COMMERCIAL ECONOMIC ISSUES & TRENDS FORUM

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2013: The “New Normal”
Economic & CRE Trends at the Crossroads of Political Changes

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COMMERCIAL ECONOMIC ISSUES & TRENDS FORUM

  1. 1. LAWRENCEYUN, PhDChief Economist,Sr. Vice PresidentNational Associationof REALTORS®H. BLAINEWALKER, CRB, GRIPresident & CEOWalker & Co. RealEstateDANIELSIGHT, CCIM, SIORVice President,BrokerReece CommercialRANDYSCHEIDT, MAI, CCIM, GRIPresidentDon R. Scheidt & Co.LINDA ST. PETERCorporate REALTOR®Prudential ConnecticutRealty2013: The “New Normal”Economic & CRE Trends at the Crossroads of Political Changes
  2. 2. How do you feel about the economytoday vs. one year ago?A) WorseB) About the sameC) A little betterD) Big improvementREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  3. 3. Record High Stock Prices(but only ½ of population have stock exposure)REALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DCStock Price Index: Standard & Poors 500 Composite1941-43=101005009590858075706560Source: Wall Street Journal /Haver Analytics 05/10/13160012008004000160012008004000
  4. 4. Falling Unemployment RateREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DCCivilian Unemployment Rate: 16 yr +SA, %12111009080706050403020100Source: Bureau of Labor Statistics /Haver Analytics 05/10/13108642108642
  5. 5. But Very High Number of Part-time WorkersREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DCWork Part Time: For Economic Reasons: All IndustrySA, Thous12111009080706050403020100Source: Bureau of Labor Statistics /Haver Analytics 05/10/13100008000600040002000100008000600040002000
  6. 6. Are employers in your marketexpanding?A) Yes, a lotB) A littleC) Staying the courseD) No; they are shrinkingREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  7. 7. Indiana Total Jobs25002600270028002900300031002000-Jan2000-Aug2001-Mar2001-Oct2002-May2002-Dec2003-Jul2004-Feb2004-Sep2005-Apr2005-Nov2006-Jun2007-Jan2007-Aug2008-Mar2008-Oct2009-May2009-Dec2010-Jul2011-Feb2011-Sep2012-Apr2012-Nov
  8. 8. Kansas Total Jobs13001320134013601380140014202000-Jan2000-Aug2001-Mar2001-Oct2002-May2002-Dec2003-Jul2004-Feb2004-Sep2005-Apr2005-Nov2006-Jun2007-Jan2007-Aug2008-Mar2008-Oct2009-May2009-Dec2010-Jul2011-Feb2011-Sep2012-Apr2012-Nov
  9. 9. Connecticut Total Jobs1500155016001650170017502000-Jan2000-Aug2001-Mar2001-Oct2002-May2002-Dec2003-Jul2004-Feb2004-Sep2005-Apr2005-Nov2006-Jun2007-Jan2007-Aug2008-Mar2008-Oct2009-May2009-Dec2010-Jul2011-Feb2011-Sep2012-Apr2012-Nov
  10. 10. Utah Total Jobs100010501100115012001250130013502000-Jan2000-Aug2001-Mar2001-Oct2002-May2002-Dec2003-Jul2004-Feb2004-Sep2005-Apr2005-Nov2006-Jun2007-Jan2007-Aug2008-Mar2008-Oct2009-May2009-Dec2010-Jul2011-Feb2011-Sep2012-Apr2012-Nov
  11. 11. D.C. Metro Total Jobs20002100220023002400250026002000-Jan2000-Aug2001-Mar2001-Oct2002-May2002-Dec2003-Jul2004-Feb2004-Sep2005-Apr2005-Nov2006-Jun2007-Jan2007-Aug2008-Mar2008-Oct2009-May2009-Dec2010-Jul2011-Feb2011-Sep2012-Apr2012-Nov
  12. 12. Texas Total Jobs8000850090009500100001050011000115002000-Jan2000-Aug2001-Mar2001-Oct2002-May2002-Dec2003-Jul2004-Feb2004-Sep2005-Apr2005-Nov2006-Jun2007-Jan2007-Aug2008-Mar2008-Oct2009-May2009-Dec2010-Jul2011-Feb2011-Sep2012-Apr2012-Nov
  13. 13. Jobs in Commercial Constructionand Contractors250026002700280029003000310032003300340035002001-Jan2001-Jul2002-Jan2002-Jul2003-Jan2003-Jul2004-Jan2004-Jul2005-Jan2005-Jul2006-Jan2006-Jul2007-Jan2007-Jul2008-Jan2008-Jul2009-Jan2009-Jul2010-Jan2010-Jul2011-Jan2011-Jul2012-Jan2012-Jul2013-Jan
