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Southern California CRE Overview

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  • 1. 2014 Southern California Commercial Real Estate Overview and Outlook Al Pontius Senior Vice President and National Director February 2014
  • 2. U.S. Employment vs. Southern California Employment Southern California United States Y-O-Y Percent Change 6% 3% 0% -3% -6% Trailing 12 Months Job Growth* Southern California: United States: +2,322,000 19 91 19 92 19 9 19 3 9 19 4 9 19 5 96 19 97 19 9 19 8 9 20 9 00 20 01 20 02 20 0 20 3 0 20 4 05 20 06 20 07 20 0 20 8 0 20 9 10 20 11 20 1 20 2 13 * -9% +115,500 * Through December Southern California includes Los Angeles, Orange County, Inland Empire and San Diego MSAs Sources: Marcus & Millichap Research Services, BLS
  • 3. U.S. Retail Sales Well Past Recession Upward Momentum Slowing Monthly Retail Sales Excl. Auto and Gas Long-Term Total Retail Sales $310 $952/person 15% +14% Retail Sales (Bil.) 10% 5% 0% -5% Recession Year-Over-Year Change 20% -10% $869/person $250 $220 -15% 10 14 * 06 02 98 94 90 86 82 $190 78 74 $280 * Through January Sources: Marcus & Millichap Research Services, U.S. Census Bureau 02 04 06 08 10 12 14*
  • 4. Single-Family Housing and Condo Market Improving Despite Recent Slowdown Median Home Prices 650 Condo $225 $200 $175 20 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 1 20 0 1 20 1 20 12 13 * $150 Y-O-Y Change +11% +10% Single-Family and Condo 550 Y-O-Y Change 450 -1% 350 250 20 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 1 20 0 1 20 1 20 12 13 * Single-Family Home Sales (000s) Median Price (000s) $250 Existing Home Sales * Through December Sources: Marcus & Millichap Research Services, National Association of Realtors
  • 5. Southern California Economic Overview
  • 6. Migration Into Southern California Net Migration (000s) 320 200 80 -40 * Forecast Southern California includes Los Angeles, Inland Empire, Orange County, and San Diego MSAs Sources: Marcus & Millichap Research Services, U.S. Census Bureau 13 15 * 11 09 07 05 03 01 99 97 95 93 91 89 87 85 83 81 79 77 75 73 71 -160
  • 7. Employment Growth Trends 2000-2011 2012 2013 2014* Y-O-Y Percent Change 8% 4% 0% -4% -8% Los Angeles Inland Empire Orange County San Diego 08-09: -378,500 -143,800 -163,300 -91,400 -8,663,000 2010: +27,800 +5,900 +16,400 +11,000 +1,058,000 2011: +31,200 +6,900 +15,400 +13,200 +2,083,000 2012: +85,100 +34,400 +37,100 +29,500 +2,236,000 2013: +45,100 +13,500 +34,000 +22,900 +2,322,000 2014*: +81,000 +27,500 +39,100 +32,400 +2,700,000 * Forecast Sources: Marcus & Millichap Research Services, U.S. Census Bureau United States
  • 8. Single-Family Home Price Trends 2000-2011 2012 2013 2014* 2005-11: -48% -57% -31% -42% -28% 2011-13: 30% 39% 22% 24% 24% Median Home Price (000s) $800 $600 $400 $200 $0 Los Angeles Inland Empire Orange County * Forecast Sources: Marcus & Millichap Research Services, National Association of Realtors San Diego United States
  • 9. Apartment Market Overview and Outlook
  • 10. Apartment Construction Trends 2007-2011 2012 2013 2014* Unit Completions (000s) 10 8 0.6% 2.1% 5 1.3% 3 0.7% 0 Los Angeles Inland Empire * Forecast Sources: Marcus & Millichap Research Services, MPF Research Orange County San Diego
  • 11. Apartment Vacancy Rate Trends 2007-2011 2012 2013 2014* Average Vacancy Rate 12% 9% 6% 3% 0% Los Angeles Inland Empire Orange County * Forecast Sources: Marcus & Millichap Research Services, MPF Research San Diego United States
