WWW.IBISWORLD.COM Real Estate Asset Management & Consulting in the US June 2019 1
Home stretch: Strong organic growth in construction activity will boost industry revenue
This report was provided to Autobahn Consultants (2134210691) by IBISWorld on 27 October 2019 in accordance with their license agreement with IBISWorld
IBISWorld Industry Report 53139 Real Estate Asset Management & Consulting in the US June 2019 Ryan Roth
2 About this Industry 16 International Trade 27 Industry Assistance 2 Industry Definition 17 Business Locations 2 Main Activities 29 Key Statistics 2 Similar Industries 19 Competitive Landscape 29 Industry Data 3 Additional Resources 19 Market Share Concentration 29 Annual Change 19 Key Success Factors 29 Key Ratios 4 Industry at a Glance 19 Cost Structure Benchmarks 30 Industry Financial Ratios 21 Basis of Competition 5 Industry Performance 22 Barriers to Entry 31 Jargon & Glossary 5 Executive Summary 22 Industry Globalization 5 Key External Drivers 7 Current Performance 23 Major Companies 9 Industry Outlook 23 CBRE Group 11 Industry Life Cycle 23 Jones Lang LaSalle
13 Products and Markets 25 Operating Conditions 13 Supply Chain 25 Capital Intensity 13 Products and Services 26 Technology and Systems 14 Demand Determinants 26 Revenue Volatility 15 Major Markets 27 Regulation and Policy www.ibisworld.com | 1-800-330-3772 | [email protected] WWW.IBISWORLD.COM Real Estate Asset Management & Consulting in the US June 2019 2 About this Industry
Industry Definition Companies in this industry provide real miscellaneous activities. The industry does estate-related services, including escrow, not include real estate agent and broker fiduciary, consultancy, research, listings, offices, real estate lessors, real estate property tenant representation and other managers or real estate appraiser offices.
Main Activities The primary activities of this industry are Providing real estate escrow services Providing real estate asset management services Providing real estate listing services Providing real estate consultancy Tenant representation and relocation Real estate research and analysis Providing real estate fiduciary services Providing other miscellaneous real estate services
The major products and services in this industry are Real estate consulting services Real estate listing services Real estate relocation services Other services
Similar Industries 53111 Apartment Rental in the US Establishments in this industry primarily lease buildings used as residences or dwellings.
53112 Commercial Leasing in the US Establishments in this industry primarily act as lessors of buildings that are not used as residences or dwellings.
53113 Storage & Warehouse Leasing in the US Establishments in this industry primarily engage in renting or leasing space for self-storage.
53119 Land Leasing in the US Establishments in this industry primarily act as lessors of nonfixed structure real estate properties (i.e. not buildings), including manufactured home (i.e. mobile home) sites and vacant lots.
53121 Real Estate Sales & Brokerage in the US Establishments in this industry primarily sell, buy and rent real estate for others.
53131 Property Management in the US Establishments in this industry provide a variety of services, such as collecting rent and overseeing maintenance, security and trash removal.
53132 Real Estate Appraisal in the US Establishments in this industry estimate the fair market value of real estate.
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About this Industry
Similar Industries 54119 Conveyancing Services in the US Establishments in this industry research public land records for title ownership and undertake conveying real continued estate titles.
Additional Resources For additional information on this industry www.bea.gov Bureau of Economic Analysis www.fhfa.gov Federal Housing Finance Agency www.hud.gov US Department of Housing and Urban Development
IBISWorld writes over 1000 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Real Estate Asset Management & Consulting in the US June 2019 4 Industry at a Glance Real Estate Asset Management & Consulting in 2019
Key Statistics Revenue Annual Growth 14–19 Annual Growth 19–24 Snapshot $68.7bn 4.3% 1.0% Profit Wages Businesses $24.0bn $24.0bn 552,551
Revenue vs. employment growth Demand from building, developing and Market Share general contracting There are no major 12 20 players in this 8 10 industry 4 0
0 -10 % change % change
-4 -20
-8 -30 Year 11 13 15 17 19 21 23 25 Year 13 15 17 19 21 23 25 Revenue Employment SOURCE: WWW.IBISWORLD.COM p. 23 Products and services segmentation (2019)
Key External Drivers 9.4% Demand from building, Real estate listing services developing and general contracting Yield on 10-year 18.6% Treasury note Real estate relocation services Housing starts 50.8% Real estate House price index consulting services Office rental vacancy
21.2% p. 5 Other services
SOURCE: WWW.IBISWORLD.COM
Industry Structure Life Cycle Stage Mature Regulation Level Light Revenue Volatility Medium Technology Change Low Capital Intensity Low Barriers to Entry Low Industry Assistance None Industry Globalization Low Concentration Level Low Competition Level Medium
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 29
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Executive Summary The Real Estate Asset Management and relocation services. Overall, industry Consulting industry consists of a range of revenue is expected to expand at an services for businesses and individuals annualized rate of 4.3% to total $68.7 involved in real estate investment, billion over the five years to 2019. In transactions and development. Industry 2019 alone, industry revenue is activities include consulting and expected to grow 2.3% alongside rising advisory, real estate asset management, corporate profit and housing starts. escrow, relocation, tenant representation, Amid rising demand for industry listing and fiduciary activities. The services and relatively low ancillary majority of companies in the industry are costs, industry profit, measured as nonemployers; the average industry earnings before interest and taxes establishment employs fewer than two (EBIT), is expected to account for workers. Accordingly, market share 35.0% of industry revenue in 2019. concentration in the Real Estate Asset Moving forward, the housing market is expected to continue to expand, benefiting the industry over the five years Strong growth in housing starts and gains in to 2024. An increase in real estate nonresidential construction have catalyzed transactions is expected to drive revenue growth as residential and commercial surging demand for industry services construction improves. Consequently, industry profit is also projected to grow Management and Consulting industry is during the five-year period. Additionally, relatively low, with operators mainly the possible privatization of Fannie Mae serving regional markets. and Freddie Mac is anticipated to provide Over the five years to 2019, the new capital for the property market and industry has experienced moderate create demand for real estate asset growth as construction markets have managers and consultants. Accordingly, expanded due to broad economic the number of enterprises is expected to improvements. In particular, strong increase at an annualized rate of 2.0% to growth in housing starts and overall reach 609,790 companies over the five gains in nonresidential construction years to 2024, amid speculation of have served to catalyze surging demand increased demand for industry services. for consulting and advisory services. Overall, IBISWorld expects industry Furthermore, rising corporate profit revenue to rise at an annualized rate of has led to expanded business budgets, 1.0% to total $72.2 billion over the five increasing demand for industry years to 2024.
Key External Drivers Demand from building, developing developing and general contracting is and general contracting expected to increase in 2019, presenting The Real Estate Asset Management and a potential opportunity for the industry. Consulting industry primarily provides advice to the corporate sector and Yield on 10-year Treasury note property developers. An increase in the The yield on the 10-year Treasury note is volume of construction creates demand used as a proxy for interest rates. A for consulting and advisory services, real higher yield translates to increased estate information and analysis and interest rates, which can lead to the listing services. Demand from building, deferment of real estate purchases,
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Industry Performance
Key External Drivers entitlements and development, thus index increases, demand for companies continued causing demand for industry services to that perform real estate services rises decline. The yield on the 10-year accordingly. Conversely, when housing Treasury note is expected to fall in 2019. values decrease, demand declines and revenue falls. The house price index is Housing starts expected to increase during 2019. Housing starts measure the number of new privately owned housing units Office rental vacancy started in a year. An increase in the The office rental vacancy rate measures number of new residential buildings the percentage of available office units leads to greater demand for escrow that remain unoccupied in a given year. services and other real estate Typically, a decline in the office vacancy information, which increases industry rate suggests demand for corporate real revenue. Housing starts are expected to estate services and information, while increase in 2019. high office vacancy indicates a cooldown in demand for these services. The office House price index rental vacancy rate is expected to The house price index measures changes in increase in 2019, posing a potential the value of housing. When the house price threat to the industry.