  14. 14. How do you feel about the CRE marketstoday vs. one year ago?A) WorseB) About the sameC) A little betterD) Big improvementREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  15. 15. 2012 Global CRE Investments Rise 4%Source: Real Capital AnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  16. 16. 15 of Top 30 Global Markets are in U.S.Source: Real Capital AnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  17. 17. Cross-border Capital Flows into U.S. RiseSource: Real Capital AnalyticsYes, 18%No, 82%2012 REALTOR® CRE Sales toInternational Clients/InvestorsSource: REALTORS® 2012 CRE Lending SurveyREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  18. 18. U.S. Sales Rise 24% in 2012; 35% in 2013.Q1$0$20$40$60$80$100$120$140$160$18006 07 08 09 10 11 12 13billions Individual Portfolio EntitySource: Real Capital AnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  19. 19. REALTOR® Markets & Deal Size21%22%26%17%12%1%2%< $250,000$250,000 - $500,000$500,000 - $1,000,000$1,000,000 - $2,000,000$2,000,000 - $5,000,000$5,000,000 - $10,000,000> $10,000,0002013 CRE Lending Survey: Value of most recent sales transactionSource: NARREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  20. 20. Tale of Two Commercial Markets-100%-50%0%50%100%150%200%2008.Q42009.Q12009.Q22009.Q32009.Q42010.Q12010.Q22010.Q32010.Q42011.Q12011.Q22011.Q32011.Q42012.Q12012.Q22012.Q32012.Q4Sales Volume (YoY % Chg)Major CRE Markets Realtor CRE MarketsDeals < $2M +Deals > $2M-25.0%-20.0%-15.0%-10.0%-5.0%0.0%5.0%10.0%Sales Prices (YoY % Chg)Moody’s/RCA CPPI - Major Markets Realtor CRE MarketsSource: NAR, Real Capital AnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  21. 21. Low Interest Rates Encourage Lending?A) Yes, low rates encourage more borrower toseek creditB) No, low rates do not excite the bankers fromlendingC) UnsureREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  22. 22. Monetary Policy by Federal Reserve(zero rate policy to 2015 ?)0123456Fed Funds%
  23. 23. Federal Reserve Balance Sheet fromQuantitative Easing05000001000000150000020000002500000300000035000001-Aug-07 1-Aug-08 1-Aug-09 1-Aug-10 1-Aug-11 1-Aug-12Total Assets$ million
  24. 24. Feeling Inflationary Pressure?Particularly in Property ManagementA) Virtually No inflationB) Rents rising modestly, though faster thanCosts of operationC) Rents rising modestly, but slower than Costsof operationD) Both Rents and Costs are rising; Inflation isbuildingREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  25. 25. Consumer Price Inflation Less than 2%(% change from one year ago)-3-2-101234562000-Jan2000-Jul2001-Jan2001-Jul2002-Jan2002-Jul2003-Jan2003-Jul2004-Jan2004-Jul2005-Jan2005-Jul2006-Jan2006-Jul2007-Jan2007-Jul2008-Jan2008-Jul2009-Jan2009-Jul2010-Jan2010-Jul2011-Jan2011-Jul2012-Jan2012-Jul2013-JanCore Overall
  26. 26. Rising Renters’ and Homeowners’ Rent Growth(Above 2% and On the Way to 3%)-10123452000-Jan2000-Jul2001-Jan2001-Jul2002-Jan2002-Jul2003-Jan2003-Jul2004-Jan2004-Jul2005-Jan2005-Jul2006-Jan2006-Jul2007-Jan2007-Jul2008-Jan2008-Jul2009-Jan2009-Jul2010-Jan2010-Jul2011-Jan2011-Jul2012-Jan2012-Jul2013-JanOwners Equivalent Rent Renters Rent
  27. 27. Natural Gas Price(100% increase from one year ago)2.002.503.003.504.004.505.002011 -Jan2011 -Apr2011 -Jul2011 -Oct2012 -Jan2012 -Apr2012 -Jul2012 -Oct2013 -Jan2013 -Apr