  • 12. Apartment Effective Rent Trends 2007-2011 2012 2013 2014* Y-O-Y Percent Change 15% 10% 5% 0% -5% Los Angeles Inland Empire Orange County * Forecast Sources: Marcus & Millichap Research Services, MPF Research San Diego United States
  • 13. Apartment Cap Rate Trends 2005-2011 2012 2013* Average Cap Rate 8% 7% 6% 5% 4% Los Angeles Inland Empire Orange County San Diego * Estimate Includes sales $1,000,000 and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics United States
  • 14. Office Market Overview and Outlook
  • 15. Office Construction Trends 2007-2011 2012 2013 2014* Completions (Mil. Sqft.) 4.8 3.6 2.4 1.0% 1.2 0.2% 0.5% 0.3% 0.0 Los Angeles Inland Empire * Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc. Orange County San Diego
  • 16. Office Vacancy Rate Trends 2007-2011 2012 2013 Inland Empire Orange County 2014* Average Vacancy Rate 24% 18% 12% 6% 0% Los Angeles * Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc. San Diego United States
  • 17. Office Asking Rent Trends 2008-2011 2012 2013 2014* Y-O-Y Percent Change 10% 5% 0% -5% -10% Los Angeles Inland Empire Orange County * Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc. San Diego United States
  • 18. Office Cap Rate Trends 2005-2011 2012 2013* 10% Average Cap Rate 8% 6% 4% 2% Los Angeles Inland Empire Orange County San Diego * Estimate Includes sales $1,000,000 and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics United States
  • 19. Retail Market Overview and Outlook
  • 20. Retail Construction Trends 2007-2011 2012 2013 2014* Completions (Mil. Sqft.) 8.0 6.0 4.0 2.0 0.4% 0.5% 0.5% 0.3% 0.0 Los Angeles Inland Empire * Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc. Orange County San Diego
  • 21. Retail Vacancy Rate Trends 2007-2011 2012 2013 Inland Empire Orange County 2014* Average Vacancy Rate 12% 9% 6% 3% 0% Los Angeles * Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc. San Diego United States
  • 22. Retail Asking Rent Trends 2008-2010 2012 2013 2014* Orange County San Diego Y-O-Y Percent Change 10% 0% -10% -20% -30% Los Angeles Inland Empire * Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc. United States
  • 23. Retail Cap Rate Trends 2005-2011 2012 2013* 10% Average Cap Rate 8% 6% 4% 2% Los Angeles Inland Empire Orange County San Diego * Estimate Includes sales $1,000,000 and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics United States
  • 24. Industrial Market Overview and Outlook
  • 25. Industrial Construction Trends 2007-2011 2012 2013 2014* Completions (Mil. Sqft.) 32 24 3.5% 16 8 0.3% 0.0% 0 Los Angeles Inland Empire * Estimate Sources: Marcus & Millichap Research Services, CoStar Group, Inc. Orange County 0.2% San Diego
  • 26. Industrial Vacancy Rate Trends 2007-2011 2012 2013 Inland Empire Orange County 2014* Average Vacancy Rate 16% 12% 8% 4% 0% Los Angeles * Estimate Sources: Marcus & Millichap Research Services, CoStar Group, Inc. San Diego United States
  • 27. Industrial Asking Rent Trends 2008-2011 2012 2013 2014* Y-O-Y Percent Change 20% 10% 0% -10% -20% Los Angeles Inland Empire Orange County * Estimate Sources: Marcus & Millichap Research Services, CoStar Group, Inc. San Diego United States
  • 28. Industrial Cap Rate Trends 2005-2011 2012 2013* 12% Average Cap Rate 9% 6% 3% 0% Los Angeles Inland Empire Orange County San Diego * Estimate Includes sales $1,000,000 and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics United States
  • 29. 2014 Southern California Commercial Real Estate Overview and Outlook Al Pontius Senior Vice President and National Director February 2014