Demand from building, developing and Yield on 10-year Treasury note general contracting 20 4.0
10 3.5
0 3.0 % -10 2.5 % change
-20 2.0
-30 1.5 Year 13 15 17 19 21 23 25 Year 11 13 15 17 19 21 23 25
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Companies in the Real Estate Asset Current Management and Consulting industry Industry revenue provide services to individuals and Performance 12 companies that are active in real estate markets. Industry enterprises provide 8 transactional services such as escrow and tenant representation. They also generate 4 data and analysis on local and regional 0
markets and provide consulting and % change advisory services to property owners, -4 managers, investors and developers. Over the five years to 2019, industry -8 revenue is expected to rise as housing starts Year 11 13 15 17 19 21 23 25 and access to credit have improved. Residential and nonresidential property SOURCE: WWW.IBISWORLD.COM values have been rising and encouraging professional assistance from consultants grow at an annualized rate of 4.3% to total and other specialized real estate companies. $68.7 billion over the five years to 2019, As a result, industry revenue is expected to including a 2.3% jump in 2019 alone.
Movements in Rising demand for building, developing robust growth experienced in 2014 property markets and general contracting is expected to represented the highest single-year lead the industry to expand over the five increase in home prices during the years to 2019. In large part, increasing five-year period. However, home prices consumer confidence, relatively low have risen strongly overall, as the house interest rates and declining price index is projected to rise at an unemployment have led housing starts to annualized rate of 4.7% over the five increase over the five years to 2019. The years to 2019. The gain in home values greater number of real estate transactions has also corresponded with an increase in and rising property values have provided the value of residential construction, favorable conditions for companies which is expected to rise at an annualized involved in management and consulting rate of 3.9% over the five years to 2019. of real estate assets. In addition, many Another measure of the strength of the investors have placed greater importance residential market is the rise in housing on consultants who can assist in starts, which are projected to grow at an gathering, analyzing and evaluating data annualized rate of 4.9% over the five regarding the costs associated with years to 2019. The expansion of this key occupying existing residential, market has generated a significant commercial and industrial buildings to increase in demand for real estate minimize the risk of investing in a consulting services, such as guidance precarious market. regarding real estate-related accountancy Greater access to credit and rising and financing. incomes during the period have helped Moreover, rising employment across the drive new investment in housing stock as United States and stronger business well as higher average selling prices. The confidence have increased the number of house price index increased 6.6% in 2014 employee relocations as corporate budgets and an additional 4.6% in 2015. The expand and companies open new facilities.
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Industry Performance
Movements in Therefore, industry operators have decline of major commodity prices and property markets experienced an uptick in revenue as they uncertainty borne through major political continued assist businesses and individuals in events such as Brexit and the US conducting the sales and acquisitions of presidential election. Therefore, the value employee residences, the transportation of of nonresidential construction slipped belongings and other human resource 5.0% over 2016. In 2019, however, services. Over the five years to 2019, nonresidential construction markets are corporate profit in the United States is expected to grow again as companies expected to increase at an annualized rate seek to lock in low interest rates before of 2.2%. Amid rising corporate profit, they rise significantly in the future. The companies have been much more willing to strength of the nonresidential employ the services of industry enterprises. construction market is important for In 2016, nonresidential construction operators providing industry services markets lagged with the continued such as real estate listing.
Profit and industry Over the past five years, a stronger structure construction market and expanding Low barriers to entry and corporate budgets have enabled industry operators to increase their prices amid a high profit margins have flurry of new work. In recent years, encouraged new businesses however, corporate budgets have to enter the industry sometimes contracted due to the fall in oil prices, which are usually a part of most companies’ investment portfolio. Further, services to a range of businesses. Most of an appreciation of the US dollar has these companies are small and only offer reduced the dollar-denominated profit of services on a local or regional scale, while US companies. After moderate gains over major players such as CBRE focus on the past five years, industry profit, providing asset management and measured as earnings before interest and consulting services to the largest taxes (EBIT), is expected to increase to a companies in the United States. Such 35.0% share of industry revenue. companies have consolidated their The number of industry establishments position in the market over the past five is projected to increase at an annualized years through mergers and acquisitions. rate of 2.8% to 555,019 locations over the Major and small players alike are also five years to 2019. Relatively low barriers expected to boost industry employment, to entry and high profit margins have which is expected to increase at an encouraged new businesses to enter the annualized rate of 3.4% to 620,535 industry and provide real estate consulting workers over the five years to 2019.
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Industry Performance
Over the five years to 2024, the Real small new nonemploying companies Industry Estate Asset Management and enter the industry and merger and Outlook Consulting industry is forecast to acquisition activity also increases. While continue benefiting from rising home competition will keep profit margins prices, greater transaction activity and contained, consistent demand for organic growth in construction activity. industry services will enable operators The US property market is beginning to to raise their prices. Residential growth slow after recovering from the depths of is expected to slow over the five years to the recession. However, interest rates 2024 compared with the previous remain low and rising consumer and five-year period; however, strong business confidence are projected to nonresidential growth will help support result in growth in both residential and the industry. Overall, industry revenue nonresidential markets. In addition, the is projected to grow at an annualized industry is also expected to experience rate of 1.0% to $72.2 billion over the five more stringent internal competition, as years to 2024.
Downstream markets During the previous period, the residential market underwent strong Beneficial consumer expansion. Housing price growth helped conditions will also drive drive demand for industry services. Over the next five years, the residential an increase in home prices market is expected to continue improving due to improving consumer unsafe lending practices, such as those incomes and relatively low interest rates. that were common in the lead up to the Over the next five years, per capita recession, raising compliance costs and disposable income is expected to limiting access to credit somewhat. continue rising, while unemployment Therefore, over the next five years, the remains low. These consumer conditions residential market is expected to be will also drive an increase in home healthy and help drive demand for prices, which if organic, is indicative of a industry services, but at a slower rate. stronger residential market. Increasing corporate profit and rising The Federal Reserve is expected to business sentiment are projected to result increase interest rates over the five years in an increase in nonresidential to 2024. However, rates are expected to construction over the next five years. rise slowly as the Federal Reserve Nonresidential construction activity continues to encourage new economic tends to trend in line with residential investment while avoiding any large construction, though it has a lag of one to increases that would shock financial two years due to the additional time markets. Nonetheless, the 30-year larger construction project design and conventional mortgage rate is expected to approval takes. Businesses across the continue to rise and slow new United States are benefiting from investment. As funding costs for lenders stronger consumer spending and are increase, homeowners bear the increased once again investing in expanding the cost through higher mortgages, which workforces and facilities. As a result, the discourages new home purchases. value of private nonresidential Additionally, financial regulators will construction is projected to grow at an maintain a vigilant presence to prevent annualized rate of 1.2% over the five
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Industry Performance
Downstream markets years to 2024. Moreover, gains in over the next five years will encourage continued productivity and the tax advantages that businesses to expand and demand businesses are expected to experience commercial space.
