13 Observations From CRE Economists You Need to Hear

Right now, people are not moving back to NYC and renting so they can “work from home.”

That was one of the quips from Ryan Severino, Chief Economist, JLL, as part of an economic roundtable held Wednesday at the MFE Conference in Las Vegas, hosted by Zonda.

Mixed opinions and forecasts about the state of the economy and the apartment market highlighted the outspoken session that included moderator Ali Wolf, Chief Economist, Zonda, and John Sebree, Senior Vice President, National Director – Multifamily, Marcus & Millichap.

Following are 13 of the more interesting comments made in a discussion spanning supply chain management, the labor market, office occupancy and even “Shark Week.”

Supply Chain Management & Labor Markets

Severino: “COVID-19 is raging in many of the areas of the world that produce our goods.”

Sebree: “One developer I spoke with was going around to every Home Depot he could find and buying every refrigerator and appliance that was available.”

Sebree: “The labor shortage is hurting onsite operations; you hear of maintenance techs who are making $22 per hour and are leaving to go work for Amazon at $27 per hour.

Severino: “We had a labor shortage going even before the pandemic hit. The Boomers were aging out of the workplace and the younger generations weren’t enough to replace them. So, technology investment by companies is way up – it has to be because they have no choice to fill that productivity gap.”

Severino: “There’s a very low chance for a recession in 2022.”

Office Space Occupancy & Employment

Severino: “On the work-from-home and urban vacancy phenomenon: We have to get past this hesitancy to work in urban areas, and we will. People aren’t moving to markets like New York City and San Francisco so they can work from home. They’ll be back in the office.”

Severino: “Concerns you hear about the lack of office vacancy are not as real as many say. We’re seeing job growth and that leads to office demand. Employees miss coming to the office. Companies’ policies are showing on average that workers must be there about three days a week. And given health and safety concerns, offices are needing more square footage to help provide that separation of workers.”

Sebree: “Look, Salt Lake City even added jobs during the pandemic’s earlier rough spots.”

Apartment Living

Sebree: “There’s enough apartment demand for as much as we are able to build.”

Sebree: “Moveouts from the city during the pandemic were the result of many who lived in the city because they loved it, they loved the nightlife and action. Pre-pandemic, younger people and young couples kept saying that ‘one day they’d move out.’ But they didn’t. They kept putting it off until 1) when they married; 2) when they had kids; 3) when their kids started to go to school. So, when COVID hit, it became a reason for all who kept putting it off to leave at once.”

Eviction Moratorium

Sebree: “The eviction moratorium didn’t affect most markets, but it did in areas that were anti-landlord, and where the politicians were fanning the flames against owners. I spoke to one San Francisco apartment operator who told me his residents woke up every morning, went to work, and never paid their rent.”

Severino: “What bothered me about the eviction moratorium was where the government was choosing sides and picking winners. Their policies would hurt the owners, then the banks, and then trickle down to someone else based on who they favored and who they wanted to stick it to. They should have tried to make everyone whole. When the government decided to throw billions of dollars into a solution, you think they could have figured that out.”

Infrastructure

Severino: “Right now, it’s like every week is ‘Infrastructure Week’ on Capitol Hill. It seems like there are more of these weeks than there are of “Shark Week.” But this is so important. There is so much creaking and antiquated infrastructure out there and it’s affecting production – maybe not where you live, but that doesn’t matter. It’s affecting all of us.”