JLL leaders discuss global real estate trends and future

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CHARLOTTE – The rise of commercial real estate in urban areas and investors’ willingness to move forward following the Great Recession were two of the themes discussed by panelists at a breakfast hosted by JLL at the Mint Museum on Thursday.

Charlotte’s real estate climate was brought up during the discussion, but primarily to explain why the Sun Belt region is following western real estate trends, which the panelists believe is a result of population growth, job market shifts and urban residential demand.

The panel was composed of three JLL executives: Rich Thompson, the company’s supply chain and logistics solutions leader for the Americas; John Sikaitis, managing director of office research for the Americas; and Colin Dyer, the company’s president and CEO. Carolinas Market Director and Charlotte Brokerage Lead for JLL, Chase Monroe, moderated the discussion. The company, formerly known as Jones Lang LaSalle, is a global real estate firm based in Chicago.

Sikaitis said the South and Southwest regions of the U.S. have seen a population growth of 5 percent to 7 percent in the past three years. He said this surge, combined with the availability of jobs in those two regions, has driven up the demand for commercial real estate.

Furthermore, Sikaitis attributed this demand to a change in residential interests; he said millennials are an influential factor for commercial real estate growth because people want to live and work in cities, which is pulling commercial space out of suburbs and into high-density areas.

Sikaitis likened Charlotte and Raleigh to Dallas and Houston, respectively, because of the high number of technology jobs in the Tar Heel State’s capital compared to the more “traditional” job opportunities in the Queen City.

“The cost of doing business is a really substantial thing. The quality of living is a substantial thing. And when you look at some of the key sectors here in Charlotte, i.e. banking, what we’re seeing across that industry as a whole is the lessening of an epicenter in high-cost financial centers, i.e. New York, and the diversification of that into lower cost, higher quality of living centers,” he said.

An audience member asked the panelists how Charlotte banks could compete with cities like New York for commercial office space.

Dyer said banks could learn from the youthful and creative identity of technology companies, and use something similar to attract development. He cited Google’s office space in New York as an example of moving a particular industry environment to a new location, and said that European cities like London and Paris were experiencing similar adaptations.

Dyer also pointed out that, like the U.S., foreign commercial real estate markets are on the rise, which makes investors confident and allows for greater risks. For example, he said countries like Malaysia and Indonesia are tapping into Eastern European markets.

According to Sikaitis, the common denominator among countries capitalizing on this global market potential is the cooperation between business and government.

“Whatever side of the aisle you’re on, legislative policy demonstrates the best impact when economies are starting to grow at a pretty fast rate, he said. “If you combine the public and private partnership, it starts to grow at an even faster rate.”

Dyer said over-socialized governments, such as China and Brazil, tend to limit countries’ market options.

Thompson explained how supply chains affect the cost of developing commercial real estate.  He said “80 percent of everything that moves, moves around on a truck,” but this has become costly due to trucking restrictions that are forcing time limits on drivers.

Because of this, developers are exploring new ways of moving project materials, such as multimodal supply chains, in an effort to cut costs. Thompson described multimodal as using trucks and trains – in particular – as opposed to using a single supply line.

He said there’s a reason why Bill Gates is the largest investor in the Canadian National Railway Co.