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K.C. Conway, MAI, CREACRE Director of Research & Corporate Engagement
CCIM Chief [email protected]
Survive & Thrive by putting Best Red Shoe Forward
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K.C. Conway, MAI, CREDir. of Research – ACRE R.E. CenterCCIM Chief Economist / https://www.ccim.com/resources/commercial-real-estate-insights-series/[email protected] / http://www.acre.culverhouse.ua.edu/
Disclaimer: Not in fine print…
This presentation consists of materials prepared exclusively by K.C. Conway, MAI, CRE, andis provided during this event solely for informational purposes of attendees. This presentationis not intended to constitute legal, investment or financial advice or the rendering oflegal, consulting, or other professional services of any kind.
NC CCIM Chapter’s 2019 Charlotte Market ForecastCharlotte, NC – February 6, 2019
This Presentation reflects the analysis and opinions of the author, but not necessarily those of the faculty and staff of the Culverhouse College of Business or the administrative officials of the University of Alabama.
Neither NC CCIM, Event Sponsors, UA/ACRE or Monmouth REIC make anyrepresentations or warranties about the accuracy or suitability of any information in thispresentation. The aforementioned do NOT guarantee, warrant, or endorse the advice orservices of K.C. Conway, but we do occasionally pontificate over the economy andcommercial real estate.
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Thank You to ACRE National Networkhttp://www.acre.culverhouse.ua.edu/http://www.acre.culverhouse.ua.edu/about/national-network
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What’s to Survive? 4 Fed Rate Hikes, Gov. Shutdown, Tariffs, etc.Yogi Berra had a Quote to put Anything in Perspective.
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Jan 2018 Vs Jan 2019: Yogi was right, déjà vu! TRUMP - Trump goes to the World Economic
Forum in Davos, Switzerland. He is praised for being “presidential” …
Tax Act of Dec 2017 – What does it mean?
Amazon HQ2 Searchhttps://www.ccim.com/newscenter/commercial-real-estate-insights-report/amazon-hq2/?gmSsoPc=1
The Wall
Hurricanes – Harvey, Irma, Maria / Constr. Costs
The Stock Market – "Stock Market up 40% since the Election." When the market hit a record high on Aug. 25, Trump tweeted
The FED – Transitioning from Yellen and maybe2 interest rate hikes. Who is this Jay Powell?
Economic Growth: to “Infinity & Beyond”
TRUMP – Not going to Davos; Not Praised as being “Presidential” by Pelosi/Schumer; Trump still wants a Wall.
Tax Act of Dec 2017 – Opportunity Zones?
Amazon Divide by 2 Divorce – Stock Control
The Wall – Democrats in Control. It’s like Dr. Suess
Hurricanes – Florence & Michael / Constr. Costs
The Stock Market – Worst year since 2008 and its worst December since 1931, during the depths of the Great Depression. Best January in 30 years.
The FED – 4 Rate hikes; Invert the Yield Curve. What’s this Balance Sheet reduction thing?
Economic Volatility - the “R” word (Recession)
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Forget the “R” word for 2019 … but Get used to the “V” word (Volatility)
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Just when things were going so well,“V” remerged.
What lies ahead?
By: K.C. ConwayThe RMA Journal – February 2019
Forget the “r” word for 2019 … It’s the “v” word
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Reflect back to the way things were last July. 1. The Federal Reserve had just increased interest rates for a
second time in 2018 at its June FOMC meeting. The market consensus was that it would raise rates just once more.
2. The 10-year Treasury bond had settled back to the 2.85% range after briefly spiking above 3% in April.
3. Tariffs and a trade war with China were just talk. 4. Republicans controlled both houses of Congress, and the
November midterm elections were something to pontificate about at Labor Day picnics.
