5/19/2011 Megatrends, Mega ‐ impacts: Implications for Maine, 2035 Maine Real Estate & Development Association Portland, ME May 18, 2011 Susan M. Wachter Richard B. Worley Professor of Financial Management Co ‐ Director, Penn Institute for Urban Research The Wharton School University of Pennsylvania Global Megatrends 2035 1. Global Population and Income Surge and the Earth’s Build ‐ Out 2. The New Normal: Environmental and Natural Resource Limits 3. Global Competition and Governance: The Great Challenge of the 21 st Century 1
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5/19/2011 Maine Least Dense State East of Mississippi http://www.nrcm.org/gallery.asp?gallery=11&image=251 Additional 1.5 billion 2035 3
5/19/2011 America Grows 200 million in 1968 300 million in 2006 400 million in 2032 500 million in 2050 America adds 100 million people faster than any other nation except India and Pakistan – But faster than China. Source : Arthur C. Nelson, Metropolitan Research, University of Utah. 4
5/19/2011 Build ‐ Out of United States: Consequences for Maine • United States population 2011 309 million • 1% population growth = 95 million people over next 25 years • Maine’s population growth 2000 ‐ 2010 v US, .4% v 1% Build ‐ Out of United States: Consequences for Maine • Maine’s pop 1.3 million • 10% growth over 25 years = 139,000 people • Equivalent of adding two cities the size of Portland 5
5/19/2011 Envisioning Maine Spatially • 70% of population in cities • Much of population growth will be concentrated in cities • Portland metro population 516,000, city 66,000 • Density of Portland: 3,000 people/sq. mi., metro (3 counties) 248 • Population growth likely to double urban population • Albany, 5500 density; 7,000 Hartford; 12,000 Boston US Census Bureau 2000 Maine’s Home Prices: 10 years >50% 6
5/19/2011 150 140 130 Price Index 120 Explainable with CC 110 100 90 199901 199903 200001 200003 200101 200103 200201 200203 200301 200303 200401 200403 200501 200503 200601 200603 200701 200703 200801 200803 13 House Price Indexes By State HPI for Comparable States 800 700 600 500 400 Maine Mass. 300 200 100 0 1983 1983 1984 1985 1986 1986 1987 1988 1989 1989 1990 1991 1992 1992 1993 1994 1995 1995 1996 1997 1998 1998 1999 2000 2001 2001 2002 2003 2004 2004 2005 2006 2007 2007 2008 2009 2010 2010 7
100 200 300 400 500 600 700 800 0 1983 1983 1984 1985 1986 House Price Index By State 1986 1987 1988 1989 1989 Real Home Prices 1990 1991 1992 1992 1993 1994 1995 1995 1996 1997 1998 1998 1999 2000 2001 2001 2002 2003 2004 2004 2005 2006 2007 2007 2008 2009 2010 2010 Florida Ariz. Mass. Maine 5/19/2011 8
5/19/2011 House Price Indexes By City 400 350 300 250 Las Vegas Phoenix 200 Miami Portland, ME 150 Boston 100 50 0 1983 1983 1984 1985 1986 1986 1987 1988 1989 1989 1990 1991 1992 1992 1993 1994 1995 1995 1996 1997 1998 1998 1999 2000 2001 2001 2002 2003 2004 2004 2005 2006 2007 2007 2008 2009 2010 2010 Increased Population Density May Result in Even Higher Appreciation 9
5/19/2011 2. The New Normal: Environmental and Natural Resource Limits • 30% of the environment will be built or re ‐ built in the next 30 years • Maine is resource ‐ sensitive – Cold weather = high heating costs • Energy solutions to mitigate rising commodity prices and carbon dioxide emissions • Maine’s resources are energy dependent 10
5/19/2011 Emerging Economy Growth: Unprecedented Income Convergence 11
5/19/2011 China and India Are Becoming the Dominant Forces in Global Oil Demand GDP Growth = CO 2 Growth Source: World Resources Institute 12
5/19/2011 Emerging Economies Will Put Pressure on World’s Energy Supplies China and India Will Dwarf the U.S. in Oil Consumption Growth 13
5/19/2011 The Bottom Line: Oil Prices Will Continue to Rise Emerging Market Growth = Extreme Pressure on Natural Resource Demand Source: International Energy Agency 14