  28. 28. Federal GovernmentTax Revenue and Spending050000010000001500000200000025000003000000350000040000001970-Jan1971-Jan1972-Jan1973-Jan1974-Jan1975-Jan1976-Jan1977-Jan1978-Jan1979-Jan1980-Jan1981-Jan1982-Jan1983-Jan1984-Jan1985-Jan1986-Jan1987-Jan1988-Jan1989-Jan1990-Jan1991-Jan1992-Jan1993-Jan1994-Jan1995-Jan1996-Jan1997-Jan1998-Jan1999-Jan2000-Jan2001-Jan2002-Jan2003-Jan2004-Jan2005-Jan2006-Jan2007-Jan2008-Jan2009-Jan2010-Jan2011-Jan2012-Jan2013-JanRevenue Spending12-month tally in $ million
  29. 29. 10-Year Treasury Yields0246810121416181970-Jan1972-Jan1974-Jan1976-Jan1978-Jan1980-Jan1982-Jan1984-Jan1986-Jan1988-Jan1990-Jan1992-Jan1994-Jan1996-Jan1998-Jan2000-Jan2002-Jan2004-Jan2006-Jan2008-Jan2010-Jan2012-Jan%
  30. 30. How is the Credit Availability forCommercial Deals?A) Not a ProblemB) Not good but better than a year agoC) Extremely difficult to obtainREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  31. 31. Big Banks getting Bigger54.30%0%10%20%30%40%50%60%1970 1980 1990 2000 2012Top 10 Banks Share of Total DepositsSource: Janicki and Prescott, BankRate.com
  32. 32. 8%17%25%7%6%4%18%1% 11%3%Current sources of financing for commercial dealsNational banks (“Big four”)Regional banksLocal banksCredit unionsLife insurance companiesREITsPrivate investorsPublic companiesSmall Business AdministrationOther, please specifySource: NARSmall Banks Important to REALTORS®
  33. 33. Causes of Bank Capital Availability22%6%27%27%7%1%10%Reduced net operating income, propertyvalues, and equityA slow-down in the pooling and packaging ofCMBS by financial institutionsRegulatory uncertainty for financial institutionsNew and proposed US legislative andregulatory initiativesInability of banks to dispose of distressedassetsEuropean debt crisisOther, please specifyThe most relevant cause for lack of sufficient bank capital available for commercial lendingSource: NAR, 2013 CRE Lending SurveyREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  34. 34. Legislative/Regulatory IssuesREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC> Dodd–Frank Wall Street Reform and Consumer Protection Act> Patient Protection and Affordable Care Act (Obamacare)> Basel III> Qualified Commercial Real Estate Mortgage• Securitizers must hold 5% of CMBS issued unless:– 65% loan-to-value (60% if cap rate < 10-year swap + 300bp)– Debt service coverage ratio of 1.5x (stable history) to 1.7x or higher– Amortization period ≤ 20 years– 10-year minimum loan term– 80% of tenants must pay rent + taxes + insurance + maintenance– Borrower credit and income verification along with 2-year forecast– Collateral restriction limits subordinate financing– Securitizer must buy back bad loans in order to retain QCRE status– Just 0.4% of CMBS ever issued would qualify for first 3 stipulations
  35. 35. Legislative/Regulatory Impacts59%31%8%3%Decrease the flow of capital into U.S. realestateHave no effect on the flow of capital into U.S.real estate, but change the way in whichtransactions or loans are structuredHave no effect on the flow of capital into U.S.real estateIncrease the flow of capital into U.S. real estateImpacts of new/proposed U.S. legislative and regulatory initiativesSource: NAR, 2013 CRE Lending SurveyREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  36. 36. What is HOT in your market?A) Office Investment SalesB) Industrial Investment SalesC) Retail Investment SalesD) Are you kidding? Nothing is hotREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  37. 