5. “Gov. shutdown” was a legacy term from the 1980s & 1990s
So What Happened? In essence, the year-end 2018 market disruption and volatility is self-inflicted, created by government entities and changing both the psychology & sentiment regarding economy. It is not a market-induced event caused by, for example, a decline in GDP, rising unemployment, overbuilding of commercial real estate, or the collapse of financial markets. Whether it is the Federal Reserve playing a game of chicken with the inverted yield curve (something the St. Louis Fed’s president, James Bullard, warns against), our elected leaders playing politics with border security and shutting down the government, or tariffs and an escalating trade war between the industrial economies of the world, throwing the economy into reverse this time around—all are the result of actions by government entities.
By: K.C. ConwayThe RMA Journal – February 2019
Why no “R” in 2019 – but worry about 2020!
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Momentum: (GDP, <4% Unempl. JOLTS, etc.)
GDP: 3%+ doesn’t go negative for consecutive quarters in 2019. Q4’18 will be 3% … Q1 will do its normal contraction to 1% range … Q2 is >2% due to housing … Q3 is typically best Qtr in CY above 3%. Q4 2019 is what I worry about. Q4 2019/Q1 2020 could contract or <1% (feels “R”)
Employment Metrics: JOLTS, Employment <4%, 312k Dec Jobs Report – Monitor ADP & LinkedIn
Corporate Earnings: The Q4 EPS will be good (Citi, Lennar, etc.), but the Guidance on Top-Line revenue is what to watch for both margin erosion/declining Revenue from tariffs. Monitor Earnings in 1H 2019. That is your “R” gauge!
What can go WRONG?
The FED: It’s not just rate hikes, but Balance Sheet reduction. Initially, $40-$45 billion a month was hardly noticeable. It now tallies almost $1/2 Trillion - and if left on pace - drops to $3.5 trillion end of 2019.KC forecasts no rate hikes in Q1 2019. No rate cuts in 2019. Max 2 hikes in 2019 (1 late Spring/early Summer and 1 Fall or Q4)
Ground Hog Day: Fortunately on a Saturday in 2019 (Feb 2nd) Vs a Friday and Jobs report day as in 2018. Recall “V” started Ground Hog Day 2018 with Jobs report (10-Yr Tr. moved to 3%).
Gov. Shutdown: Unresolved or leads to a Constitutional Crisis over “Declared National Emergency.” This one was the19th (35 days surpassing 21 days (Clinton 1995/1996)
NAFTA 2.0 / USMCA not passed in Spring
NFIB Business, NAHB Homebuilder, and Consumer confidence tank. NFIB 108 record Q3 2018. If <100 (http://www.nfib-sbet.org/)
The Wildcards: 1 or more Cat-3/4 Hurricanes / Lease Accounting
What is Still Going Right?
The GDP Perspective: What “to survive” to “thrive?
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• U.S #1 approaching $1.0 Trillion• Japan a rising economic power• Europe pre EU was strong
Where was Germany?• China – not even $100 billion
• U.S #1 but GDP explodes $2.6Tr• Japan #2 but now > US in 1969• Germany sprung to life
displacing France (Pre-EU)• China doubled but <$200 billion
• U.S #1 & Doubles AGAIN to $5.5Tr• Japan & Germany strong #2 & #3• What happened to China?
• U.S #1 & Doubles AGAIN to $10Tr• France & Italy slowing• China is back and grows 5X to
>$1.0Tr in just a decade!
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The GDP Perspective: Survive China to Thrive to 2029
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• U.S #1 but only grew by 50% 1999-2009 vs doubling every decade 1969 to 1999
• China grows 5X AGAIN 1999 to 2009 surpassing Germany.
• UK falls from Top-5 behind France & Germany.Wonder why Brexit?
• U.S #1 but only grew by 33% 2009 to 2017 vs 50% 1999-2009 and doubling every decade 1969-1999
• China more than doubles AGAIN• Germany, UK and France all
contracted in GDP 2009-2017• China must be Survived to Thrive
in 2019-2029!
