First 400 Days of Trump Administration: Interactive...
Transcript of First 400 Days of Trump Administration: Interactive...
First 400 Days of Trump Administration:
Interactive Analysis of Impact on Your
Firm and
Real Estate
Presented by
Benjamin Breslau
Elizabeth Cooper, J.D.
LI22
5/4/2018
2:15 PM
The handout(s) and presentation(s) attached are copyright and trademark protected and provided for individual use only.
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First 468 Days of TrumpLegal and real estate impactElizabeth Cooper
International Director and Co-Chair, Law Firm Group, JLL
May 4, 2018
Benjamin Breslau
International Director, Americas Research, JLL
Political backdrop
Economic & property outlook
Big trends to watch
Implications & Q&A
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Poll question…
How has your firm’s performance changed since Trump was elected?
a. Worse b. Same c. Better
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A look back: Trump presidency after 468 days
2016 Our prediction at the time…
Likely to occur Some taxes cuts / tax reform
Somewhat likely to occurInfrastructure spending
Deregulation
Defense spending
Who knows?Healthcare reform
Immigration reform
Trade and foreign policy
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The reality: Trump presidency vs. expectations
2018 What actually got done…
Likely to occur Some taxes cuts / tax reform
Somewhat likely to occurInfrastructure spending
Deregulation
Defense spending
Who knows?Healthcare reform
Immigration reform
Trade and foreign policy
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Trump presidency…by the numbers
Here’s what’s happened since inauguration day:
167Bills passes
2.8Million jobs added
2.6% Average GDP growth
18% change in S&P 500
39%Approval rating
8.6MSFLaw firm leasing since January 2017
(-5.6% vs. 2016 rate)
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Policy implications for law firms
Sustained economic
growth
Taxreform
DeregulationSector-specific activity
Policy uncertainty
Continued activity across sectors
driving demand
Less direct benefit due to partnership
status, but increased demand from clients
adapting to new legislation
Robust demand for legal services as
corporates adjust to changing regulatory
environment
Changing policy surrounding finance, anti-trust, trade and
energy industries and regulation
Will weigh on firms’ abilities to create
long-term strategic plans
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Economic and property cycle
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The cycle that keeps on giving?
Second-longest expansion on record
24
36
37
39
45
58
67
73
92
106
106
120
April 1958 - April 1960
November 1970 - November 1973
October 1945 - November 1948
May 1954 - August 1957
October 1949 - July 1953
March 1975 - January 1980
Average
November 2001 - December 2007
December 1982 - July 1990
February 1961 - December 1969
June 2009 - Current
March 1991 - March 2001
Months
10Source: JLL Research
Revenue growth accelerated to fastest post-recession level
5.5% increase driven by the top tier of firms
$31.1$35.1
$38.1$41.7
$46.0
$50.9
$56.8
$64.5$67.3
$64.4$67.4
$71.4$73.4
$77.4$80.9
$83.1$86.7
$91.4
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Am
Law
100
gro
ss r
even
ue
($ b
illio
ns)
Source: JLL Research, American Lawyer 11
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$1,375,747
$1,402,392
$1,463,875 $1,466,809
$1,548,901
$1,613,439
$1,661,772
$1,767,054
2010 2011 2012 2013 2014 2015 2016 2017
Profitability up due to improved efficiency and productivity
Source: JLL Research, American Lawyer 11
Profit per partner Revenue per lawyer
$804,651
$820,235
$842,130 $838,775
$871,002
$894,253
$907,765
$936,655
2010 2011 2012 2013 2014 2015 2016 2017
M&A activity is likely to increase even more
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (F)
Nu
mb
er o
f m
erge
rs
13Source: JLL Research, Altman Weil
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Poll question…
When do you think this economic cycle will peak?