37. Apartments Gain Market ShareOffice - CBD14%Office - Sub13%Flex5%Warehouse9%Mall & Other11%Strip7%Garden19%Mid/Highrise11%Full-Service5%Limited Service2%Land4%Source: Real Capital AnalyticsOffice $77.6BIndustrial $36.9BRetail $52.8BApartment $84.6BHotel $19.6BLand $11.8BREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  38. 38. Prices Advance – Apartments Lead90.00110.00130.00150.00170.00190.00210.002001JanuaryAprilJulyOctober2002JanuaryAprilJulyOctober2003JanuaryAprilJulyOctober2004JanuaryAprilJulyOctober2005JanuaryAprilJulyOctober2006JanuaryAprilJulyOctober2007JanuaryAprilJulyOctober2008JanuaryAprilJulyOctober2009JanuaryAprilJulyOctober2010JanuaryAprilJulyOctober2011JanuaryAprilJulyOctober2012JanuaryAprilJulyOctoberMoody’s/RCA CPPIApartment Retail Industrial OfficeSource: Real Capital AnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  39. 39. Renter Households25,00027,00029,00031,00033,00035,00037,00039,00041,0001980-Q11981-Q11982-Q11983-Q11984-Q11985-Q11986-Q11987-Q11988-Q11989-Q11990-Q11991-Q11992-Q11993-Q11994-Q11995-Q11996-Q11997-Q11998-Q11999-Q12000-Q12001-Q12002-Q12003-Q12004-Q12005-Q12006-Q12007-Q12008-Q12009-Q12010-Q12011-Q12012-Q1In thousands
  40. 40. Large Spread between Cap Rates andTreasuries01002003004005006007001%2%3%4%5%6%7%8%9%10%01 02 03 04 05 06 07 08 09 10 11 1210yr UST* Cap Rate Spread (bps)Source: Real Capital AnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  41. 41. Apartments and CBD OfficeAttracting investors as evidenced by low cap ratesSource: Real Capital AnalyticsSuburban OfficeIndustrialCBD Office5.0%5.5%6.0%6.5%7.0%7.5%8.0%8.5%9.0%9.5%06 07 08 09 10 11 12 13ApartmentRetailREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  42. 42. What is HOT in your market?A) Office LeasingB) Industrial LeasingC) Retail LeasingD) Are you kidding? Nothing is hotREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  43. 43. Commercial Fundamentals – ApartmentsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  44. 44. Commercial Fundamentals – OfficeREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  45. 45. Commercial Fundamentals – RetailREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  46. 46. Who is buying CRE in your market?A) Institutional/REIT InvestorsB) Private local investorsC) National BanksD) Regional/Local BanksE) No one has any money to buyREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  47. 47. $-$50$100$150$200$250$300Cross-Border Instl/Eq Fund Listed/REITs Private User/otherBillionsWho Is Buying?Source: Real Capital Analytics0%10%20%30%40%50%60%70%80%90%100%01 02 03 04 05 06 07 08 09 10 11 12Cross-Border Instl/Eq Fund Listed/REITs Private User/otherREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  48. 48. Lending Environment3.5%4.0%4.5%5.0%5.5%6.0%6.5%7.0%2009 2010 2011 2012 2013Commercial Mortgage RatesCommercial MultifamilyFixed rate loans with 7-10 year terms; 3 mo. avg.Source: Real Capital Analytics23%20%30%27%1%15%23%32%30%1%Tightened significantlyTightened somewhatNot changedEased somewhatEased significantlyCredit Availability2012 2011Source: NARREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  49. 49. Lending Environment – REALTOR® Markets5%4%20%14%8%7%5%0%3%33%Financing: 90% LTVFinancing: 85% LTVFinancing: 80% LTVFinancing: 75% LTVFinancing: 70% LTVFinancing: 65% LTVFinancing: 60% LTVFinancing: 55% LTVFinancing: 50% LTV100% CashCRE Financial TermsSource: NAR, 2013 CRE LendingREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DCYes, 52%No, 48%Sales transaction fail during past 12months due to lack of financing?
