Southern California CRE Overview

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Southern California CRE Overview

  1. 1. 2014 Southern California Commercial Real Estate Overview and Outlook Al Pontius Senior Vice President and National Director February 2014
  2. 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. 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. 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. 5. Southern California Economic Overview
  6. 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. 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. 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. 9. Apartment Market Overview and Outlook
  10. 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. 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. 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. 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. 14. Office Market Overview and Outlook
  15. 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. 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. 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. 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. 19. Retail Market Overview and Outlook
  20. 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. 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. 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. 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. 24. Industrial Market Overview and Outlook
  25. 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. 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. 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. 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. 29. 2014 Southern California Commercial Real Estate Overview and Outlook Al Pontius Senior Vice President and National Director February 2014

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