Low Labor-Force Participation Could Spell Trouble

Roschelle: “We have formed more households than supply, both multifamily and single-family, which makes the business case for apartments.”

SAN DIEGO—Fewer people in the workforce could mean the US won’t have the skills necessary to compete in the global marketplace, which could lead to economic crisis, PricewaterhouseCoopers partner and real estate advisory leader Mitch Roschelle told attendees at Friday’s “Breakfast at the BMC” event “Emerging Trends in Real Estate.” Roschelle summarized the results of his firm’s annual report on the subject, now in its 38^th year, discussing where to invest, which sectors and markets offer the best prospects and which trends in the capital markets will affect real estate in the coming year.

Roschelle said the report’s survey respondents—a wide range of executives in all facets of the real estate industry—characterized the real estate industry in 2017 using some of the following words: cautious, competitive, balanced, growing, overheated, uncertain, neutral and troublesome. He compared the respondents’ predicted prospects for profitability in 2006 (86.9%) to those in 2016 (82.9%) and 2017 (81.3%), which could reflect the atmosphere of uncertainty many are feeling with the advent of the Trump administration. Despite this uncertainty, Roschelle said investors are betting on real estate to succeed, calling it “actually the world’s oldest profession.” He pointed out that people like hard assets that are income producing, and real estate is both. “There’s why the exuberance continues here” and from foreign investors.