Change in GDP by Country 1962 to present.
https://mail.google.com/mail/u/0?ui=2&ik=2a73eaf0a0&attid=0.1&permmsgid=msg-f:1621388704591664730&th=1680546fb404565a&view=att&disp=safe
2019 update: China has
caught Europe.
Japan & Germany are contracting
https://tradingeconomics.com/
Translate GDP to State Level
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What a difference a Tax Act Made:
NC GDP grew from +2.1% to +3.4% since I last addressed CCIM NC
VA, FL, GA, SC caught up to or surpassed NC GDP.
What happened? VA, FL, GA, SC = Port states and EXPORTS boomed … until we see impact of Tariffs in 6 months. NC is more services like IT and Finance.
Jobs & Workforce: ADP & LinkedIn Vs. BLS-L=BS
2018 was the 8th consecutive year in which the economy creates over 2 million jobs. Will 2019? If Small Biz can find the Workforce.
ADP: Job Gr is stalled at 200k/mo due to labor shortage
LinkedIn Workforce: 146m / 3m / 50k / Q1 18 hiring 20% > Q1 17
This new “Skills-Gap” analysis in LinkedIn
Workforce jobs report is a must-teach in CCIM
Site Selection
Tr 3-Mos = 212k / Tr 6-mos = 201k / Tr 12-mos = 203k
https://economicgraph.linkedin.com/resources/linkedin-workforce-report-july-2018 13
Jobs Update:ADP: Jan ‘19
+213k
BLS: Jan ‘19 +304k
Unempl up 4%
Just one ? Where are the 300k workers coming from if 4% Unempl.?
Not from Immigration
LPR% stuck at 63% - humm?
Amazon HQ2 Issue:
Amazon HQ2 MSAs are where Skills Gap is worst!
KC forecast was a Co-working/WeWork option for Amazon HQ2
Jobs & Workforce: LinkedIn MSA-level Skills AnalysesCharlotte is making all the right moves
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NC to be a big winner from Amazon HQ2 Split Decision being NoVa and NY.
WHY?
Workforce and IT companies afraid of what Amazon will do to supply & cost of skilled labor in NY & NoVa!
Compared to when Charlotte lost 57,000 jobs from the 2008 financial collapse, the city has tried to diversify its former bank-centric economy, courting technology firms. Honeywell announced a plan in November to move its global headquarters to Charlotte, which will create 750 jobs.
15https://www.wsj.com/amp/articles/big-railroads-dont-see-slowdown-on-horizon-for-u-s-economy-11548701083
Earnings … Q4 2018 look good, but Guidance …
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A quick note on last year's fourth-quarter result. Much of that result is from a one-time gain related to corporate tax rate changes at the beginning of 2018. So it's better to use operating income as the comparable number.
Even though Norfolk Southern's fourth-quarter revenue was down slightly from its record-smashing third-quarter results, the numbers were impressive in their own right. Even though merchandise and coal shipment revenues were down slightly, the intermodal segment continues to post incredibly strong results.
Intermodal is perhaps the one segment that most directly competes with trucking, and higher revenue for intermodal shipments is likely a result of a supply shortage of trucking and the high costs of moving containers on roads today. It's pretty obvious from these results that rail is benefiting from this issue.
Earnings … Rail Traffic and Numbers say “No sky is Falling” …
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The two “T”s in Rail & Logistics:
Memphis & Kansas CityNFS & KSU
Why no “R” in 2019 – but worry about 2020!
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What can go WRONG? The FED: It’s not just rate hikes, but Balance Sheet reduction.
Initially, $40-$45 billion a month was hardly noticeable. It now tallies almost $1/2 Trillion - and if left on pace - drops to $3.5 trillion end of 2019.KC forecasts no rate hikes in Q1 2019. One rate cuts in 2019.Max 2 hikes in 2019 (1 late Spring/early Summer and 1 Fall or Q4)
Ground Hog Day: Fortunately on a Saturday in 2019 (Feb 2nd) Vs a Friday and Jobs report day as in 2018. Recall “V” started Ground Hog Day 2018 with Jobs report (10-Yr Tr. moved to 3%).
