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Why Des Moines?

James Chung

October 2018

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SUBTITLE COMES HERE

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Des Moines GDP grows faster than average Central US comps

Des Moines real GDP

+36.6% since 2010

Others

+1% to +20%

Source: Bureau of Economic Analysis,

U.S. Department of Commerce/Reach Advisors analysis

Des Moines

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DSM productivity higher overall and faster-growing

Source: Bureau of Economic Analysis,

U.S. Department of Commerce/Reach Advisors analysis

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Better off in DSM �vs. Central US comp cities…

Average

annual HHI

Average

home value

Average

net worth

Source: StratoDem Analytics/Reach Advisors analysis

$11,000

higher

$52,000

more

$80,000

higher

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People want to stay in DSM…unlike other places

Source: Reach Advisors survey of 5,000 adults in IA, KS, NE, and OK

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People in DSM more optimistic about their city’s future, compared to other cities

Source: Reach Advisors survey of 5,000 adults in IA, KS, NE, and OK

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Why Des Moines?

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Difference #1

Abundant labor market

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Updated story of population growth: �DSM still a winner

Net domestic migration

(newcomers – departures) �2010-2017

Des Moines rank:

#37 of 381 MSAs

#4 of 100 Central US comps

Source: Reach Advisors analysis of US Census Bureau, Population Estimates 2014

Omaha: 2,869

Des Moines: 32,042

St. Louis: - 67,560

Little Rock: 7,215

Wichita: -18,452

Chicago: - 479,482

Kansas City: 16,802

Minneapolis: 432

Milwaukee: -50,575

OKC: 71,409

Austin: 121,257

Source: U.S. Census Bureau American Community Survey/Reach Advisors analysis

Nashville: 126,142

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Positive domestic migration has real dollar impact

Net gain:

2,020 households

Added aggregate AGI:

$110,886,000

Des Moines 2015 to 2016

Net loss:

-778 households

Lost aggregate AGI:

-$67,764,000

Comp city 2015 to 2016

Source: Internal Revenue Service/Reach Advisors analysis

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Open jobs… �hot economy

US and Des Moines labor force growing

Not in every city

Source: U.S. Bureau of Labor Statistics

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19,000 fewer adults compared to that city…

Source: U.S. Census Bureau American Community Survey/Reach Advisors analysis

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…but 17,000 person larger labor force in DSM

Source: U.S. Census Bureau American Community Survey/Reach Advisors analysis

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Impact of deep labor force?

Easier for businesses to grow

Easier to attract new businesses

Easier for ventures to grow

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Difference #2

More college-educated workers

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DSM: 26,000 more college-educated workers

Source: U.S. Census Bureau American Community Survey/Reach Advisors analysis

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�Each 1% increase in college educational attainment adds �$1,349 to a city’s median household income�

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A better-educated city generates stronger pay for everyone

Each 1% increase in college educational attainment boosts median wages for…

College graduates by .4%
Those with some college by 1.6%
High school graduates by 1.6%
High school dropouts by 1.9%

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Difference #3

Mid-career talent strength

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Des Moines:�Younger adult population grew 4x faster than US

Source: U.S. Census Bureau American Community Survey/Reach Advisors analysis

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Disproportionate attraction of� college-educated �mid-career adults

Source: U.S. Census Bureau

American Community Survey/Reach Advisors analysis

Source: U.S. Census Bureau American Community Survey/Reach Advisors analysis

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Difference #4

Outsized community investment

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Civic investment

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DSM downtown

civic development:

5x more than some comp cities

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DSM downtown

hotels in development:

10x comp cities

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DSM downtown

residential in development:

5x comp cities

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DSM downtown

commercial in development:

5x comp cities

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DSM mega-projects: 5x comp cities

Apple $1.4BB

Microsoft $3.5BB

Principal $400MM

Facebook $3BB

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Philanthropic investment

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Community foundation assets

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Community foundation assets

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Three challenges

Significant shifts entering

the next decade

αβ

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Challenge #1�

Young adult population growth slows

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Growth in younger adult population starts to slow mid-decade

Growth rate drops by half

Source: U.S. Census Bureau American Community Survey/Reach Advisors analysis

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Increasing battle with top markets ��for smaller pool of top mid-career talent…��

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Challenge #2

Des Moines is a high beta economy

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Digging deeper by applying

financial portfolio-theory tools

Alphas and betas

αβ

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High-beta economy (12.4% more cyclical)

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High beta = strong recovery…

High-beta

rebound

Steeper decline

Des Moines outpacing

more than ever…

Source: Bureau of Economic Analysis, U.S. Department of Commerce/Reach Advisors analysis

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High beta = strong recovery… but also steeper declines

High-beta

rebound

Steeper decline

Des Moines outpacing

more than ever…

Source: Bureau of Economic Analysis, U.S. Department of Commerce/Reach Advisors analysis

Will regress

toward the mean

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No alpha in the economy (0.0%)

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Challenge #3

Disruptive innovation…

or putting more alpha into the economy

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Will Des Moines rely on what’s worked in the past…��or re-invent as the economy evolves?