Fannie and Freddie In addition to improving residential privatization options construction, the private capital and The federal government mortgage market could receive a boost from the reprivatization of the Federal has stated its intention National Mortgage Association (Fannie to eventually end Mae) and the Federal Home Loan conservatorship Mortgage Corporation (Freddie Mac). These two agencies entered conservatorship in September 2008, as permitting the private sector to take the federal government acted to protect over. Any deal to privatize the more than $5.0 trillion in mortgage- organizations would create increased backed securities and stabilize the demand for real estate asset financial markets. The federal management and consultant firms, as government has stated its intention to funds are injected into the market and eventually end conservatorship, spur construction activity.
Industry expansion As the US construction market continues five years. M&A activity will pick up as to recover and benefit the industry, large companies seek to increase industry profit margins are expected to revenue by acquiring other companies remain healthy, albeit without that provide complementary services experiencing growth; they are projected and operate in additional geographic to account for 34.2% of revenue in 2024, regions. Historically, the acquisition lower than 2019. Nonetheless, more has been a key growth strategy for operators are expected to enter the industry players, and IBISWorld industry. The number of industry expects that a revival of consolidation operators is projected to grow at an activity will occur as the economy annualized rate of 2.0% to 609,790 over recovers and the industry continues to the five years to 2024. mature. Companies are also expected to Growth in the number of industry increase the size of their workforces. establishments will primarily be fueled Over the five years to 2024, the number by small, boutique agencies because of industry employees is forecast to rise greater merger and acquisition (M&A) at an annualized rate of 1.5% to reach activity is also expected over the next 669,736 workers.
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Industry Performance Life Cycle Stage The industry is expected to grow faster than the overall economy The industry has wholehearted market acceptance for its services New businesses are expected to continue entering the industry
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Industry Performance
Industry Life Cycle The Real Estate Asset Management and 3.4% over the 10 years to 2024. Rising Consulting industry is in the mature revenue will help drive IVA, as the stage of its economic life cycle. The industry recovers from the downturn This industry industry is growing at a slightly faster caused by the housing bubble. Industry is Mature pace than that of the overall economy, profitability is also expected to grow over has an increasing number of companies the next five years as demand for industry and is experiencing stagnation in services increases. GDP is forecast to consumer and investor acceptance of grow at an annualized rate of 2.2% over services, which are all indicative trends of the same 10-year period; this discrepancy a mature industry. Over the five years to is largely attributed to the levels of 2019, the industry experienced moderate decline experienced during the recession. growth as the number of housing starts Low barriers to entry and high profit increased and nonresidential margins are expected to entice new construction continued to recover as low operators to enter the industry. Over the interest rates and rising confidence 10 years to 2024, the number of industry precipitated greater investment. enterprises is forecast to grow at an Industry value added (IVA), which is annualized rate of 2.4% to reach 609,790. used to measure an industry’s Growth in employment is expected to be contribution to the overall economy, is similar due to a large number of projected to grow at an annualized rate of nonemployees in the industry.
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Supply Chain KEY BUYING INDUSTRIES 23 Construction in the US Developers of residential, industrial, commercial and municipal projects regularly require real estate research, analysis, consultancy and listing services. 23721 Land Development in the US Land developers frequently use real estate research, analysis and consultancy services. 52 Finance and Insurance in the US Many operators in this industry require information, consultancy, fiduciary and escrow services. 53 Real Estate and Rental and Leasing in the US Many operators in this industry use information and consultancy services. 53121 Real Estate Sales & Brokerage in the US This industry uses real estate agency listing services to advertise and promote properties for sale and lease. 9901 Consumers in the US Consumers are a significant user of the industry’s services.
KEY SELLING INDUSTRIES 51322 Cable, Internet & Telephone Providers in the US The majority of operations are conducted using various communication platforms and internet services. Companies in this industry collect data, communicate with clients, advertise and sell services using internet and telecommunication systems. 52 Finance and Insurance in the US Financial institutions provide real estate and investment information to industry operators. 53 Real Estate and Rental and Leasing in the US Real estate companies provide real estate and investment information to this industry.
Products and Services Operators in the Real Estate Asset services related to real estate and Management and Consulting industry are commercial and industrial location highly diverse, with many companies finding services. specializing in only one service line, rather Over the five years to 2019, this than competing in all fields. Over the past segment has grown as a proportion of five years, all industry segments have revenue as rising demand for real estate expanded in line with a burgeoning coupled with stronger corporate profit housing and commercial property market. and greater outsourcing of expert services has surged forward demand for Real estate consulting services consulting services. Expert advice and Real estate consulting services represent guidance from consultants help the majority of revenue with an investors mitigate potential risk estimated 50.8% of revenue in 2019. through analysis, which drives revenue This segment includes the provision of from this segment. advice and guidance regarding real estate-related accountancy, financing Real estate relocation services and other similar matters that are Real estate relocation services are provided independently of accounting estimated to represent 18.6% of revenue and financial services. Furthermore, in 2019. Relocation service providers operators provide expert witness typically assist other companies by
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Products & Markets
Products and Services Products and services segmentation (2019) continued 9.4% Real estate listing services
18.6% Real estate relocation services 50.8% Real estate consulting services
21.2% Other services
Total $68.7bn SOURCE: WWW.IBISWORLD.COM
conducting strategic execution of industry revenue in 2019, yet have employee relocations, including declined over the five-year period. handling the sale and acquisition of Listing services include the provision of employees’ residences and arranging the a register or list of real estate properties move of personal goods. Other services for sale in an area. However, online may include human resource services have mitigated this segment’s procurement, outsourcing solutions and proportion of revenue over the past five global assignment services. Over the years and companies have sought to past five years, real estate relocation add higher value-added services such as services have remained a steady consulting to overcome the competition proportion of industry revenue. provided by free online databases. Increased employment and rising corporate budgets have enabled Other services companies to further invest in relocation Other services include various services, which dropped off during the reimbursements from property owners height of the recession. for miscellaneous expenditures, construction services, market research Real estate listing services and other services. In 2019, other Real estate listing services are miscellaneous services are expected to estimated to account for 9.4% of account for 21.2% of industry revenue.
Demand Real estate asset management and Property development and Determinants consulting is heavily reliant on the redevelopment volume and value of real estate Demand for new housing and commercial transactions. When properties are building construction drives demand for bought, sold, leased, developed, industry services. Growth in industry insured or mortgaged, accurate activity generally correlates with growth information, analysis and counsel are in building construction activity but is sought to make informed decisions in also heavily influenced by mortgage regard to demand. interest rates (i.e. the availability and
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Products & Markets
Demand price of finance) and movements in and speculative capital gains), taxation Determinants property values. The collapse of the treatment of building investment continued mortgage finance market and the compared with other types of assets, subsequent shock waves throughout the vacancy rates of existing building stock and banking and finance sector resulted in changes in the structure, distribution and banks and mortgage initiators tightening size of the population. lending practices, thus dampening investment in building activity. Current economic conditions and outlook This industry encompasses a variety of Property sales and investment real estate services, all of which are The need for asset managers to help affected by current economic conditions determine the optimal time to acquire, and expected outlook. The need for improve and dispose of real estate assets commercial real estate is often associated creates demand for industry services. with corporate expansion and a rise in Investment decisions are influenced by the consumer spending. As a result, demand prevailing level of interest rates and for industry services from commercial availability of finance, company development and leasing activities profitability and capacity to invest in new increases during times of economic premises or expand rental accommodation, growth. Housing market trends also current and expected rates of general correspond to demand for real estate economic growth, expected yield on services, such as listing, escrow, research investment (both long-term rental yield and analysis.
