Cushman & Wakefield Ltd. · NYSE:CWK
Cushman & Wakefield — Global Recovery Journey EMEA and AMER Webinar (July 2021)
35 slides from Cushman & Wakefield's conference presentation, July 2021
Slide 1: Thank you for joining us. We will begin shortly
Thank you for joining us. We will begin shortly…
Slide 2: Our latest house view on the global economic and CRE market recovery
Our latest house view on the trajectory of the global economic and commercial real estate market recovery ANDREW PHIPPS Head of Business Development, EMEA & Local Markets
Slide 3: Commercial Real Estate: The Next Boom Cycle
COMMERCIAL REAL ESTATE: THE NEXT BOOM CYCLE KEVIN THORPE Chief Economist, Global Head of Research CAPITAL MARKETS OUTLOOK DAVID HUTCHINGS Head of European Investment Strategy OCCUPIER OUTLOOK DESPINA KATSIKAKIS Global Head of Total Workplace
Slide 4: Kevin Thorpe, Chief Economist, Global Head of Research
KEVIN THORPE Chief Economist, Global Head of Research
Slide 5: Kevin Thorpe, Chief Economist, Global Head of Research
KEVIN THORPE Chief Economist, Global Head of Research
Slide 6: Economic momentum forming
Economic momentum forming BALTIC DRY INDEX – ABOVE PRE-PANDEMIC LEVELS CONSUMER CONFIDENCE RISING 3500 102 101.5 3000 101 2500 100.5 2000 100 99.5 1500 99 1000 98.5 98 500 97.5 0 97 Nov-20 Dec-20 Feb-21 Jul-20 May-21 May-20 Aug-20 Oct-20 Apr-21 Apr-20 Jan-21 Mar-21 Jun-20 Sept-20 Euro Area U.S. OECD
Slide 7: Massive pent-up demand
Massive pent-up demand *EXCESS HOUSEHOLD SAVINGS Excess household savings Country GDP $bil. % of disposable Income $ bil. % of GDP United States 21,872 13.8 2,623 12.0 United Kingdom 2,942 14.8 306 10.4 Canada 1,862 16.6 181 9.7 Spain 1,387 10.5 115 8.3 Australia 1,590 13.3 111 7.0 Netherlands 985 9
Slide 8: As the economy goes, so goes property
As the economy goes, so goes property 100 2.0 Global Sales Volume, $tril. (right scale) 1.8 90 Global Real GDP, $tril. (left scale) 1.6 80 1.4 1.2 70 1.0 60 0.8 50 0.6 0.4 40 0.2 30 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Real Capital Analytic
Slide 9: #1 Risk to the Recovery – Infections Ticking Up
#1 Risk to the Recovery – Infections Ticking Up NEW DAILY CORONAVIRUS INFECTIONS GLOBAL UNITED STATES Source: Johns Hopkins Coronavirus Resource Center 8
Slide 10: Herd Resiliency Tracker
Herd Resiliency Tracker AS OF JULY 7, 2021 SHARE OF POPULATION VACCINATED OR IMMUNE VACCINATION LEADERS 100 Citizens fully vaccinated, % Country of 12 & older pop. 90 Israel 74.5 80 Herd resilience = 70-85% Chile 68.0 70 U.K. 58.9 60 50 US/Europe U.S. 56.2 Spain 45.9 40 30 World Germany 43.8 Ireland
Slide 11: #2 Risk to the Recovery - Inflation
#2 Risk to the Recovery - Inflation UNITED STATES PRICES SPIKE IN APRIL/MAY SHOULD BE TEMPORARY 6 2.5 4.9% 5 2.3 4 2.1 1.9 2.1% 3 1.7 2 1.5 1 1.3 0 1.1 -1 0.9 -2 0.7 -3 0.5 May-00 May-01 May-02 May-03 May-04 May-05 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 M
Slide 12: Interest rates to remain low
Interest rates to remain low 10-YEAR GOVERNMENT BOND YIELD *Historical average = 2000-2020 9.0 2021 2022 Historical Average* 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 AMERICAS EUROPE ASIA PACIFIC Source: Real Capital Analytics, Moody’s Analytics, Cushman & Wakefield Research 11
