This segment first appeared in the 12/30/22 episode of the Atlanta Real Estate Report…

How do these Wall Street companies impact Main Street?

* Access to capital

* M&A activity

* Economic impact

* Wealth effect

Access to Capital

* By tapping equity & debt markets

* Use for expansion, R&D (innovation)

Going public in a bear market…

Timing is everything…

Mergers & Acquisitions

* Public + private combos create a liquidity event at the local level (e.g., Green Brick + Providence Group, 2011)

* Public + public combos seek to create diversification, scale and/or synergy (e.g., Home Depot + HD Supply, 2020) — MRO (Maintenance, Repair, and Operations)

* Especially significant in CRE market (size)

* Primarily REITs and public companies like Blackstone and Blackrock

* Private equity, pension funds and foreign investors

Economic Impact

* Huge multiplier effect

* Residential Housing: 15-18% of GDP ($3.9 - 4.7 trillion) + 33% of consumer spending (Source: NAHP + Hoya Capital)

* Commercial Real Estate: $1.2 trillion in GDP + $418.7 billion in salaries and wages (Source: NAIOP)

* Commercial Real Estate: 8.5 million jobs

* Construction employment = 7.6 million jobs (3.1M residential)

* Construction jobs: ~300,000 to 400,000 per month

NOTE: Economic impact and employment data are for the entire real estate industry, which includes both public and private companies

Wealth Effect

* Equities = ownership = wealth creation

* Bear markets lead to wealth destruction which, in turn, can lead to demand destruction (including real estate and related sub-sectors)

* Stock prices affect consumer confidence which, in turn, impacts consumer spending

* Most 401(k) plans invest in stocks

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