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In a city where 33% of the GDP driven by��Financial / Insurance / Real Estate (FIRE industries)…

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What happens when AI replaces…

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Accountants, actuaries, agents, claims adjusters, customer service representatives, examiners and investigators, financial managers, loss control specialists, marketing managers, salespeople, underwriters…

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The digital and algorithmic reality… ��

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Another industry example of digital transformation…��

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Choosing your own future…��

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James Chung��Reach Advisors�StratoDem Analytics�0213eight��james@reachadvisors.com�518.439.6942

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What will Des Moines do to stay ahead of the curve?�

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Extra slides and alternate template slides follow

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High beta comp city:��Beta swings and increasingly negative alpha choke a recovery

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Source: Bureau of Economic Analysis, U.S. Department of Commerce/Reach Advisors analysis

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Des Moines:��Higher beta swings drive greater recovery and continuing cycles up

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Source: Bureau of Economic Analysis, U.S. Department of Commerce/Reach Advisors analysis

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Open jobs… �hot economy

Des Moines

labor force growing

Not in other cities

Source: Bureau of Labor Statistics

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Open jobs… �hot economy

US and Des Moines labor force growing

Not in other cities

Source: Bureau of Labor Statistics

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Des Moines:�Has more young college educated adults vs. US

2.3x

growth rate

1.4x

Higher index

Des Moines:

Attracts more young talent vs. US

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Some growth due to retention and attraction of college grads…

Source: Wall Street Journal and EMSI

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Venture capital investment: Past two years

City C

5 tracked deals

$5.4MM

City D

15 tracked deals

$20.8MM

DSM

23 tracked deals

$130MM

Source: National Venture Capital Association

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Younger adult population growth likely to slow

Annual growth slows to .7% nationally, to 1.3% in Des Moines

Will need something to demonstrate how this audience is shrinking…and will create even more of a battle over them.

+++ I think that I might use silhouettes to illustrate grow slowing, like we did with aging population boom slide a while ago.++++

Population growth of adults age 30 to 44 starts to slow down over the next few years across the US

Leading to a more fierce competition for talent

And young talent determines success in growing established businesses and attracting new business

Growth in young adult (age 25-44) population with a bachelor’s degree or higher slows nationally (to .7% annually)

And in Des Moines (to 1.3% annually from 1.8% annually)

Ages 25 to 44 with a bachelor's degree or higher

Past performance:Growth (9.3% past five years)

Current concentration:High (1.43x concentration)

Five-year outlook:Worse than comp.; slowing

At 77,672 people (16.4% of all market people) this group has a high concentration relative to the US (1.4x). Over the past five years, the segment added 6,604 (+1.8% ann.; the US: +0.8%). The StratoDem Analytics Engine forecasts this segment to grow by 5,270 over the next five years (+1.3% ann.; the US: +0.7%).

Ages 25 to 44 with an associate degree or higher

Past performance:Growth (9.1% past five years)

Current concentration:High (1.48x concentration)

Five-year outlook:Worse than comp.; slowing

At 100,112 people (21.1% of all market people) this group has a high concentration relative to the US (1.5x). Over the past five years, the segment added 8,392 (+1.8% ann.; the US: +0.8%). The StratoDem Analytics Engine forecasts this segment to grow by 6,712 over the next five years (+1.3% ann.; the US: +0.7%).

Ages 25 to 44 with a bachelor's degree or higher

Past performance:Growth (9.3% past five years)

Current concentration:High (1.43x concentration)

Five-year outlook:Worse than comp.; slowing

At 77,672 people (16.4% of all market people) this group has a high concentration relative to the US (1.4x). Over the past five years, the segment added 6,604 (+1.8% ann.; the US: +0.8%). The StratoDem Analytics Engine forecasts this segment to grow by 5,270 over the next five years (+1.3% ann.; the US: +0.7%).

Ages 25 to 44 with an associate degree or higher

Past performance:Growth (9.1% past five years)

Current concentration:High (1.48x concentration)

Five-year outlook:Worse than comp.; slowing

At 100,112 people (21.1% of all market people) this group has a high concentration relative to the US (1.5x). Over the past five years, the segment added 8,392 (+1.8% ann.; the US: +0.8%). The StratoDem Analytics Engine forecasts this segment to grow by 6,712 over the next five years (+1.3% ann.; the US: +0.7%).

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Section divider

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Content 01�

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Nunc viverra imperdiet enim. Fusce est. Vivamus a tellus.

Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac turpis egestas. Proin pharetra nonummy pede. Mauris et orci.

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Content 02�

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet commodo magna eros quis urna.

Nunc viverra imperdiet enim. Fusce est. Vivamus a tellus.

Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac turpis egestas. Proin pharetra nonummy pede. Mauris et orci.

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Comparison 01

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TOPIC 01

TOPIC 02

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Comparison 02

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Nunc viverra imperdiet enim. Fusce est. Vivamus a tellus.

Pellentesque habitant morbi tristique senectus et netus et males

Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac

TOPIC 01 COMES HERE

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Nunc viverra imperdiet enim. Fusce est. Vivamus a tellus.

Pellentesque habitant morbi tristique senectus et netus et males

Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac

TOPIC 02 COMES HERE

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Chart

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Table

9

TOPIC 01	TOPIC 02	TOPIC 03	TOPIC 04	TOPIC 05
Item 01	Text	Text	Text	Text
Item 02	Text	Text	Text	Text
Item 03	Text	Text	Text	Text
Item 04	Text	Text	Text	Text
Item 05	Text	Text	Text	Text
Item 06	Text	Text	Text	Text
Item 07	Text	Text	Text	Text
Item 08	Text	Text	Text	Text
TOTAL	Text	Text	Text	Text

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Venture investment

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Funding rounds and dollars: Past two years

City C

205 tracked deals

$681.0MM

DSM

141 tracked deals

$1,119.4MM

Source: Crunchbase Data

City A

30 tracked deals

$53.0MM

City B

117 tracked deals

$600.5MM