Places that encourage larger gatherings, like shopping malls, movie theaters, office space, sports facilities and amusement parks, are likely to experience a decline. Many of these places have taken a hit from the COVID-19 pandemic, combined with shifts in how people work and consume entertainment, and it is unlikely investment will return at the same levels. Forecasting the exact behavior of spending across various segments or markets is tricky, but we can understand the possible impacts some of these larger trends will have in shaping the new economy in the coming years. Some bigger trends to focus on: Urbanization: Eighty percent of the U.S. population lives in an urban area, which is shifting how people shop, eat and get around. For example, those consumers do most of their shopping online, driving demand for logistics, cold storage and last-mile delivery facilities. They’re further away from food sources; and now 70% of U.S. daily caloric intake is processed foods, up from less than 50% in 2000. With nearly half of groceries purchased online, the need for distribution facilities and drivers continues to grow. And as car owner- ship becomes a larger household expense, many are shifting to mass transportation options, driving demand for new ways to efficiently get around. Declining health: With 60% of U.S. adults on a daily pre - scription, the demand for life sciences and health care facil- ities continues to increase. Yet, our forecast of 2% growth in the next five years is tempered by the lack of staff for hospitals and other clinics despite the increase in demand. Growing data: The number of connected devices tripled in the past five years, adding to the growing need to store, process and analyze data, indicated by the more than 932 billion computer chips manufactured in 2020. Combine the increase in technology adoption with the shifting nature of work, with 50% of people working at home compared with only 5% pre-pandemic, and a 50% increase in data center spending in the next five years becomes clear.
While macro prognostications provide vital context, you need to zoom in to understand the dynamics of market sectors, which are often moving in different directions. So which areas will fare better through a recession and which will contract? Those sectors that have different demand drivers, that are larger than current economic activity, have increased devel- oper interest and a time frame that’s longer than 12 months, or what we’re calling the new economy, will likely experience growth. Examples of this include data centers, life sciences, semiconductor fabrication and distributed power.
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