Major Markets Major market segmentation (2019)
3.0% Government 6.7% Real estate agents and brokers 19.7% Other 37.8% Commercial markets
32.8% Residential markets Total $68.7bn SOURCE: WWW.IBISWORLD.COM
Commercial markets consulting services, relocation services, Commercial markets comprise the largest fiduciary services, escrow services, asset proportion of industry revenue. In 2019, management and tenant representation. IBISWorld estimates that commercial This market has increased as a percentage markets are expected to account for 37.8% of industry revenue in recent years of industry revenue. Real estate service because the subprime mortgage crisis and enterprises within this segment provide credit crunch severely hurt demand from
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Products & Markets
Major Markets other major markets, including real estate the past five years despite improvement continued agents, brokers and private residential across the housing market. The mean investors. Businesses are terminating reason for this stagnation despite in-house real estate operations and are improvements in the market is a question instead relying more heavily on industry of scale. Simply put, private homeowners operators that offer comprehensive real have not demanded industry services at a estate services. faster or larger rate than other markets.
Residential markets Real estate agents and brokers IBISWorld estimates that residential Real estate agents and brokers are expected clients will collectively account for 32.8% to account for 6.7% of industry revenue. of industry revenue in 2019. The largest Real estate agents and brokers use many client group in this market is property industry services, including listing services, developers. Developers rely on research escrow services, consulting services and and analysis and advisory and transaction research. This segment has risen as a services to assist in making informed proportion of industry revenue in large part investment, product development, pricing because of the robust growth in the housing and other critical decisions throughout the sector since the subprime mortgage crisis. development process. Consultants can Much of this growth has occurred over the also assist developers in procuring past five years and IBISWorld expects the entitlements and building permits segment to have recovered to its required to commence construction and prerecessionary levels. secure financing. Over the past five years, this segment has increased as a proportion Other markets of revenue due to increasing housing In 2019, all other markets are expected to starts and demand for development in account for 22.7% of industry revenue. urban areas. Moreover, the residential Financial institutions use the industry’s construction sector has undergone more fiduciary, escrow, asset management and robust growth than the nonresidential consultancy services. Real estate service construction sector, further increasing this providers may be required to analyze and market’s share of revenue at the expense evaluate government-owned properties of commercial clients. and institutions. Real estate-related Private homeowners and prospective research is also carried out when publicly homebuyers also use market information, owned institutions and buildings are escrow and other real estate services when developed, sold or privatized. Government residential properties are bought, sold, bodies also use the industry’s services mortgaged, renovated and insured. This when investing in infrastructure and segment has remained relatively flat over affordable housing projects.
International Trade There is no significant international trade Larger industry operators such as CBRE in the Real Estate Asset Management and also provide services internationally; Consulting Services industry. Industry however, the majority of industry operators are primarily small businesses revenue is earned in the United States. with a local or regional focus. Larger For more information on industry national companies with extensive globalization and foreign investment in international holdings use their US the industry, please see the Industry divisions to perform domestic services. Globalization section of this report.
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Products & Markets
Business Locations 2019
est AK 0.2 e a d
ME reat M d 0.3 akes t a t c 1 2 NY 3 WA ND 6.4 4 MT 0.2 5 2.7 0.3 MN 2.4 WI ock 0.7 MI PA 6 SDP a s 2.5 2.6 OR 0.1 7 1.0 Mou ta s ID IA OH 9 8 0.7 WY 0.5 1.4 0.3 IN VA NE IL 0.6 WV 0.2 4.4 0.2 3.0 KY est NV 0.5 1.1 NC UT MO 1.6 2.5 CO KS 1.0 3.3 0.7 TN 0.8 SC CA 1.4 19.1 OK AR out east 1.1 0.5 GA AL 3.0 AZ MS 0.6 2.8 NM 0.2 0.5 out est LA TX 1.2 FL 7.2 13.0
est Establishments (%) HI Less than 3% 0.4 Additional States (as marked on map) 3% to less than 10% 1 VT 2 NH 3 MA 4 RI 10% to less than 20% 0.1 0.3 2.0 0.2 20% or more 5 CT 6 NJ 7 DE 8 MD 9 DC 0.5 1.8 0.3 1.3 0.4
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
Company locations in the Real Estate Business Locations Distribution of establishments vs. population Asset Management and Consulting industry generally follow the distribution 30 of the population, although there are often variations stemming from land
values, housing market trends and 20 consumer preferences. Establishment
numbers and revenue patterns reflect % business activity, property values, real 10 estate investments and population. The Southeast is estimated to account for 25.7% of the industry’s establishments 0 in 2018, which is lower than the region’s West portion of total revenue. The number of Plains Southeast industry establishments reflects the Southwest Great Lakes Mid-Atlantic region’s growing population and the New England
considerable development activity and Establishments Rocky Mountains investment in income-producing Population properties (i.e. residential and SOURCE: WWW.IBISWORLD.COM nonresidential commercial real estate). The second-largest region in terms of and value of the regional economy establishments and revenue is the and population. West. This region comprises 24.6% The Mid-Atlantic region is home to of the industry’s establishments. It 12.9% of industry establishments. The contains a greater number of larger real Southwest and Great Lakes regions account estate service providers that benefit for an estimated 11.6% and 9.6% of from regional name recognition and a industry establishments, respectively. highly skilled workforce. The While they are both major contributors of concentration of larger operators in the industry revenue, high unemployment West is due to a higher level of levels plagued the Great Lakes, and an franchising and consolidation among oversupply of speculative developments in the region’s companies. The high the Southwest region resulted in noticeable revenue proportion reflects high declines in the region’s proportion of property values as well as the size revenue, establishments and employment.
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Real Estate Asset Management & Consulting in the US June 2019 19 Competitive Landscape Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The Real Estate Asset Management level of fragmentation in his industry, Concentration and Consulting industry is which mitigates the risk of any single characterized by a low level of company dominating the industry. concentration. The four largest Over the five years to 2019, industry Level companies are expected to account for concentration is expected to increase due Concentration in less than 20.0% of industry revenue to stronger merger and acquisition this industry is Low due to a large number of nonemployers activity from major players such as active in the industry. The majority of CBRE. Furthermore, the industry’s companies operating in this industry largest players have benefited most from act as sole proprietors or partnerships, an increasing number of home sales and hiring no additional staff and rising average selling prices. Nonetheless, providing specialized services and the industry is expected to remain subcontracting additional work when dominated by small companies that offer required. This leads to a relatively high services to local or regional markets.
Key Success Factors Ability to raise revenue from Effective quality control additional sources Attention to detail is crucial when The real estate market can be volatile from providing escrow, fiduciary, investment IBISWorld identifies year to year, so some real estate services management and consulting services to 250 Key Success companies have branched out by clients. The effectiveness of these activities Factors for a providing complementary services to is often easily measured, making it simple business. The most clients. Companies that offer a wide range for clients to assess their value. important for this of services are able to increase revenue. Well-developed internal processes industry are: Access to highly skilled workforce Given the generally labor-intensive Real estate companies that employ highly nature of the industry, operators need to skilled staff with specialized knowledge can ensure that appropriate cost and time- develop a reputation for quality service and management systems are in place on a increase their bargaining power. project basis.
Having contacts within key markets Proximity to key markets Successful real estate service companies Industry companies must be in markets need to have a consistent flow of new where there are ample supply and business. Companies that establish demand for real estate services. Densely networks among the key players in each populated areas or places with strong market will successfully attain business population growth tend to be key markets through referrals and industry contacts. for industry participants.