5/19/2011 Commodity Prices Will Continue to Rise • Purchases in developing countries rose to 45m hectares in 2009, a ten ‐ fold jump from the last decade. • Sovereign wealth funds from the Mid ‐ East, as well as state ‐ entities from China, the Pacific Rim, and even India are trying to lock up chunks of the world’s future food supply. • Western agribusiness is trying to beat them to it. • Hedge funds that struck rich ‘shorting’ US sub ‐ prime have rotated into the next great play of our era: ‘long’ soil. http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7997910/The ‐ backlash ‐ begins ‐ against ‐ the ‐ world ‐ landgrab.html 3. Global Competition and Governance: The Great Challenge of the 21 st Century • Globalization and global competition will intensify • Maine must increase focus on competing globally – Government efficiency – Education • Maine must maintain the assets it is known for, especially quality of life and recreational amenities, to sustain demand 15
5/19/2011 Governance Issues and Challenges for Maine • High energy costs and taxes • Workforce educated, skilled and low poverty but aging population • Must invest in scientific research – Marine technology – Renewable energy – Environment preservation • Natural beauty = competitive edge Change in Ownership of Traditional Timberlands • 95% of Maine’s North Woods are privately owned • In mid 1990’s just a few large industrial owners held 60% of the land • Since June 1998, 2/3’s of Maine’s North Woods (7.1 million acres) have changed hands • By 2005, only 1 industrial owner, Irving Paper Co., remained, owning 15% • REIT’s and Timber Investment Management Organizations are now the majority owners flickr.com/photos/bp1971 16
5/19/2011 Change in Ownership of Traditional Timberlands • 95% of Maine’s North Woods are privately owned • In mid 1990’s just a few large industrial owners held 60% of the land • Since June 1998, 2/3’s of Maine’s North Woods (7.1 million acres) have changed hands • By 2005, only 1 industrial owner, Irving Paper Co., remained, owning 15% • REIT’s and Timber Investment Management Organizations are now the majority owners http://www.nrcm.org/gallery.asp?gallery=11&image=258 Maine Growth Management Enacted in 1989 • Comprehensive Planning • Funding for projects support goals • 250 municipalities have adopted comprehensive plans • Incentives rather than mandates flickr.com/photos/picsofmaine/ 17
5/19/2011 Questions: 25 Years into the Future • How can Maine compete in the next 25 years? • What does Maine need to do to compete with other states to attract funds? • Where are developers going to be investing their money? • What changes in the landscape will we see where developers/brokers will be making their money over the next 25? • What will be the key ingredients of decision ‐ making for future development in Maine? State Goals: (1) To encourage orderly growth and development in appropriate areas of each community and region while protecting the State's rural character , making efficient use of public services, and preventing development sprawl; (2) To plan for, finance, and develop an efficient system of public facilities and services to accommodate anticipated growth and economic development; (3) To promote an economic climate which increases job opportunities and overall economic well ‐ being; (4) To encourage and promote affordable, decent housing opportunities for all Maine citizens; (5) To protect the quality and manage the quantity of the State's water resources, including lakes, aquifers, great ponds, estuaries, rivers, and coastal areas; (6) To protect the State's other critical natural resources, including without limitation, wetlands, wildlife and fisheries habitat, sand dunes, shorelands, scenic vistas, and unique natural areas; (7) To protect the State's marine resources industry, ports, and harbors from incompatible development and to promote access to the shore for commercial fishermen and the public; (8) To safeguard the State's agricultural and forest resources from development which threatens those resources; (9) To preserve the State's historic and archeological resources; and (10) To promote and protect the availability of outdoor recreation opportunities for all Maine citizens , including access to surface waters. 18
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