a. 2018 b. 2019 c. 2020 d. 2021+
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Growth looks solid this year and into next
Economic growth continues to rebound
2.5
1.6
2.2
1.7
2.62.9
1.5
2.32.7
2.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Seasonally adjusted (%) Forecast
14Source: JLL Research, Bureau of Economic Analysis
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Cumulative 5-year probability distribution for recession
Highest risk is in 2020 and 2021
6%
17%
32%
26%
19%
0%
5%
10%
15%
20%
25%
30%
35%
2018 2019 2020 2021 2022
Pro
bab
ility
Typical causes of recessions
1. Asset bubbles
2. Monetary tightening
3. Geopolitical crisis
15Source: JLL Research
Office clock: market is approaching its cyclical peak
Source: JLL Research 16
Peakingphase
Fallingphase
Risingphase
Bottomingphase
Atlanta, Austin, Orange County, Portland
Chicago, New York
Baltimore, Cleveland, Fairfield County, Hampton Roads, Suburban Maryland
SF Peninsula, Silicon Valley
Detroit, Fort Worth, Long Island, Oakland-East Bay, Sacramento Houston
Columbus, Fort Lauderdale, Indianapolis, Louisville, North Bay
Miami, Milwaukee, Orlando, Philadelphia
Jacksonville, Phoenix, Richmond, San Antonio
Boston, Salt Lake City, Tampa, United States
Los Angeles, Pittsburgh
New Jersey
Dallas, Nashville, San Francisco
Raleigh-Durham, San Diego
Charlotte, Minneapolis, Seattle-Bellevue, St. Louis
Washington, DC
Cincinnati, Northern Virginia
Grand Rapids
Denver
Hartford, West Palm Beach, Westchester County
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0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2018 2019 2020 2021 2022
CB
D C
lass
A c
om
ple
tio
ns
(s.f
.)
Preleased Available
Core space under construction remains available, improving firms’ prospects
Source: JLL Research 17
Availability rate (%)
32.4%2018
30.4%2019
53.3%2020
54.8%2021
91.1%2022
$38$42
$49
$44
$63
$74
$49
$56
$66 $67
$92
$110
$0
$20
$40
$60
$80
$100
$120
Los Angeles San Francisco Boston Chicago New York Washington, DC
CB
D C
lass
A T
I allo
wan
ce (
$ p
.s.f
.)
Q1 2016 Q1 2018
Concession packages are rising across law firm-heavy markets
Source: JLL Research 18
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Poll question…
Which of the following do you expect to benefit your firm?a. New supply increasing options
b. Rising concessions
c. Improved efficiency
d. Workplace experience
e. Harnessing technology
f. Other
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Big secular trends to watch
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Human experience and operational changes to shift law firm behavior
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Future of Work
Urbanization
Technology
Capital Cross border flows
Comsumer-ization of
Real Estate
Increasing real estate allocations
Global savings and the
search for yield
Active vs passive
strategies
Millennial generation
impact
Regeneration of fringe locations
Innovation clusters
Regulatory and planning
New tenant expectations (amenities & walkability)
Procurement &
Outsourcing
Everything as a
ServiceHuman
Experience
Productivity & Performance
Ecommerce Blockchain
Sharing economy
AI and Automation SMART
buildings
Autonomous vehicles
Infrastructure Challenges
Human experience and operational changes to shift law firm behavior
Human ExperienceEnhance user experience through engagement,
empowerment and fulfillment.
Digital DriveHarness digitization and rich data to enhance people and enterprise performance.
Continuous InnovationCombine new thinking, solutions and processes to drive value creation and accelerate transformation.
Operational ExcellenceOptimize enterprise resources and service delivery to increase productivity, mitigate risks and ensure high performance.
Financial PerformanceManage spending to enable growth and enhance return on
investment (ROI).
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Poll question…
What trend will have the biggest impact on your business and real estate?a. Economic cycle
b. Political and policy environment
c. Tech and innovation
d. Changing demographics
e. Other
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Implications & Q&A
Your opinion matters!
Please take a moment now to complete the evaluation.
Thank You!