
or
Gavin Anderson & Company For PricewaterhouseCoopers
Emma Murphy, 212/515-1912
emurphy@gavinanderson.com