Real Assets Adviser

July 1, 2021: Vol. 8, Number 7

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From the Current Issue

Roundtable: What will the world look like in 2030?

The world will be older than ever in 2030. According to the UN, by 2030 the number of people aged 65 and over will outnumber children under the age of nine for the first time in history. So, while innovations in the roaring 1920s and the decades around it helped expand our longevity, innovations in the 2020s and beyond should focus on improving our “healthspan,” or the number of healthy years in our total longevity.

The return of hospitality: The pandemic took hotels to the brink. How are they faring now?

“The hotel industry experienced the most devastating year on record in 2020, resulting in historically low occupancy, massive job loss and hotel closures across the country. Hotels were one of the first industries affected by the pandemic after travel was forced to a virtual halt in early 2020, and it will be one of the last to recover. The impact of COVID-19 on the travel industry so far has been nine times that of 9/11.” That quote leads off the State of the Hotel Industry 2021 report put out by the American Hotel & Lodging Association. For the hotel industry to experience a record-setting downturn is saying quite a lot, given that the industry is known for its downturns.

Putting household debt and net worth in perspective

U.S. household debt hit a new record at the end of March 2021 of almost $15 trillion. That’s a scary-looking number, and it is huge on a standalone basis. But the U.S. consumer is doing much better than they appear by simply looking at the debt side of the equation. In fact, U.S. households are in better shape financially than they have been in some time.

Quantum shift looms for office

Office properties have taken quite a hit from COVID-19, even though the measurable cost has been obscured by the long-term nature of office leases. As of April, the U.S. office vacancy rate climbed to 15.9 percent, up 280 basis points year-over-year, while sublease space has more than doubled during that time, as measured by Yardi Matrix.

Profile: Souheil Badran COO of 164-year-old Northwestern Mutual

Want to send a chill through the executives sitting atop traditional banks and financial service providers? Flash them the resume belonging to Souheil Badran. It speaks of his stints at the likes of Alipay Americas (an Alibaba subsidiary), Digital River (a global e-commerce, payments and marketing services company), First Data Corp.’s ecommerce solutions group, M&I Data Services (a financial software and services firm), and Edo Interactive (which provides personalized offers and makes them automatically available through credit and debit cards). In essence, the sorts of fintech companies that have been disrupting legacy banking and financial companies for the past decade or more.

Dispatch from New York: Ruminations about the Big Apple’s post-COVID recovery

In the spring of 2020, all eyes were on New York City as the epicenter of the U.S. pandemic. More than a year later, New York City is a bellwether for what other cities’ recovery might look like. With NYC vaccination rates rising, job growth projected to rise and a near $100 billion city budget unveiled in April, the headlines look promising.

Factory-built real estate to the rescue

Since the real estate market collapsed in 2008, sending ripples across global markets, the construction industry has struggled, along with landlords, investors and other property owners. An initial surplus of empty units wiped out jobs at all levels, sending tradespeople and real estate experts alike scrambling to create new opportunities for themselves, which seemed to balance the equation for a while.

Fifth generation self-storage: The niche property type meets mixed-use and produces some startling results

Like an ever-increasing wave, self-storage began rather simply as a covered land play, owned mostly by mom-and-pop operators. Still today, the industry is about 65 percent owned by mom-and-pop operators, so the industry remains rather fragmented. But, as the attractive operating fundamentals, revealed during the 2008 recession, initially, and again during COVID, more institutional investors began to take notice. It seems self-storage performs well during upcycles and downcycles.

The shrinking student body: Once hot student housing confronts demographic trends

Investors committed to student housing appear to have some stark challenges ahead. New data provides a final tally of the enrollment decline higher education experienced during the spring term of 2021. Total college enrollment fell 3.5 percent from a year earlier, a shortfall of 603,000 students. That was compounded by news the U.S. birth rate fell 4 percent in 2020, marking the lowest number of births since 1979 and the sixth consecutive year of declining birth rates.

Access to data: The maturing of real estate as an investment class

At a recent conference, the COO of a large real estate investor was lamenting that he couldn’t actually say with accuracy the number of individual assets his firm’s various funds owned around the world, let alone speak to trends or forecasts from one asset class to the next without a massive data-pulling exercise from various teams. His plight is not unique and speaks to the challenges of real estate as a growing asset class and the ongoing struggle to harness data.

How 5G technology is fueling augmented reality

No less an intellect than physicist Albert Einstein once observed: “Reality is merely an illusion … albeit a persistent one.” The malleability of what we perceive as objective reality has long been a subject of fascination among spiritual sages and, more recently, technologists — the latter of whom have been working on creating augmented realities for reasons ranging from work to play. Alas, the bandwidth required to virtualize or augment human realities has been beyond our grasp.

5 Questions: How automation is advancing online grocery shopping

After months of habit-forming behaviors, many shoppers have acclimated to shopping online. Breaking old habits and becoming confident in the use of a new channel are often perceived to be the largest barriers to online grocery adoption. Why did ecommerce adoption come slowly to the grocery business? How did the coronavirus pandemic change that? What nation has the highest online grocery penetration in the world? How is automation being used to change the economics of ecommerce grocery delivery? What foods top the list of online orders? What timeframe constitutes high-velocity service? And what will the grocery store of the future look like?

Space tourism has arrived: 20 years after the first stellar traveler, Jeff Bezos plans to send civilians to space

For most people, getting to the stars is nothing more than a dream. But on May 5, 2021, the 60th anniversary of the first suborbital flight, that dream became a little bit more achievable. The space company Blue Origin announced that it would start selling tickets for suborbital flights to the edge of space. The first flight is scheduled for July 20, and Jeff Bezos’ company is auctioning off one single ticket to the highest bidder.

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