Gov. Shutdown: Unresolved or leads to a Constitutional Crisis over “Declared National Emergency.” This one was the19th (35 days surpassing 21 days (Clinton 1995/1996)
NAFTA 2.0 / USMCA not passed in Spring
NFIB Business, NAHB Homebuilder, and Consumer confidence tank in Spring 2019. NFIB hit 108 record in 2018. If goes <100 …
The Wildcards: 1 or more Cat-3/4 Hurricanes / Lease Accounting.
Pennsylvania's most famous groundhog did not see his
shadow on Saturday, predicting spring will arrive
early.Phil has only been accurate
about 39%of the time.
The FED – It isn’t your 2018 FED/FOMC
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https://www.wsj.com/articles/kansas-city-fed-president-esther-george-says-central-bank-can-pause-rate-increases-for-now-11547576132
Kansas City Fed’s Esther George Says Central Bank Can Pause Rate Increases (Jan 15, 2019)A chorus of Fed officials have said in recent weeks there is no urgency to raise rates
One of the Federal Reserve’s most consistent supporters of raising interest rates said the central bank could refrain from more increases for the time being while it studies the effects of its previous steps to withdraw economic stimulus.
Fed officials next meet in Washington on Jan. 29-30.
Ms. George is a voting member of the interest-rate setting Federal Open Market Committee this year.
https://www.federalreserve.gov/monetarypolicy/fomc.htm
2019 FOMC Meeting Schedule
Source: Fed Reserve and TREPP
Historic Spread between 2-Yr and 10-Yr Treasuries: Widest spread Feb 2010 @ 2.83bps. What is it in Feb 2019? Approx. 15bps. Pay attention to Yield Curve!
The spread between the 10- and 2-year has averaged about 120 basis points since 1998, with the 10-year rate typically higher than the 2-year rate as investors are compensated for the higher risk of holding a longer-term bond. Over the past two years, this spread has dropped, reaching a mere 15 basis points in December 2018
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Receipts up 3.1% / Outlays up 3.9% … BUT Interest on Debt up 8.5% & Total Spending up 3.9%
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Tax Inflows vs Spending – Yr 2018: The 2017 Tax Act didn’t bust the Budget – The FED did!
https://www.cbo.gov/system/files?file=2018-12/54861-MBR.pdf
http://www.usdebtclock.org/?mod=article_inline
The Debt Clock – The Elephant in the Room!
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https://www.investors.com/news/technology/verizon-stock-vz-earnings-q418/
Earnings – Hey, Lease Accounting is appearing
Lease Accounting & ValuationNew FASB Lease Accounting –CRE Value implications!
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Accounting – ASC 842’s Lease Accounting
Construction Costs: Picture worth 1,000 words
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Construction Costs: 5 Hurricanes Impacting
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https://www.agc.org/sites/default/files/Files/Communications/2019_Outlook_Survey_National.pdf
79% of Contractors Expect to Hire in 2019
59% of Contractors Expect to pay more for labor in 2019
67% of Contractors project costs are higher than budgeted and taking longer
78% of Contractors say its hard finding labor
Construction Costs: Labor & Materials still Rising
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Commercial Real Estate Performance: Green Street CPPI
Property Price Appreciation is flattening.
Manufactured Housing and Industrial lead CPPI, while Retail and Office are still contracting.
How does this data and CPPI trend with appraisals in banks?
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Commercial R.E. Performance: REITs YTD 2019 as a Proxy
ngalpha.com/article/4237654-reits-
https://seekingalpha.com/article/4237654-reits-homebuilders-surge-january?page=2
REITs And Homebuilders Surge In January
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Commercial R.E. Performance: RCA reports +7%
https://www.rcanalytics.com/us-prices-nov-2018-rcacppi/
US Annual Price Growth at 7.0%-RCA Report
By Elizabeth Szep on December 20th, 2018U.S. commercial property prices rose 7.0% in November from a year earlier, logging a steady pace of increase consistent with the sustained investment sales growth in 2018 so far. The US National All-Property Index rose 0.6% from a month prior, the latest RCA CPPI report shows.
