This document provides an overview of construction industry trends in California and the United States from 2000-2012. It shows that total construction activity follows a cyclical pattern, with downturns occurring roughly every 10 years. The most recent downturn was from 2008-2010 due to the housing crash and economic recession. Key factors currently inhibiting growth are the intractable housing market, large budget deficits, high unemployment, and economic issues in Europe. While some sectors like multifamily and healthcare are improving, public funding for projects is decreasing which is pushing down on overall construction activity. The document analyzes construction trends by sector and state, finding a mixed recovery with some areas like Dallas and Seattle multifamily growing significantly while other regions like New York remain

1. Cliff Brewis
Senior Director, Operations
McGraw-Hill Construction

2. Where We Have Been
Total Construction Activity by Cycle
Cyclical Trough (T) = 100, Based on Constant 2000 Dollars
190
175
1975-1982
160
145
1982-1991 1991-2012
130
115
100
85
70 1991- 2005
T T+2 T+4 T+6 T+8 T+10 T+12 T+14 T+16 T+18 T+20 T+22
Years from Cyclical Trough

3. The Overall Economy
The US Economy has upside limits and downside potential.
GDP Pattern:
Real GDP Growth Quarterly “11Q2
+1.3% History Forecast
7 2009 2010 2011 2012
5
-3.5% +3.0% +1.6% +2.0%
3
1
-1
-3
-5
Major Inhibitors:
-7 – Intractable Housing
-9
01 02 03 04 05 06 07 08 09 10 11 12 – Budget Deficit
– Unemployment/Demand
– Europe

4. Area of Concern: Public Construction Funding
Pushing down on the economy
Federal Budget Surplus/Deficit
Billions of Dollars, CBO Projections State and Local Revenues
400
200
0
-200
-400
-600
-800
-1,000
-1,200
-1,400
-1,600
90 92 94 96 98 00 02 04 06 08 10 12

5. Significance Of Housing
Best Indicator of Local Market Strength
S&P Case Shiller Home Price Index
20-Metro Composite, Indexed: Jan. 2000=100
220
200
180
160
140
120
100
01 02 03 04 05 06 07 08 09 10 11 12

6. Employment by State

7. California: Single Family
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

8. California: Multi Family
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

9. U.S. • Multifamily Housing
Top 8 Metros – September YTD 2011 vs. 2010
New York
+32%
Washington DC +183%
Boston
+32%
Dallas
+270%
+36%
Chicago 2010 2011
+170%
Seattle
+66%
Los Angeles
+57%
Miami-Fort Lauderdale
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Value in Billions

10. California: Retail/Warehouses
Retail
$3,000,000 Warehouses
$2,500,000
$2,500,000
$2,000,000 $2,000,000
$1,500,000
$1,500,000
$1,000,000
$1,000,000
$500,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

11. California: Offices
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

12. U.S. Commercial Buildings • Offices
Top 8 Metros – September YTD 2011 vs. 2010
- 48%
New York
Salt Lake City +1200%
Boston +134%
-52%
Washington DC
Houston
+143
Chicago +26% 2010 2011
Minneapolis-St. Paul +428%
Seattle
+83%
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Value in Billions

13. California: Healthcare
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

14. California: Education
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

15. U.S. Institutional • Educational Buildings
K-12 School Construction larger than Colleges/Universities/
Community Colleges, particularly in sq. ft. terms, less so in dollar terms.
K-12 has typically shown steeper up-and-down swings.
Education Buildings - Segments Education Buildings - Segments
Millions of Sq. Ft. Billions of Dollars
200 40
175 35
K-12 Schools K-12 Schools
150 30
125 25
100 20
Colleges/Universities/
75 15
Community Colleges
Colleges/Universities/
50 10
Community Colleges
25 5
0 0
90 92 94 96 98 00 02 04 06 08 10 12 90 92 94 96 98 00 02 04 06 08 10 12
• In 2010, sq. ft for K-12 school construction • In 2010, dollars for K-12 school construction
was 3.6 times the size for Colleges/ was 2.3 times the size of Colleges/Universities/
Universities/Community Colleges Community Colleges

