1. State Of The CRE Markets
Los Angeles County
Risk Management Association
April 29, 2010
Los Angeles Athletic Club
By:
Ted Simpson, MCR
Executive Director
Cushman & Wakefield of California, Inc.

2. TODAY’S AGENDA
I. Community Bank CRE vs.
Institutional CRE
II. Industrial
III. Retail
IV. Office
V. Forecast

3. Last Three Years
2007 – Forecasting end of party
2008 – Forecasting how ugly
2009 – “We’ve seen this movie before”
2010 – Recovery is the next story

4. INDUSTRY: A big bounce
Source: Beacon Economics

5. PROFITS
Source: Beacon Economics

6. JOBS, JOBS, JOBS
Source: Beacon Economics

7. STIMULUS LEFT IN THE SYSTEM
Stimulus Package to April
Spent $210 billion
In process $151 billion
Left to spend $219 billion
Tax cuts issued $119 billion
Tax cuts remaining $93 billion
Tax Breaks by Income
Avg. tax Drop in
Income savings tax bite
Under $19K $476 -95.0%
$19K-$38K $652 -22.0%
$38K-$66K $781 -9.0%
$66K-$112K $1,301 -7.5%
$112K-$161K $2,549 -8.3%
$161K-$227K $3,883 -8.3%
$227K-$603K $5,133 -5.7%
$2.8M plus $39,350 -1.4%
Source: Beacon Economics

8. CALIFORNIA: A widespread hit
Jan-10
Bakersfield 224,800 -5.5%
Salinas 121,300 -5.7%
San Diego 1,212,700 -7.3%
Santa Barbara 161,200 -7.4%
San Francisco 922,200 -7.7%
Stockton 191,500 -8.0%
Los Angeles 3,761,900 -8.2%
Ventura 270,100 -8.3%
San Jose 841,700 -8.5%
Modesto 143,900 -9.6%
Oakland 945,700 -9.6%
Santa Ana 1,351,500 -10.6%
Santa Rosa 168,000 -11.7%
Riverside 1,102,400 -12.2%
Source: Beacon Economics

9. Greater Los Angeles Industrial Market
Overall Rental Rate vs. Vacancy Rate
$0.70 7%
$0.66
$0.60 $0.63 6%
$0.60
$0.50 $0.54 $0.53 5%
$0.52 $0.51
$0.49 $0.50 $0.49 $0.49 $0.50
$0.40 4%
$0.30 3%
$0.20 2%
$0.10 1%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10
Average Asking NNN Rate Vacancy

10. Los Angeles County Industrial Sales
Average Price per Square Foot
$160
$140
$137.56
$130.57
$120
$110.42
$100
$91.04
$89.18
$80 $84.37
$66.65
$60
$65.66
$65.21
$40
$20
$0
2002 2003 2004 2005 2006 2007 2008 2009 1Q10
Source: Real Estate Capital Analytics, Inc. Based on transactions over $5 million

11. INDUSTRIAL CASE STUDY
ADDRESS: 4633 La Palma Ave
SQ. FT.: 281,548 / 11 acres
PRICE: $21M
PRICE PER SF: $75/SF
■ 27 Offers
■ A lot of money chasing very few industrial deals
■ CAP rates have compressed about 100 basis points in the
past 6 months

12. Greater Los Angeles Retail Market
Overall Rental Rate vs. Vacancy Rate
$3.00 7%
$2.80
$2.60
$2.40 $2.53
6%
$2.43
$2.20 $2.33 $2.33
$2.00 $2.19 5%
$2.04
$1.80 $1.86
$1.60 $1.71 $1.78
$1.40 4%
$1.47
$1.20 $1.31 $1.36
$1.00 3%
$0.80
$0.60 2%
$0.40
$0.20
$0.00 1%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10
Average Asking NNN Rate Vacancy

13. Los Angeles County Retail Sales
Average Price per Square Foot
$450
$400
$385.00
$350
$355.00
$300
$295.00
$286.00
$250
$245.00
$221.00
$219.00
$200
$179.00
$150
$100
$50
$0
2002 2003 2004 2005 2006 2007 2008 2009
Source: Real Estate Capital Analytics, Inc. Based on transactions over $5 million

14. U.S. UNEMPLOYMENT RATES
U.S. Unemployment Rates
March 2010
(U.S. Rate = 9.7%)
9.5%
7.1% 8.2%
4.0%
6.5%
10.6% 7.4%
7.0%
9.4% 4.8% 8.8% 8.6% 9.3%
9.2%
7.3% 14.1%
12.6%
6.8% 9.0%
5.0% 9.8%
13.4% 11.0% 7.7%
9.9%
7.2% 11.5%
7.9% 9.5% 9.2%
6.5% 9.5% 7.4%
12.6% 10.7%
11.1%
10.6%
9.6% 6.6%
8.8% 7.8% 12.2%
11.0% 0.0% to 5.0%
11.5% 10.6%
6.9% 5.1% to 7.3%
8.2%
7.4% to 9.0%
6.9%
9.1% to 10.7%
8.6%
12.3% 10.7% to 14.1%
Source: U.S. Bureau of Labor Statistics, Cushman & Wakefield Research Services.