Slide 13: Property recovery – second half boom
Property recovery – second half boom KEY OBSERVATIONS Uptrend/Strong improvement INDUSTRIAL-LOGISTICS, DATA CENTERS AND LIFE SCIENCE: Turning Point/Slight improvement Recovering swiftly, benefitting from secular shifts and other accelerating Sluggish/Below Potential trends. Q4 H1 H2 2020 2021 2021 M
Slide 14: Point #2: Seeing many green shoots
Point #2: Seeing many green shoots TOUR ACTIVITY IS SURGING 120 100 80 60 40 20 0 National Boston Chicago Los Angeles New York City Seattle San Francisco Washington, DC December 2020 January 2021 February 2021 March 2021 April 2021 May 2021 Source: VTS (VODI), June 2021 Report 15
Slide 15: Point #3: Jobs, Jobs, Jobs = Full Recovery
Point #3: Jobs, Jobs, Jobs = Full Recovery OFFICE-USING EMPLOYMENT EUROPE UNITED STATES 6 Forecast 8 Forecast 4 6 4 2 2 Millions Millions 0 0 -2 -2 -4 -4 -6 -6 -8 -8 -10 Source: Moody’s Analytics, Cushman & Wakefield Research, updated 7-13-2021 16
Slide 16: Global fun facts to drop into conversations
Global fun facts to drop into conversations ECONOMY PROPERTY • GDP: Global GDP will growth by 6% in 2021 and by 4.4% in 2022 – the • INDUSTRIAL: Every $1 billion increase in online sales, typically generates strongest back-to-back growth rates ever recorded. 1.25 MSF of additional demand for industr
Slide 17: David Hutchings, Head of European Investment Strategy
DAVID HUTCHINGS Head of European Investment Strategy
Slide 18: Boom times ahead?
Boom times ahead? WHERE ARE WE NOW? • After a difficult Q1 the market is entering a recovery driven by occupier as well as investor sentiment. • The recovery looks set to be synchronized and broad based – however it is far from uniform by sector or geography. WHERE ARE WE HEADING? • With investor de
Slide 19: Where are we now?
Where are we now? Global Trend YEAR TO Q1 2021 VS YEAR TO Q1 2020 • The pandemic has adversely impacted CRE markets globally Investment Office Yields (bps) Capital Values • Unlike prior cycles, most of the impact has come in the Volumes form of reduced liquidity while pricing has remained 7.4% 2% st
Slide 20: Winning sectors?
Winning sectors? • Industrial assets are in high demand globally – but a YEAR TO Q1 2021 VS YEAR TO Q1 2020 shortage of supply has held back investment activity. LARGER SECTORS THE NEW MAINSTREAM 450 Q1 2020 Q1 2021 35 Q1 2020 Q1 2021 • Conventional multifamily assets have also remained resilient wh
Slide 21: Delivering relative value
Delivering relative value PRIME OFFICE YIELD SPREADS REMAIN HIGHLY ATTRACTIVE Max* Min* 21Q1 (current) Average* (*max/min/avg refer to 2010-2021Q1) 800 700 600 500 400 300 200 100 0 -100 EUROPE ASIA PACIFIC AMERICAS 22
Slide 22: A wall of capital in a well-priced market
A wall of capital in a well-priced market DRY POWDER – WAIT FOR IT? RISING INSTITUTIONAL ALLOCATION TO CRE GLOBALLY 400 12.1% 11.8% 350 10.9% +0.4% 10.2% 300 +0.9% +4.6% +0.7% 250 200 150 100 50 0 Global APAC EMEA Americas Jul-21 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 23: Where are we heading?