  50. 50. Who Is Lending for Large Deals?0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%201220112010200920082007MajorSecondaryTertiaryLender Composition ($2.5M+)CMBSFinancialGovt AgencyInsuranceIntl BankNatl BankRegl/Local BankPvt/OtherSource: Real Capital AnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  51. 51. Who Is Lending in REALTOR® Markets?9%17%25%9%8%4%13%1%12%2%National banks (“Big four”)Regional banksLocal banksCredit unionsLife insurance companiesREITsPrivate investorsPublic companiesSmall Business AdministrationOther, please specify2013 REALTORS® Commercial Real Estate Lending SurveySource: NARREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  52. 52. For CRE investors, how is the debtmarket?A) Doing deals (a lot more paperwork)B) Still hard, but you can find itC) Not availableD) I am trying to get rid of all my debtREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  53. 53. Net Operating Income0% 5% 10% 15% 20% 25% 30%Increased 1% - 4%Increased 5% - 9%Increased 10% - 15%No ChangeDecreased 10% - 19%Decreased 20% - 24%Decreased 25% - 29%Decreased 30% - 34%Decreased 35% - 39%Decreased 40% - 49%Decreased 50% - 75%How did net operating income ($/SF) of sold/leased properties change from the 2007 to 2012?Source: NAR, 2013 CRE Lending Survey35%REALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  54. 54. Valuation = Appraisals and/or BPOsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DCYes, 36%No, 64%Sales transaction fail during past 12months due to appraisals?Source: NAR, 2013 CRE Lending SurveyCurrent valuation issuesImpact of distressed propertiesValuation of “high risk” business models
  55. 55. How optimistic are you about the CREmarkets in 2014?A) WorseB) About the sameC) A little betterD) Big improvementREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  56. 56. Apartments MarketsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  57. 57. Office MarketsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  58. 58. Retail MarketsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  59. 59. Commercial Fundamentals – IndustrialREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  60. 60. Is there new development in yourmarket?A) Yes, best in many yearsB) Only few projectsC) What is development?REALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  61. 61. Commercial Construction/DevelopmentREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC-40-30-20-100102030402000-Q12000-Q22000-Q32000-Q42001-Q12001-Q22001-Q32001-Q42002-Q12002-Q22002-Q32002-Q42003-Q12003-Q22003-Q32003-Q42004-Q12004-Q22004-Q32004-Q42005-Q12005-Q22005-Q32005-Q42006-Q12006-Q22006-Q32006-Q42007-Q12007-Q22007-Q32007-Q42008-Q12008-Q22008-Q32008-Q42009-Q12009-Q22009-Q32009-Q42010-Q12010-Q22010-Q32010-Q42011-Q12011-Q22011-Q32011-Q42012-Q12012-Q22012-Q32012-Q42013-Q1Real Private Nonresidential Investment: Structures (% Chg Annual Rate)Source: BEA
  62. 62. Value of Construction Put-in-Place01000020000300004000050000600007000080000900001000002002-Jan2002-Jul2003-Jan2003-Jul2004-Jan2004-Jul2005-Jan2005-Jul2006-Jan2006-Jul2007-Jan2007-Jul2008-Jan2008-Jul2009-Jan2009-Jul2010-Jan2010-Jul2011-Jan2011-Jul2012-Jan2012-Jul2013-JanOfficeCommercial
  63. 63. CRE REOs: How active are banks andspecial servicers in your market?A) Selling a lotB) They already sold itC) They are in a holding patternD) I just got a new toaster to buy a bank REOREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  64. 64. CRE Debt Maturities PeakSource: Trepp, LLCREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  65. 65. When will CRE markets be HOT again?A) Beginning to feel HOT this yearB) In 1 to 3 yearsC) In 4 to 5 yearsD) Never again (I am going to sell cars)REALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  66. 66. Vehicle Sales8101214161820222000-Jan2000-Aug2001-Mar2001-Oct2002-May2002-Dec2003-Jul2004-Feb2004-Sep2005-Apr2005-Nov2006-Jun2007-Jan2007-Aug2008-Mar2008-Oct2009-May2009-Dec2010-Jul2011-Feb2011-Sep2012-Apr2012-NovIn million units annualized