15. SOUTHERN CALIFORNIA OVERALL VACANCY ANALYSIS
30.0%
26.0% 25.6%
25.0%
20.6%
19.4% 19.5%
19.2%
20.0%
17.6% 17.8% 17.6%
16.6% 17.2% 16.9%16.6%
16.1% 16.7%
14.8%
15.0%
12.7%
12.1%
10.0%
5.0%
0.0%
LA CBD LA West LA North LA South Tri Cities Orange San Gabriel Inland San Diego
Bay County Valley Empire
1st Quarter 2009 1st Quarter 2010

16. LOS ANGELES OFFICE HISTORICAL
Direct Direct Overall Overall Direct Average YTD Direct YTD Construction
Year Total Inventory
Vacancies Vacancy % Vacancies Vacancy % Rental Rate $ Absorption Completions
1991 163,417,235 31,405,413 19.2% 37,216,760 22.8% $1.67 4,997,889
1992 166,562,180 32,495,516 19.5% 38,391,913 23.0% $1.63 1,729,084 388,976
1993 165,849,906 31,241,165 18.8% 37,394,411 22.5% $1.43 (581,657) 0
1994 166,055,491 31,350,874 18.9% 37,679,239 22.7% $1.40 321,611 48,000
1995 167,427,474 30,023,036 17.9% 35,693,395 21.3% $1.64 (50,285) 169,700
1996 168,348,948 29,624,594 17.6% 33,833,734 20.1% $1.58 1,895,447 83,000
1997 169,800,024 28,095,810 16.5% 31,745,963 18.7% $1.61 1,039,910 125,632
1998 169,447,067 26,037,156 15.4% 29,479,838 17.4% $1.78 2,618,922 790,460
1999 171,847,191 21,996,440 12.8% 24,917,843 14.5% $1.86 6,859,583 2,431,315
2000 174,335,088 19,699,865 11.3% 22,140,556 12.7% $1.95 4,245,140 2,674,794
2001 175,468,677 23,337,334 13.3% 29,478,738 16.8% $2.15 (2,289,216) 3,403,793
2002 182,166,240 27,926,391 15.3% 34,292,187 18.8% $2.16 (453,037) 2,238,676
2003 183,446,813 27,780,860 15.1% 31,919,745 17.4% $2.12 453,775 1,114,336
2004 183,863,378 24,086,103 13.1% 27,211,780 14.8% $2.10 2,496,952 332,997
2005 184,607,106 20,675,996 11.2% 22,706,674 12.3% $2.14 3,517,407 791,357
2006 185,404,908 18,169,681 9.8% 19,467,515 10.5% $2.30 2,533,648 653,531
2007 186,621,198 15,912,812 8.5% 17,661,568 9.5% $2.81 3,336,945 838,000
2008 190,099,755 20,631,316 10.9% 23,747,598 12.5% $2.86 (4,499,437) 1,040,892
2009 193,096,545 28,732,185 14.9% 33,026,180 17.1% $2.65 (5,111,556) 2,249,045
1Q10 193,043,845 29,936,779 15.5% 33,896,692 17.6% $2.64 (1,174,494) 0
■ Though overall vacancy is nowhere near the highs of the last recession, occupancy loss is the
highest in history with nine consecutive quarters of negative absorption.
■ Construction completions ground to a halt for the first time since 1993.
Source: C&W Research Services

17. LOS ANGELES COUNTY METRO SUPPLY & DEMAND
Overall Abs. Cnst. Overall Vac
6.0 20.0%
18.0%
4.0
16.0%
2.0 14.0%
12.0%
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
mf
s
10.0%
-2.0
8.0%
-4.0 6.0%
4.0%
-6.0
2.0%
-8.0 0.0%
■ Negative direct absorption continued to accelerate, finishing first quarter 2010 with negative 1.1
msf of absorption.
■ New construction is nonexistent and will help cap rising vacancies until sustained job growth
returns.
Source: C&W Research Services