Into the year-end, industrial, CBD office and retail properties are all experiencing a positive bump in growth. Annual price growth for each of these three types has accelerated for at least the past three months.
Apartment prices rose 9.0% year-over-year, a slower rate of increase than posted in the first half of 2018 but still the fastest rate of growth among the property types, tied with suburban offices. Suburban offices have posted the strongest acceleration in price growth so far this year; at the start of 2018 they were increasing at a 4.6% year-over-year pace.
What to Keep an Eye on – 2019 CRE Influencers?
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Economic Metrics:
1. ADP & LinkedIn Workforce on jobs2. NFIB Small Biz Optimism.
Still >104, but if drops below 100 …3. Earnings: Read the Guidance!!! (Verizon)4. Rail Traffic – AAR.org RailTime Indicators
CRE Industry Metrics:1. MF Starts & Permits rise over SF Starts/Permits
2. Absorption: Industrial is strongest and HotelADO and RevPar are proxy for Bus./Consumer
3. Retail – Get used to more store closings. It’s theconvergence with Industrial, Logistics, Online $
4. Opportunity Zones: Only 5-10% viable of 8,700
5. Adaptive Reuse: A CCIM niche!https://www.bisnow.com/south-florida/news/construction-development/citadel-little-river-miami-965106. Construction Costs: >80% LTV Constr. Loans
Jan ‘19 NFIB SBOI for Dec ‘18NFIB Small Business Optimism Index remained unchanged in December, drifting down 0.4 points to 104.4. Unfilled jobs and the lack of qualified applicants continue to be #1 issue. Job openings setting a record high
Grocery Retail: Will it go the way of the Dept. Store?
33https://www.cnbc.com/2018/02/27/amazon-wasnt-alone-in-investing-in-grocery-stores-last-year.html
Amazon wasn't alone in investing in grocery stores last year. Grocery store openings were down roughly 29 percent last year, according to Jones Lang LaSalle. But investments in grocery-anchored shopping centers in 2017 climbed more than 5 percent, JLL says.Grocery store openings declined 29 percent last year as expansion plans cooled. But investments in grocery-anchored shopping centers in 2017 climbed 5.3 percent from 2016, JLL found, making it one of the only retail sectors to see deal growth.
"Grocery is considered to have a moat around it to defend against e-commerce, and because of that, these [assets] are seen by retail property investors as a safe investment.“ However, there's a glut of shopping centers built around weak tenants that risk going dark, just like many malls anchored by weak department stores. "In many U.S. markets you might have six or more grocery chains," Cook said. "In most cases, investors are only interested in the top one or two. The short list for those top grocery contenders include Whole Foods, Trader Joe's, Florida-based Publix, Wegmans and some of Kroger's brands. And for the most part today, these chains are opening few new stores. Instead, they are investing in their existing locations to fulfill online orders.
The strongest U.S. markets for grocery stores, where the most businesses continue to expand, include California, Virginia and North Carolina, according to JLL. Texas, although it's still a top market for grocers, added fewer stores in 2017 than in 2016. The growth in that state has stemmed from a spurt of new residential development. Where there are homes, people need more grocery stores.
https://www.bisnow.com/national/news/retail/grocery-retail-ecommerce-amazon-whole-foods-97072
Among all forms of shopping centers, neighborhood strips anchored by grocery stores are considered a far safer investment than malls or power centers anchored by department stores. But they are beginning to feel similar pressures.
A few regional brands have already reorganized through bankruptcy and closed stores to stay alive. Southeastern Grocers, the parent company of Southern grocery chain, filed for and subsequently emerged from bankruptcy last year with fewer stores. Catch-all retailer Shopko, which has some grocery elements, filed for Chapter 11 bankruptcy protection earlier this month, and its restructuring plan includes closing over 100 stores to stay viable.