Where are we heading? THE LIGHT TURNS GREEN GLOBAL SUMMARY: If progress in opening-up is maintained, real Uptrend/Strong Improvement estate investment markets face a synchronized boom. Turning Point/Slight Improvement Sluggish/Below Potential COVID-19: Vaccination rates are exciting but must spread
Slide 24: U.S. leads the upturn
U.S. leads the upturn ASIA PACIFIC: Progress in defeating the pandemic may Uptrend/Strong Improvement have proceeded at a slower than hoped pace - and unevenly across Turning Point/Slight Improvement the region – but real estate markets have stabilized and will be Sluggish/Below Potential called upo
Slide 25: Investment ideas
Investment ideas RIDING THE WAVE SECTORS THEMES • OFFICE - Return for investors and occupiers • ESG - THE dominant trend to get on top of • RETAIL - Deep value starting to emerge • DIVERSIFICATION - Sector dominating but geography to follow • LOGISTICS - Selectivity needed • DEBT AND DISTRESS - Oppo
Slide 26: Despina Katsikakis, Global Head, Total Workplace
DESPINA KATSIKAKIS Global Head, Total Workplace
Slide 27: What do we hear in the market
What do we hear in the market EXAMPLES OF FIRMS THAT ARE RETURNING TO THE OFFICE & …THOSE THAT ARE NOT RETURNING NOT RETURNING Goldman Sachs Amazon Ford Twitter • Return-to-work to return to pre COVID • Expect all employees back at the office • White-collars can chose to WFH • Employees can work fro
Slide 28: Latest XSF insights
Latest XSF insights Clear evidence supports that having CHOICE and COMING TO THE OFFICE remains important to retain & attract talent 29
Slide 29: An agile & iterative approach to manage uncertainty
An agile & iterative approach to manage uncertainty Short term vs Long term Hybrid settings vs static bricks & mortar Employer vs Employee ENTERPRISE GOALS EXPECTATIONS HYBRID WORKPLACE It is tempting to seek short-term savings by reducing space, but such reactions can undermine enterprise goals. It
Slide 30: Active recovery
Active recovery ALIGNING SPACE WITH STAKEHOLDER PRIORITIES ( ALIGNED GOALS & BUDGETS) EXPERIENCE Efficiency Effectiveness Engagement Agility & Flexibility Business Performance Culture & Values The Financial Perspective: Enable Efficient Use The Business Performance Perspective: Ensure The People Per
Slide 31: Shifts in space allocation
Shifts in space allocation CURRENT SPACE SAME FOOTPRINT, LESS SPACE, BETTER ALLOCATION BETTER EXPERIENCE EXPERIENCE Work from Local Home Satellites Dedicated Dedicated Dedicated Workspace Workspace Workspace Shared Amenities / Shared Amenities / Shared Amenities / Spaces Services Spaces Services On
Slide 32: How will space change?
How will space change? REALIGNING SPACE TO MEETING THE SHIFTING NEEDS OF WORKERS INDIVIDUAL WORKSPACE COLLABORATIVE SPACE SUPPORT & WELLBEING 60% 30% 30% 50% 5% 20% Supported by real-time data for space utilisation and experience management 33
Slide 33: Change management is more integral than ever
Change management is more integral than ever PA S T PRESENT Hot desking Experience Office Ecosystem Static Working Practices Agile Working Practices of places + Activity based working People management In-person Virtual Traditional Office Design Activity Based Working Collaborations Technology Virtu
Slide 34: Please submit your questions in the Q&A box
Please submit your questions in the Q&A box. ANDREW PHIPPS (moderator) Head of Business Development, EMEA & Local Markets KEVIN THORPE DAVID HUTCHINGS DESPINA KATSIKAKIS Chief Economist, Head of European Investment Strategy Global Head of Total Workplace Global Head of Research
Slide 35: About Cushman & Wakefield
About Cushman & Wakefield Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60
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