  67. 67. Green Street Advisor Price Index(Class-A Expensive Properties for REITs)0204060801001201998-Jan1998-Sep1999-May2000-Jan2000-Sep2001-May2002-Jan2002-Sep2003-May2004-Jan2004-Sep2005-May2006-Jan2006-Sep2007-May2008-Jan2008-Sep2009-May2010-Jan2010-Sep2011-May2012-Jan2012-Sep
  68. 68. Secondary Markets in SpotlightSource:RealCapitalAnalyticsREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  69. 69. How optimistic are you about theeconomy in 2014?A) WorseB) About the sameC) A little betterD) Big improvementREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  70. 70. Economic Forecast2011 2012 2013Forecast2014ForecastGDP Growth +1.8% +2.1% +2.1% 3.0%Net New Jobs 1.6 million 2.2 million 2.0 million 2.4 millionCPI Inflation 3.1% 2.1% 2.3% 3.4%10-yearTreasury2.8% 1.8% 2.0% 2.7%Fed Funds Rate 0.1% 0.1% 0.1% 0.1%
  71. 71. Government Spending Growth-4-2024682000200120022003200420052006200720082009201020112012StateFederal%
  72. 72. Corporate Profits($ billion)050010001500200025002000-Q12000-Q32001-Q12001-Q32002-Q12002-Q32003-Q12003-Q32004-Q12004-Q32005-Q12005-Q32006-Q12006-Q32007-Q12007-Q32008-Q12008-Q32009-Q12009-Q32010-Q12010-Q32011-Q12011-Q32012-Q12012-Q3
  73. 73. Consumer and Business SpendingGrowth-20-15-10-50510152000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Business Consumer%
  74. 74. U.S. Coal Production(Reaching 20-year Low)700000007500000080000000850000009000000095000000100000001990-Jan1991-Jan1992-Jan1993-Jan1994-Jan1995-Jan1996-Jan1997-Jan1998-Jan1999-Jan2000-Jan2001-Jan2002-Jan2003-Jan2004-Jan2005-Jan2006-Jan2007-Jan2008-Jan2009-Jan2010-Jan2011-Jan2012-Jan2013-JanShort tons; 12-month average
  75. 75. Shrinking Trade Deficit($ billion in 2005 dollars)-800-700-600-500-400-300-200-10002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  76. 76. Commercial ForecastOFFICE 2013 I 2013 II 2013 III 2013 IV 2014 I 2013 2014Vacancy Rate 16.0% 15.9% 15.7% 15.6% 15.6% 15.9% 15.7%Net Absorption (000 sq. ft.) 10,268 6,310 8,955 8,440 13,128 33,973 42,349Completions (000 sq. ft.) 7,220 7,275 6,030 5,494 8,598 26,019 30,986Rent Growth 0.6% 0.6% 0.7% 0.7% 0.7% 2.6% 2.8%INDUSTRIAL 2013 I 2013 II 2013 III 2013 IV 2014 I 2013 2014Vacancy Rate 9.6% 9.5% 9.5% 9.4% 9.2% 9.5% 9.0%Net Absorption (000 sq. ft.) 24,354 21,919 38,966 36,531 20,695 121,770 103,475Completions (000 sq. ft.) 12,643 13,448 8,787 8,362 18,849 43,241 64,467Rent Growth 0.5% 0.6% 0.5% 0.7% 0.6% 2.3% 2.6%RETAIL 2013 I 2013 II 2013 III 2013 IV 2014 I 2013 2014Vacancy Rate 10.7% 10.6% 10.6% 10.5% 10.4% 10.6% 10.1%Net Absorption (000 sq. ft.) 4,297 2,865 1,910 2,865 5,899 11,935 16,387Completions (000 sq. ft.) 1,981 1,712 1,923 1,964 3,328 7,580 12,735Rent Growth 0.2% 0.3% 0.5% 0.5% 0.5% 1.5% 2.1%MULTI-FAMILY 2013 I 2013 II 2013 III 2013 IV 2014 I 2013 2014Vacancy Rate 4.0% 3.9% 3.9% 3.8% 3.9% 3.9% 4.0%Net Absorption (Units) 64,954 67,661 56,835 81,193 60,759 270,643 253,161Completions (Units) 31,851 40,457 36,945 39,205 36,251 148,458 168,962Rent Growth 1.0% 1.1% 1.2% 1.3% 1.2% 4.6% 4.7%Sources: National Association of REALTORS® / Reis, Inc.REALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  77. 77. Will China overtake the U.S. in GDP?It depends on Singapore05000100001500020000250001929193319371941194519491953195719611965196919731977198119851989199319972001200520092013201720212025U.S. (growing 3%) China (growing 8%)
  78. 78. If you had $10 Million, what would youbuy?A) OfficeB) IndustrialC) RetailD) MultifamilyE) OtherF) If I had $10M, I’d move to Hawaii and hang it upREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DC
  79. 79. Research ResourcesREALTORS® Commercial Economic Issues & Trends Forum | May 2013 | Washington, DCWeb: www.realtor.org/research-and-statisticsBlog: economistsoutlook.blogs.realtor.orgFacebook: www.facebook.com/narresearchgroupTwitter: twitter.com/#!/NAR_Research

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