1. 1 GLOBAL RESEARCH AND CONSULTING
HOUSING PRICES CONTINUE TO GROW
S&P/Case-Shiller Home Price Index
Source: S&P Case-Shiller Index

2. GLOBAL RESEARCH AND CONSULTING
U.S. PROPERTY MARKET FUNDAMENTALS

3. 3 GLOBAL RESEARCH AND CONSULTING
Source: CBRE Research, CBRE Econometric Advisors
PROPERTY SECTOR TRAJECTORY
2013 Q4
Past Cyclic
High
“Natural
Rate”
Year Back to
"Natural Rate"
Office Vacancy Rate 15.0 16.8 / 2010 13 to 15 2013
Industrial Availability Rate 11.5 14.5 / 2010 9 to 10 2015
Retail Availability Rate 12.0 13.2 / 2011 9 to 10 2016
Multifamily Vacancy Rate 5.3 7.4 / 2009 5 to 6 2010

4. 4 GLOBAL RESEARCH AND CONSULTING
PROPERTY SECTOR TRENDS
 OFFICE
• Urbanization & densification
• Impact of workplace strategy
• Investor interest in suburban, non-gateway markets
• Tech markets leading the way
 INDUSTRIAL
• Supply chain efficiencies
• Peak manufacturing productivity
• Impact of e-commerce
• More speculative construction but still in check
 RETAIL
• High-street retail still strong
• E-commerce growing impact
• Omni channel strategies
• Shrinking retail footprints

5. 5 GLOBAL RESEARCH AND CONSULTING
S
L
M
N
A
C
D
D
L
P
P
S
W
A
B
D
N
S
H
San Diego
Orange County O
Atlanta
Dallas (Suburban)
Boston
Seattle
U.S. OFFICE RENT CYCLE Q4 2013
Source: CBRE Research

6. 6 GLOBAL RESEARCH AND CONSULTING
RENT GROWTH LED BY TECH MARKETS
5-Year Annualized Rent Growth (%), Largest 20 Office Markets
Source: CBRE Econometric Advisors

7. 7 GLOBAL RESEARCH AND CONSULTING
Source: CBRE Research, CBRE Econometric Advisors
Completions, Net Absorption & Vacancy Rate
OFFICE OUTLOOK
FORECAST

8. 8 GLOBAL RESEARCH AND CONSULTING
REAL ESTATE INVESTMENT TRENDS
 Increased global interest in U.S. markets
 2013 saw the beginning of interest rate increases. In
2014, look for the end of cap rate compression and a
new era of NOI growth.
 Expect improved economic performance to correspond
with interest rate increase
 Expect spreads to between primary & secondary
markets to compress

9. 9 GLOBAL RESEARCH AND CONSULTING
Sales Volume ($ Billions)
NATIONAL INVESTMENT SALES
Source: Real Capital Analytics

10. 10 GLOBAL RESEARCH AND CONSULTING
U.S. Ten Year Treasury Bonds
INTEREST RATE
Source: Federal Reserve
FORECAST

11. 11 GLOBAL RESEARCH AND CONSULTING
Q2 Survey of economists places the 10-year treasury at 3.5% at the end of 2014
A RANGE OF OPINIONS
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
2013.3 2013.4 2014.1 2014.2 2014.3 2014.4 2015.1 2015.2 2015.3 2015.4
Ten Year Treasury, %

12. GLOBAL RESEARCH AND CONSULTING
THE ECONOMY AND REAL ESTATE
GARY BARAGONA
DIRECTOR, RESEARCH & ANALYSIS
JANUARY 2014