Cost Structure Industry enterprises’ cost structures are is also characterized by a high profit Benchmarks dependent on the structure and size of margin due to low operating costs. the company and the specialization of services offered to clients; however, due Wages to the high level of value-added in the Wage costs are expected to account for industry, wage costs tend to dominate 35.0% of revenue in 2019. The majority companies’ cost structures. The industry of enterprises in the industry are
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Competitive Landscape
Cost Structure nonemployers due to low barriers to Profit Benchmarks entry and employees providing services Profit, measured as earnings before continued based on high levels of education and interest and tax (EBIT), is estimated to experience in real estate asset account for 35.0% of revenue amid rising management. This involves the provision demand and relatively low operating of research and analysis into property costs. Over the five years to 2019, data, complete real estate documentation, profitability has had its up and downs site visits and the preparation of reports. throughout the period, including a dip in Most of these functions cannot be 2015. Overall, however, rising demand automated and that is something that is enabled operators to charge more for their unlikely to change in the near future. services, which bolstered profitability.
Purchases Depreciation Industry purchases are expected to Due to minimum capital requirements to represent 2.2% of industry revenue in operate in the industry, depreciation costs 2019. Operators in the industry purchase tend to be low; however, the labor- basic equipment such as office intensive nature of the industry results in administrative tools including computers companies having high amortization costs and office furniture. Furthermore, because of decreasing value in contracts. enterprises in the industry tend to purchase Overall, depreciation is expected to printing and production services, licensed account for 3.0% of industry revenue in software for analytics and other tools that 2019, representing an increase from its assist employee efficiency. share of 2.0% in 2014.
Sector vs. Industry Costs
Average Costs of all Industries in Industry Costs sector (2019) (2019) 100 n P r o fi t n Wages 22.2 n Purchases 80 35.0 n Depreciation n Marketing 18.2 n Rent & Utilities n Other 60
21.7 35.0 40
Percentage of revenue Percentage 7.9 1.8 2.2 5.3 3.0 1.1 20 3.8 22.9 19.9
0 SOURCE: WWW.IBISWORLD.COM
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Competitive Landscape
Cost Structure Marketing Utilities Benchmarks Marketing costs are expected to account for Utilities are required to power and continued 1.1% of industry revenue in 2019, provide general amenities to staff. In representing a slight decline from its share of 2019, utilities are expected to account 1.2% in 2014. Advertising costs are relatively for 1.6% of industry revenue, moderate in this industry, as operators must representing a decline from its 2.1% secure revenue from new business frequently. share in 2014.
Rent Other Companies in the industry require office Other costs are expected to account for spaces to work and meet clients, which leads 19.9% of industry revenue in 2019. to rent accounting for an expected 2.2% of Companies in the industry also require industry revenue in 2019. This represents a legal assistance, insurance and other slight decline from its 2.4% share in 2014. miscellaneous costs.
Basis of Competition Internal competition asset values will gain repeat business and The Real Estate Asset Management and referrals from other clients. Consulting industry is large and highly Price is an important basis of Level & Trend fragmented, with thousands of competition within the industry. In a Competition in companies offering a variety of real estate highly fragmented industry with many this industry is services. The quality and range of participants, real estate services Medium and the services provided form a primary basis companies that unnecessarily charge a trend is Increasing for competition. Corporations, higher price than competitors risk losing institutions and investors that outsource existing clients and failing to attract new real estate services prefer to employ business. However, real estate companies that offer a full range of enterprises that have specialized services across a wide geographic area. knowledge and skills in niche industries Moreover, a wider range of services is and markets can be in high demand and attractive for large clients because it cuts therefore have more pricing power. costs and improves efficiency. Companies that offer a wide range of services are External competition able to leverage their expertise, The Real Estate Asset Management and reputation and knowledge to attract new Consulting industry experiences clients and retain business. competition from several substitutes that A company’s location also plays an perform many of the same and additional important part. Small real estate services services. Brokers, agents, property companies that operate in specific management companies, developers and geographic regions may be able to gain real estate investment trusts can bring the business of local companies and industry services in-house and reduce individuals. Localized enterprises have demand. Furthermore, potential clientele an advantage when clients are seeking can search out these companies for an services that require specialized all-in-one stop, which further reduces knowledge of a region. This can also demand for industry services. This type assist in information accuracy. Real of competition limits operators’ ability to estate companies that are able to increase their prices and requires them to consistently provide reliable and accurate increase their marketing efforts, which information on properties and real estate often limits profit margins.
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Competitive Landscape
Barriers to Entry Barriers to entry for new companies into the Real Estate Asset Management and Barriers to Entry checklist Level & Trend Consulting industry can vary among Competition Medium states and cities. Generally, these barriers Barriers to Entry Concentration Low are low across the United States. The cost in this industry are Life Cycle Stage Mature to purchase or lease facilities can be Capital Intensity Low Low and Steady considerable in well-established, highly Technology Change Low populated cities. However, in smaller Regulation and Policy Light cities and suburban regions, the costs to Industry Assistance None
establish a real estate services company is much less. The industry is dominated by SOURCE: WWW.IBISWORLD.COM smaller nonemployer companies, which incur minimal start-up costs and very low business. There are few regulatory operational costs. requirements for the industry. The most Competition in the industry is relevant of these are escrow compliance medium. The industry is large and highly and fiduciary laws. fragmented, with opportunities for Advertising and promotional costs are enterprises that provide more general generally low in the industry. Smaller real estate transactional services as well companies that operate within a specific as companies that provide niche and geographic region acquire much of their specialist advisory services. Industry business through relationships with consolidation is a growing trend because other local businesses and referral companies that offer a wide range of networks. Large companies that cross- services are able to leverage their sell services to clients can reduce expertise, reputation and knowledge to average management and overhead attract new clients and retain their costs per transaction.
Industry The Real Estate Asset Management and industry’s services. This includes Globalization Consulting industry is characterized by a companies such as CBRE, Jones Lang low level of globalization due to services LaSalle and BGC Partners. These being primarily provided for the companies earn the majority of their Level & Trend domestic real estate sector. Typically, revenue from US operations; however, Globalization in smaller companies operate in narrow, they also operate in Canada and parts of this industry is localized markets as they specialize in Latin America. In addition, some foreign- Low and the trend real estate asset management and other owned companies have domestic offices is Increasing related fields in the US market. that perform industry services. Accordingly, there is no international Investment capital from foreign investors trade in this industry. has been increasing, most notably in the There are many domestic real estate asset management segment of the companies operating outside of the industry. This trend is largely reflective of United States that offer some of the the globalization of financial markets.