“You’re going to see a lot of pressure on grocery-anchored shopping centers with second-tier brands, and that’s a concern for a lot of landlords,” SRS Real Estate Partners Managing Principal Kyle Stonis said. “If there’s a struggling grocery store anchoring your center and it goes out, it kills your shopping center because it can’t survive without something in that spot.” Grocery anchors average 50% of neighborhood centers’ square footage, according to Green Street’s report. If they go dark, even temporarily, it could be devastating. Green Street estimates that vacant big-boxes take an average of 18 months to go back online. If a box needs to be carved into multiple smaller spaces for the next wave of tenants, that becomes very expensive very quickly
Shipping, storing and packing perishable goods is a much more complex and capital-intensive proposition than it is for apparel and electronics. Large players, especially Kroger and Walmart, are taking proactive steps to address the market’s changes, which Sears and its counterparts largely failed to do. Most of all, grocery stores' advantage is that people need their products more frequently than they need soft goods.
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Grocery Retail: Kroger + Walgreens = Kroger Express
35https://weinpl.us/2018/12/31/kroger-walgreens/
First-of-its-kind Kroger Express location at a Walgreens in Florence, Kentucky. 12 additional locations will follow in the Cincinnati area, opening early 2019, in an effort that is sure to blur the lines between traditional grocery and drug store formats.
This latest shop-in-shop is an evolution of the partnership between Walgreens and Kroger which started in October of 2018 with Kroger’s ClickList pickup being offered at the same 13 locations. Also announced is a further partnership focused on having Kroger’s Home Chef meal kits at 65 Chicago-area Walgreens locations. So, if you like the idea of shopping online for groceries but still want to pick your tomatoes, you have that opportunity. You can utilize the Kroger app for ordering, select this Walgreens location for pickup, and walk inside to grab your produce while your groceries are loaded in your trunk [remember: you won’t care about picking your tomato in three years, but for now you want it, so here it is].
When two of the nation’s largest retailers get together, there’s a lot of opportunities. With Walgreen’s 10,000 locations and Kroger’s 2,800 locations, there’s much that can be gained with partnerships. It’s easy to imagine how Kroger’s footprint could expand through infill and quick-trip locations throughout the Walgreens footprint and it’s also possible to consider opportunities for Walgreens to impact the Kroger footprint.
NC RETAILERS TO MONITORLowes & Family Dollar may be expanding due to Housing & Catering to 20% w/o a Bank Account, but …
Department and Grocery Stores like Belk & Ingles face Amazon/Wal-Mart type threats!
http://www.findouter.com/USA/Region/North-Carolina/Retail-Chains
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Co-Working & Co-Warehousing driven by Technology!
The Emergence of On-Demand Warehousing
Across the world, industrial warehousing is experiencing a trend towards greater flexibility, following a similar trend of its sister sectors in office and retail.On-demand warehousing is emerging as a viable way of purchasing warehousing services on demand, a simple pay-as-you-go model that benefits users in several ways.It avoids the need to own large distribution centres and replaces the need to sign contracts with third-party logistics providers (3PLs).Similar to Uber and Airbnb, the transactions take place in an electronic marketplace where the platform or host earns a fee on the exchange.Related: What Are the Driving Forces Behind the Industrial Real Estate Boom?It allows the users to reduce capital expenditure, adapt quickly to variable demand and reduce direct and indirect costs, opening up the market to smaller players and start-ups, particularly in the e-commerce space.In the United States, several businesses have emerged that are disrupting the sector in a similar way to Uber, Airbnb and WeWork have within the transport, accommodation and office industries, respectively.Seattle-based FLEXE is the leading warehouse space and service provider in the United States with a network of 750 warehouses in over 45 markets across North America.The company is taking on the $1.4 trillion logistics and supply chain industry head-on, as it identifies spare warehouse space for companies looking for storage capacity but not wanting to build or hold the typical long-term lease.
