Sector Outlooks
Real Estate Overview
Industrial Real Estate
- Industrial (including logistics and warehousing) will remain the leading commercial real estate category for several years.
- Demand for Class A warehouses will continue to expand driven by continued e-commerce growth.
- Demand for well situated warehousing and modern logistics will also be driven by manufacturers diversifying supply chains and reducing dependence on China.
- Retail-to-industrial conversion projects will also accelerate to repurpose properties in light of growing warehouse demand.
Multifamily Housing
- Multifamily housing investment will rebound to pre-pandemic levels.
- Suburban markets in the Southwest and Southeast are positioned to outperform due to population growth.
- High-tech employment markets are expected to enjoy a fast recovery which will support overall housing demand.
- New trends in urban to suburban migration may create additional demand for multifamily housing in the suburbs near gateway cities.
Cannabis/Hemp Overview
The industry has grown dramatically over the last five years and will continue to evolve at a rapid pace driven by growing public acceptance.
- Although cannabis is considered a controlled substance under federal government guidelines, 36 states have legalized it for medical use.
- There is a growing acceptance of cannabis as a legitimate therapy for patients who suffer from medical problems such as chronic pain, opioid addiction, and seizures.
- According to a November 2019 Pew Research survey, 67% of Americans believe that cannabis should be legalized, double the 31% in 2000.
- There is a growing movement to legalize cannabis. As a Senator, Kamala Harris co-sponsored a bill called the Marijuana Justice Act, decriminalizing marijuana.
- In the November 2020 elections, voters in 5 more states approved the use of recreational cannabis.
- With legalization, the US cannabis industry could generate $85 billion in sales by 2030, according to Cowen and Company.
- These fast-moving developments will present significant new corporate finance capital raising opportunities, particularly if the anticipated change in banking regulations come to fruition.
Fintech/Financial Services Overview
Growing technological breakthroughs and improved capabilities over the last decade are creating accelerated change in global financial services technology, now coined as Fintech.
- Fintech is disrupting the role, structure, and competitive environment of global financial institutions and markets.
- Financial institutions have been adjusting their business models accordingly, with the accelerated pace of technological change leaving some behind.
- Fintech is usually accompanied by a large price tag and upfront costs can be significant. Artificial intelligence and blockchain technologies have been aimed at a broad number of issues, including payment systems, electronic cash, and banking.
- 64% of consumers worldwide have used one or more Fintech platforms vs. 33% in 2017.
- By 2022, an estimated 78% of US millennials will become digital banking users.
- Global consumer adoption has been significant, particularly in Asia and Latin America.
Artificial Intelligence Overview
The term “artificial intelligence” (AI) was coined in 1956 at a summer workshop at Dartmouth College. AI has become a significant force today, thanks to the evolution of increased data volumes over the years, advanced algorithms, and vast improvements in computer power and storage.
- Chess playing computers and self-driving cars were only the beginning examples of AI adaptation.
- Significant recent research investment allocations in AI from the private sector has come from Google, Nvidia, Tesla and many others.
- Direct specific AI applications have improved the operations of banking systems, video processing, security systems, fingerprint and eye recognition, and speech recognition systems.
- The renewed push in space exploration by the US Government has been driven by AI applications and investments from private companies such as Blue Origin and Space X.
- Significant new AI investment opportunities continues to surface for Venture Capital/Private Equity investors.
Global Supply Chain Overview
Global supply chain management has six main areas of concentration: logistics management, competitor orientation, customer orientation, supply chain coordination, supply management and operations.
- COVID-19 has disrupted supply chains around the world dramatically.
- The global supply chain has been critical to supporting the response to COVID-19.
- Distribution of effective medical supplies, food and other key necessities are also a continuing priority.
- The 2020 global supply chain has lacked resilience and has broken down due to multi-country disruptions, the pandemic and dependence on China.
- Global supply chains are in flux. Many manufacturers are in the process of reallocating their global sourcing away from China to diversify operations to mitigate future potential supply disruptions.
Alternative Energy Overview
- Alternative or renewable energy have taken prominence within the global energy industry due to greenhouse gases and subsequent climate change.
- Global new solar and wind power plant construction is key to supplementing increased global demand for power production. Last year the world invested $282.2 billion in renewable energy which is $2 billion more than the previous year.
- Major investments last year included Taiwan’s $8.8 billion investment in three off shore wind projects, and the United Arab Emirates’ $4.5 billion investment in the largest solar project in history.
- Globally VC/PE investments rose by 29% in solar to $1.8 billion, with wind power jumping by 157% to $529 million.
- US based investment opportunities will continue to unfold, buoyed in part by the Biden Administration’s interest in climate change.