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Other Company CBRE Group Inc., trading as CBRE, was investors and occupiers of real estate in Performance founded in 1906 and has grown to be one matters regarding leasing, disposition of the world’s largest commercial real and acquisition of property. estate service providers. The company The company has been involved in CBRE Group employs more than 90,000 employees several acquisitions over the five years to Market Share: 3.0% globally and provides services to real estate 2019. These acquisitions have largely owners, investors, tenants and lessees. been completed overseas as CBRE CBRE also operates in more than 300 attempts to expand its international offices worldwide and provides investment operations. Most recently, in the United management services and development States, CBRE purchased Global services under CBRE Global Investors and Workplace Solutions Business. The Trammell Crow, respectively. The majority acquisition occurred in 2015 and cost of CBRE’s revenue is earned from $1.5 billion paid to the parent company corporations, insurance companies, banks, Johnson Controls Vends. pension funds and advisors. During the period, the increased sale CBRE reports its operations through of US property amid general five segments: the Americas; Europe, improvements in global economic Middle East and Africa; Asia-Pacific; and activities has resulted in improved Global Investment Management and commercial real estate markets. Development Services. The Americas are Moreover, improved residential the company’s largest reporting segment, occupancy rates sustained these which includes operations in the United improvements and subsequently lower States, Canada and key markets in Latin vacancies and higher rent points. With America. Operations in these areas are access to low-cost credit, commercial predominantly wholly owned; however, developers were able to take full the company also licenses its name to advantage of the opportunities available independent affiliates. In the Real Estate during the period, driving the company’s Asset Management and Consulting revenue stream over the five years to industry, specifically, CBRE earns 2019. Consequently, CBRE’s industry- revenue by providing advisory and specific revenue is expected to expand outsourcing services; this includes reach $2.0 billion as commercial and providing strategic advice to owners, residential property markets improve.
Other Company Jones Lang LaSalle (JLL) is one of the during the recession because the Performance world’s leading real estate investment company focused on maintaining a management and professional services healthy balance sheet while weathering enterprises. Since its incorporation in difficult real estate market conditions. Jones Lang LaSalle 1997, the company has grown to also Since then, the company has made two Market Share: 0.9% provide real estate information, strategic acquisitions in the United consultancy, agency leasing, valuation, States, which expanded its mortgage development management, tenant origination, sales and servicing business representation and property and its agency leasing, investment management services. Over the 10 years management, tenant representation, to 2019, the company has acquired or consulting and property management merged with more than 40 companies services. These acquisitions have operating in the United States and bolstered the company’s industry- abroad. Acquisition activity slowed relevant revenue over the five years to
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Major Companies
Other Company 2019. Additionally, the company and commercial property markets. In Performance underwent six more acquisitions in South 2019, growth is expected to continue, continued Africa, Singapore, Indonesia and particularly in the company’s advisory, Australia. During the five-year period, consulting and other segments. US JLL has recorded strong revenue growth industry-specific revenue is forecast to following a recovery in the US housing total $639.7 million in 2019.
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Capital Intensity The industry has a low level of capital intensity. IBISWorld’s analysis indicates Capital Intensity that expenditure on wages accounts for a Capital units per labor unit Level significantly larger proportion of revenue 1.0 The level of capital than for capital depreciation. In 2019, intensity is Low operators are expected to invest $0.09 in 0.8 capital for every $1.00 spent on labor; in 0.6 2014, this figure was $0.06. Generally, the value added in this industry comes from 0.4 specialized knowledge requiring a 0.2 significant level of labor input compared 0.0 with other real estate and rental industries. Economy Real Estate and Real Estate Asset Over the five years to 2019, wages’ share of Rental and Management & Leasing Consulting revenue increased from 32.2% to 35.0%. Dotted line shows a high level of capital intensity Over the five years to 2019, the industry’s SOURCE: WWW.IBISWORLD.COM capital intensity has remained increased.
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Operating Conditions
Technology and Technological change and development In particular, such technologies enable Systems in the industry are low. There is a high industry professionals to sort through level of human interaction required to thousands of available real estate listings Level carry out real estate-related activities and fairly quickly and streamline database services, which is not expected to updates. As a result, industry companies The level of diminish in the future. The use of are able to carry out more transactions at technology databases and online property systems a reduced cost, which increases revenue change is Low has increased over the past five years. and profit margins. However, there are These new technologies provide limits to the degree technology and assistance to industry professionals and property databases can assist the improve the industry’s overall functions, industry as a substitute for human range of products and speed of services. research and analysis.
Revenue Volatility Demand for real estate asset management Increases in real estate development and consulting services is affected by real activity, investment and transactions estate cycles, transaction volumes and create demand for consultant services, Level property values, which results in a asset management, escrow services and The level of volatility moderate level of revenue volatility. Large other industry services. Consequently, is Medium increases in real estate transactions and over the past five years, stronger appreciation of property values boosted residential construction has boosted industry activity during the current period, industry revenue and more consistent leading to swings in industry revenue. growth has helped industry revenue Increases in property values push up volatility decline. Over the five years to real estate demand and commissions 2019, industry revenue varied 3.8% on charged by industry participants. average each year.
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Operating Conditions
Regulation and Policy The industry is subject to regulations Faith Estimate (GFE) of the anticipated related to information disclosure, closing costs of the proposed home loan. educational standards and other HUD believes the GFE will save borrowers Level & Trend requirements. Federal, state and local up to $700 of the cost of a loan. The new The level of regulations are designed to protect form requires disclosure of the loan terms, Regulation is individuals and companies from the misuse interest rate details, prepayment penalties, Light and the of personal and sensitive information balloon payments and total costs. trend is Steady provided during property transactions. Larger companies are subject to In November 2008, the US Department regulation regarding unfair competition in of Housing and Urban Development relation to mergers and acquisitions, (HUD) announced new regulations particularly at a regional level. Recent intended to make the mortgage shopping changes in accounting standards and rules experience more transparent. The affect publicly listed enterprises. Public centerpiece of the new regulation is the companies are required to provide requirement that mortgage lenders and reliable, transparent and audited financial brokers provide borrowers with a Good and nonfinancial data to the markets.
Industry Assistance The Real Estate Asset Management and home. It includes targeted income and Consulting industry does not receive any business tax cuts to help create new jobs. direct government assistance. However, New and refinanced mortgages would be Level & Trend tax incentives have long been promoting available for 4.0% to 4.5% as long as the The level of homeownership. Most recently, as a homeowner saves more than $400 per Industry Assistance result of the subprime mortgage crisis month as a result of the new or refinanced is None and the and ensuing recession, the government mortgage. Banks are expected to issue trend is Steady has launched various stimulus programs these lower fixed-rate mortgages for new that attempt to revive the residential and home purchases for primary residences commercial real estate sectors. and for refinanced mortgages for In February 2008, the House of responsible homeowners. In November Representatives passed provisions to help 2009, Congress passed the Worker, consumers take advantage of increased Homeownership and Business Assistance mortgage market credit to try and Act to extend unemployment benefits and stabilize the housing market and help the first-time homebuyer’s credit. Under homeowners refinance bad loans. The the act, the credit expiration date was legislation, passed as part of an economic pushed back from November 2009 to stimulus package, enables the Federal June 2010. The extension also authorized Housing Administration (FHA) and the a tax credit of up to $6,500 for qualified government-sponsored enterprises repeat home buyers. (GSEs) Fannie Mae and Freddie Mac to The government launched stimulus temporarily increase their loan limits to packages to try and revive the serve a greater number of areas of the commercial sector after the negative country. The stimulus package enables a effects of the credit crisis. The stimulus temporary increase for the GSEs was an attempt to tackle the credit conforming loan limits to match the new squeeze by encouraging banks to lend levels established for the FHA. again. The bailout included significantly The federal government’s 2009 increased lending to investment banks stimulus package provides an additional and an intervention to keep more major $15,000 tax credit for purchasing a new financial institutions from collapsing.