Up Property’s Morris Moor development will soon be home to CLIK Collective, the only co-warehousing and co-working space designed around the needs of ecommerce businesses in Melbourne
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Co-Working – WeWork trying WeStudy!
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https://www.bisnow.com/washington-dc/news/office/what-wework-looks-like-on-a-college-campus-97303?be=kcconway%40culverhouse.ua.edu&utm_source=Newsletter&utm_medium=email&utm_campaign=fri-01-feb-2019-000000-0500_dc-re
Inside WeWork's First Location On A College Campus Washington DC Office February 1, 2019 Jon Banister, Bisnow Washington, D.C.
To meet the type of demand it expects from a college campus location, the space is evenly split between individual hot desks and private offices, which usually comprise a larger share of the WeWork's spaces. The private offices it does have are smaller than those in a standard WeWork. The largest office at WeWork UMD includes 16 desks. WeWork Metropolitan Square, its largest D.C. space, has individual offices with over 200 desks. WeWork has also forgone an element that is a cultural draw at most of its other locations: alcohol.
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Tent Warehouses to meet Industrial Warehouse Demand Think of an Amazon “Tent Warehouse” pioneered by Iowa Company
Real Estate Design – It is a Changin! Building design is adapting to meet with the challenges of risingconstruction costs while simultaneously evolving to meet e-Commerce’s need for more efficiency.
https://www.memphisdailynews.com/news/2018/aug/2/digest/Amazon’s development of a warehouse made of a taut fabric supported by steel-tube trusses and cables with no columns is underway in Memphis. The design, engineering and construction is not too dissimilar to that used to construct the Denver International airport main terminal. This first-of-its-kind warehouse for Memphis, TN (home to FedEx) and the building’s tenant (Amazon - the world’s largest retailer and likely next trillion dollar company) is going to be a disruptor for industrial warehouse space. The building design and components are being provided by ClearSpan Fabric Structures HQ in Dyersville, Iowa for a cost of $595,000 - or just under $36 per SF
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The Big Story 2019 and Beyond will be Logistics & Industrial R.E.
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http://www.acre.culverhouse.ua.edu/research/logistics-infrastructure-research - Feb 8, 2019 Publication
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42http://www.acre.culverhouse.ua.edu/research/explore-research - Feb 1, 2019 Publication
43http://www.acre.culverhouse.ua.edu/research/explore-research - Feb 1, 2019 Publication
Remaking the U.S. Supply-Chain:This Change is what is Driving Eco. Growth & Site Selection
The 7- Class I RRs (Note CN (red) & KCS (brown)
“All that happens on the ports, doesn’t stay on the ports” – Rail, Intermodal!
http://www.intermodal.org/
AAR.org – American Assoc. of RRs
Port of Mobile: + 5 Class 1 RR connections;+ Only CN to Gulf RR connection;+ Largest Steel Port in US; + Huge auto mfg state (Mercedes etc.); but- 2nd largest estuary in No.Am (Env. Challenges)
KC SouthernOnly direct to all
Mexico. Link KCS with BNSF
or CSX and create a mega RR/E-commerce power!
CSX:The East-coast RR line
serving E-coast ports.CSX and NFS are to SE &
Mid-Atlantic what UP is to CA & West-coast. CSX in financial trouble, UP is strong. Think about a UP/CSX merger
Port Freeport: + 3 Class 1 RR connections;+ Saudi Arabia of Natural Gas+ The Port of Savannah
for Dallas;
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The Logistics Jewell in NC … Charlotte Intermodal @ Charlotte-Douglas Airport
Q&AWe have had a recession every
decade since 1857 (NBER)
Will 2019 Defy History?
Yes – But not betting on it for 2020!
In 2019, you will need to put yourBest Red Shoe forward!
CCIM - Red