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Operating Conditions
Industry Assistance In May 2009, revisions were made to the for industry professionals. BOMA offers continued Federal Reserve’s Term Asset-Backed industry research; addresses the needs Securities Loan Facility (TALF), which was and interests of office building owners, launched in November 2008. The program investors, developers and managers to offers five-year loans to buy new AAA-rated national, state, provincial and local new commercial mortgage-backed legislators; and provides education. securities. This lifeline was an attempt to The National Association of Real boost the downtrodden commercial Estate Investment Managers was property sector by making older loans established to advance the profession eligible for the emergency program and and performance of real estate reviving the troubled credit markets. investment managers. This organization provides programs and Industry associations tools to enhance members’ skills and The Building Owners and Managers understanding of the industry and Association (BOMA) is a network forum provides networking opportunities.
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Industry Data Industry Corporate Revenue Value Added Establish- Wages Domestic profit ($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand ($b) 2010 49,214.4 37,308.6 459,271 458,623 506,364 -- -- 19,345.3 N/A 1,728.8 2011 48,840.2 37,796.5 454,711 454,106 498,660 -- -- 18,358.1 N/A 1,809.8 2012 51,272.7 39,063.8 458,018 457,449 501,212 -- -- 19,631.5 N/A 1,997.4 2013 53,401.1 35,012.9 468,309 467,763 506,429 -- -- 15,948.7 N/A 2,010.7 2014 55,738.8 37,653.2 482,703 482,074 525,830 -- -- 17,921.6 N/A 2,118.8 2015 59,089.7 41,969.3 503,336 502,589 553,991 -- -- 20,578.8 N/A 2,057.3 2016 60,252.2 44,136.8 508,926 508,244 556,909 -- -- 21,481.9 N/A 2,035.0 2017 65,530.1 47,635.7 529,930 527,651 591,666 -- -- 22,930.8 N/A 2,099.3 2018 67,118.2 49,164.4 541,682 539,258 605,594 -- -- 23,473.9 N/A 2,265.2 2019 68,691.9 50,145.5 555,019 552,551 620,535 -- -- 24,047.1 N/A 2,363.4 2020 69,027.0 50,311.4 565,384 563,353 628,537 -- -- 24,318.7 N/A 2,359.5 2021 70,258.5 51,218.2 578,691 576,805 642,187 -- -- 24,827.9 N/A 2,354.9 2022 70,681.8 51,620.4 589,219 587,750 650,589 -- -- 25,117.7 N/A 2,374.8 2023 71,299.3 52,026.4 599,338 598,164 659,274 -- -- 25,429.9 N/A 2,419.4 2024 72,151.2 52,647.2 610,712 609,790 669,736 -- -- 25,813.5 N/A 2,513.2 Sector Rank 5/18 5/18 3/18 2/18 4/18 N/A N/A 3/18 N/A N/A Economy Rank 149/694 62/694 13/694 12/694 60/694 N/A N/A 73/694 N/A N/A
Annual Change Industry Establish- Domestic Corporate Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand profit (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 2011 -0.8 1.3 -1.0 -1.0 -1.5 N/A N/A -5.1 N/A 4.7 2012 5.0 3.4 0.7 0.7 0.5 N/A N/A 6.9 N/A 10.4 2013 4.2 -10.4 2.2 2.3 1.0 N/A N/A -18.8 N/A 0.7 2014 4.4 7.5 3.1 3.1 3.8 N/A N/A 12.4 N/A 5.4 2015 6.0 11.5 4.3 4.3 5.4 N/A N/A 14.8 N/A -2.9 2016 2.0 5.2 1.1 1.1 0.5 N/A N/A 4.4 N/A -1.1 2017 8.8 7.9 4.1 3.8 6.2 N/A N/A 6.7 N/A 3.2 2018 2.4 3.2 2.2 2.2 2.4 N/A N/A 2.4 N/A 7.9 2019 2.3 2.0 2.5 2.5 2.5 N/A N/A 2.4 N/A 4.3 2020 0.5 0.3 1.9 2.0 1.3 N/A N/A 1.1 N/A -0.2 2021 1.8 1.8 2.4 2.4 2.2 N/A N/A 2.1 N/A -0.2 2022 0.6 0.8 1.8 1.9 1.3 N/A N/A 1.2 N/A 0.8 2023 0.9 0.8 1.7 1.8 1.3 N/A N/A 1.2 N/A 1.9 2024 1.2 1.2 1.9 1.9 1.6 N/A N/A 1.5 N/A 3.9 Sector Rank 5/18 7/18 5/18 5/18 3/18 N/A N/A 4/18 N/A N/A Economy Rank 227/694 320/694 147/694 146/694 172/694 N/A N/A 201/694 N/A N/A
Key Ratios Imports/ Exports/ Revenue per Share of the IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy (%) (%) (%) ($’000) (%) per Est. ($) (%) 2010 75.81 N/A N/A 97.19 39.31 1.10 38,204.34 0.24 2011 77.39 N/A N/A 97.94 37.59 1.10 36,814.86 0.24 2012 76.19 N/A N/A 102.30 38.29 1.09 39,168.06 0.24 2013 65.57 N/A N/A 105.45 29.87 1.08 31,492.47 0.21 2014 67.55 N/A N/A 106.00 32.15 1.09 34,082.50 0.22 2015 71.03 N/A N/A 106.66 34.83 1.10 37,146.45 0.24 2016 73.25 N/A N/A 108.19 35.65 1.09 38,573.45 0.25 2017 72.69 N/A N/A 110.76 34.99 1.12 38,756.33 0.26 2018 73.25 N/A N/A 110.83 34.97 1.12 38,761.78 0.26 2019 73.00 N/A N/A 110.70 35.01 1.12 38,752.21 0.26 2020 72.89 N/A N/A 109.82 35.23 1.11 38,690.96 0.26 2021 72.90 N/A N/A 109.41 35.34 1.11 38,661.48 0.26 2022 73.03 N/A N/A 108.64 35.54 1.10 38,607.63 0.26 2023 72.97 N/A N/A 108.15 35.67 1.10 38,572.58 0.25 2024 72.97 N/A N/A 107.73 35.78 1.10 38,542.80 0.25 Sector Rank 3/18 N/A N/A 16/18 4/18 18/18 10/18 5/18 Economy Rank 12/694 N/A N/A 577/694 108/694 680/694 480/694 62/694
Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data. SOURCE: WWW.IBISWORLD.COM Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Real Estate Asset Management & Consulting in the US June 2019 30
Industry Financial Ratios Apr 2017 - Mar 2018 by company revenue Apr 2014 - Apr 2015 - Apr 2016 - Apr 2017 - Small Medium Large Mar 2015 Mar 2016 Mar 2017 Mar 2018 (<$10m) ($10-50m) (>$50m)
Liquidity Ratios Current Ratio 0.9 0.8 0.9 0.8 0.8 1.7 n/a Quick Ratio 0.7 0.6 0.6 0.6 0.6 1.3 n/a Sales / Receivables (Trade Receivables Turnover) n/c n/c n/c n/c n/c 29.7 n/a Days’ Receivables 0.4 n/a 0.4 0.4 0.4 12.3 n/a Cost of Sales / Inventory (Inventory Turnover) n/a n/a n/a n/a n/a n/a n/a Days’ Inventory n/a n/a n/a n/a n/a n/a n/a Cost of Sales / Payables (Payables Turnover) n/a n/a n/a n/a n/a n/a n/a Days’ Payables n/a n/a n/a n/a n/a n/a n/a Sales / Working Capital -49.6 -26.5 -64.1 -49.0 -28.0 20.7 n/a
Coverage Ratios Earnings Before Interest & Taxes (EBIT) / Interest 4.7 4.4 4.6 4.6 4.5 9.7 n/a Net Profit + Dep., Depletion, Amort. / Current Maturities LT Debt 1.8 1.9 2.3 2.1 2.2 n/a n/a
Leverage Ratios Fixed Assets / Net Worth 2.8 2.9 2.8 2.9 3.1 0.3 n/a Debt / Net Worth 2.8 2.9 3.0 3.1 3.2 1.3 n/a Tangible Net Worth 25.1 20.7 23.0 22.6 22.2 32.6 n/a
Operating Ratios Profit before Taxes / Net Worth, % 13.9 12.8 14.7 15.1 14.8 29.6 n/a Profit before Taxes / Total Assets, % 3.6 3.7 3.9 4.0 3.9 11.8 n/a Sales / Net Fixed Assets 0.2 0.2 0.2 0.2 0.2 33.8 n/a Sales / Total Assets (Asset Turnover) 0.2 0.1 0.2 0.2 0.2 1.3 n/a
Cash Flow & Debt Service Ratios (% of sales) Cash from Trading n/a n/a n/a n/a n/a n/a n/a Cash after Operations 59.5 60.4 61.9 59.9 61.5 8.8 n/a Net Cash after Operations 60.3 59.8 62.2 60.3 61.9 12.4 n/a Cash after Debt Amortization 5.5 5.8 5.3 4.6 4.8 1.0 n/a Debt Service P&I Coverage 1.5 1.6 1.7 1.6 1.6 3.5 n/a Interest Coverage (Operating Cash) 2.7 2.9 3.0 2.9 2.9 6.5 n/a
Assets, % Cash & Equivalents 10.9 11.2 11.7 10.3 9.8 21.3 n/a Trade Receivables (net) 2.9 3.1 3.2 3.1 2.5 14.9 n/a Inventory 1.2 1.7 1.9 0.8 0.7 2.5 n/a All Other Current Assets 3.5 3.5 3.8 3.2 3.0 6.1 n/a Total Current Assets 18.5 19.5 20.6 17.5 16.0 44.8 n/a Fixed Assets (net) 65.7 66.8 63.4 67.1 69.8 22.1 n/a Intangibles (net) 3.3 3.0 3.9 4.3 3.9 9.0 n/a All Other Non-Current Assets 12.5 10.7 12.1 11.1 10.3 24.1 n/a Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 n/a Total Assets ($m) 8,351.0 8,664.4 8,733.3 8,280.7 5,391.5 2,415.7 473.5
Liabilities, % Notes Payable-Short Term 6.6 9.1 7.3 6.1 6.0 7.1 n/a Current Maturities L/T/D 2.8 2.8 2.6 3.0 3.0 1.9 n/a Trade Payables 2.0 1.6 1.5 1.5 1.2 5.9 n/a Income Taxes Payable 0.2 n/a 0.1 n/a n/a 0.3 n/a All Other Current Liabilities 7.8 10.0 10.0 8.5 7.7 21.5 n/a Total Current Liabilities 19.3 23.5 21.4 19.1 18.0 36.8 n/a Long Term Debt 47.3 48.2 47.2 49.7 51.6 18.3 n/a Deferred Taxes n/a n/a n/a n/a n/a 0.1 n/a All Other Non-Current Liabilities 5.0 4.6 4.5 4.3 4.3 3.1 n/a Net Worth 28.4 23.7 26.9 26.9 26.1 41.6 n/a Total Liabilities & Net Worth ($m) 8,351.0 8,664.4 8,733.3 8,280.7 5,391.5 2,415.7 473.5
Maximum Number of Statements Used 1,093 1,179 996 987 929 52 6
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects. Note: For a full description of the ratios refer to the Key Statistics chapter online.
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Jargon & Glossary
Industry Jargon ESCROW An account established to hold funds on SPECULATIVE DEVELOPMENT Land development or behalf of a property buyer until conditions of settlement construction with no formal commitment from the end have been satisfied. The funds are then transferred to users of the finished product. The builder anticipates the seller that a demand exists or will form when it is put on the FIDUCIARY SERVICES The management of property market. investment, trust and estate portfolios on behalf of a VACANCY RATE The amount of real estate space company, individual or family. unoccupied as a percentage of total available space. RENTAL YIELD Rental income from an investment property relative to the price it was purchased for. The yield is calculated by dividing gross annual rental income by the purchase price or current valuation.
IBISWorld Glossary BARRIERS TO ENTRY High barriers to entry mean that IMPORTS Total value of industry goods and services new companies struggle to enter an industry, while low brought in from foreign countries to be sold in the barriers mean it is easy for new companies to enter an United States. industry. INDUSTRY CONCENTRATION An indicator of the CAPITAL INTENSITY Compares the amount of money dominance of the top four players in an industry. spent on capital (plant, machinery and equipment) with Concentration is considered high if the top players that spent on labor. IBISWorld uses the ratio of account for more than 70% of industry revenue. depreciation to wages as a proxy for capital intensity. Medium is 40% to 70% of industry revenue. Low is less High capital intensity is more than $0.333 of capital to than 40%. $1 of labor; medium is $0.125 to $0.333 of capital to $1 INDUSTRY REVENUE The total sales of industry goods of labor; low is less than $0.125 of capital for every $1 of and services (exclusive of excise and sales tax); subsidies labor. on production; all other operating income from outside CONSTANT PRICES The dollar figures in the Key the firm (such as commission income, repair and service Statistics table, including forecasts, are adjusted for income, and rent, leasing and hiring income); and inflation using the current year (i.e. year published) as capital work done by rental or lease. Receipts from the base year. This removes the impact of changes in interest royalties, dividends and the sale of fixed the purchasing power of the dollar, leaving only the tangible assets are excluded. “real” growth or decline in industry metrics. The inflation INDUSTRY VALUE ADDED (IVA) The market value of adjustments in IBISWorld’s reports are made using the goods and services produced by the industry minus the US Bureau of Economic Analysis’ implicit GDP price cost of goods and services used in production. IVA is deflator. also described as the industry’s contribution to GDP, or DOMESTIC DEMAND Spending on industry goods and profit plus wages and depreciation. services within the United States, regardless of their INTERNATIONAL TRADE The level of international country of origin. It is derived by adding imports to trade is determined by ratios of exports to revenue and industry revenue, and then subtracting exports. imports to domestic demand. For exports/revenue: low is EMPLOYMENT The number of permanent, part-time, less than 5%, medium is 5% to 20%, and high is more temporary and seasonal employees, working proprietors, than 20%. Imports/domestic demand: low is less than partners, managers and executives within the industry. 5%, medium is 5% to 35%, and high is more than ENTERPRISE A division that is separately managed and 35%. keeps management accounts. Each enterprise consists LIFE CYCLE All industries go through periods of growth, of one or more establishments that are under common maturity and decline. IBISWorld determines an ownership or control. industry’s life cycle by considering its growth rate ESTABLISHMENT The smallest type of accounting unit (measured by IVA) compared with GDP; the growth rate within an enterprise, an establishment is a single of the number of establishments; the amount of change physical location where business is conducted or where the industry’s products are undergoing; the rate of services or industrial operations are performed. Multiple technological change; and the level of customer establishments under common control make up an acceptance of industry products and services. enterprise. EXPORTS Total value of industry goods and services sold by US companies to customers abroad.
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Jargon & Glossary
IBISWorld Glossary NONEMPLOYING ESTABLISHMENT Businesses with WAGES The gross total wages and salaries of all no paid employment or payroll, also known as employees in the industry. The cost of benefits is also continued nonemployers. These are mostly set up by self-employed included in this figure. individuals. PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax. VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
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