16. U.S. Institutional • Educational Buildings
Top 5 States – September YTD 2011 vs. 2010
-11%
New York
-34%
California
-35%
Texas
+17%
Massachusetts
2010 2011
-14%
Ohio
0.0 1.0 2.0 3.0 4.0 5.0
Value in Billions

17. California: Public ex Schls
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

18. California: Highways
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

19. U.S. Public Works • Highways & Bridges
Top 5 States – September YTD 2011 vs. 2010
+24%
Texas
+2%
California
+112%
Washington
2010 2011
-29%
Illinois
-35%
Florida
0.0 1.0 2.0 3.0 4.0 5.0 6.0
Value in Billions

20. California:
Structure Type 2006 2007 2008 2009 2010 2011 2012
EDUCATION $6,693,899 $5,624,163 $8,389,268 $4,243,638 $5,461,528 $3,652,842 $3,453,074
-16.0% 49.2% -49.4% 28.7% -33.1% -5.5%
GOVT x schls $917,450 $901,991 $941,567 $1,651,554 $589,838 $1,109,676 $1,003,439
-1.7% 4.4% 75.4% -64.3% 88.1% -9.6%
HEALTH $2,105,817 $3,128,049 $2,325,602 $2,953,438 $2,940,200 $3,164,533 $3,144,388
48.5% -25.7% 27.0% -0.4% 7.6% -0.6%
HIGHWAY $3,586,689 $3,584,021 $4,135,368 $3,617,681 $3,578,835 $3,692,858 $3,639,106
-0.1% 15.4% -12.5% -1.1% 3.2% -1.5%
HOTEL $1,268,243 $1,132,320 $544,434 $556,980 $114,601 $147,377 $220,710
-10.7% -51.9% 2.3% -79.4% 28.6% 49.8%
MFG $694,380 $516,590 $512,135 $568,810 $257,108 $355,898 $420,674
-25.6% -0.9% 11.1% -54.8% 38.4% 18.2%
MULTI RES $7,286,060 $5,458,202 $3,741,078 $963,068 $1,541,216 $1,523,600 $2,077,791
-25.1% -31.5% -74.3% 60.0% -1.1% 36.4%
OFFICE $3,509,386 $3,359,340 $1,862,668 $1,462,696 $948,541 $780,430 $838,371
-4.3% -44.6% -21.5% -35.2% -17.7% 7.4%
ONE FAMILY $25,689,625 $16,847,205 $8,882,785 $6,889,277 $7,167,967 $6,332,685 $6,686,356
-34.4% -47.3% -22.4% 4.0% -11.7% 5.6%
RETAIL $2,185,000 $2,782,949 $2,013,468 $998,577 $936,040 $910,142 $1,022,755
27.4% -27.6% -50.4% -6.3% -2.8% 12.4%
WAREHOUSE $1,409,346 $1,363,134 $1,214,879 $448,252 $217,810 $298,518 $408,937
-3.3% -10.9% -63.1% -51.4% 37.1% 37.0%
WATER $1,716,305 $2,049,777 $2,004,652 $1,582,216 $1,684,722 $1,141,553 $1,155,952
19.4% -2.2% -21.1% 6.5% -32.2% 1.3%
TOTAL $67,998,286 $59,244,698 $48,043,677 $35,672,178 $40,892,129 $42,431,483 $42,217,077
-12.9% -18.9% -25.8% 14.6% 3.8% -0.5%
‘$000.00

21. Questions?
Cliff Brewis
Senior Director Operations
McGraw-Hill Construction/Dodge
510-566-0913
cliff_brewis@mcgraw-hill.com

22. Appendix
National numbers

23. U.S. Total Construction Starts for 2012
Billions of Dollars 2007 2008 2009 2010 2011 2012
Total Construction 641.0 556.8 425.9 428.6 409.8 411.8
-7% -13% -24% +1% -4% -0-
100.8 81.4 47.1 41.3 43.9 47.4
Commercial Bldgs. +9% -19% -42% -12% +6% +8%
117.7 130.6 112.0 109.7 93.6 92.1
Institutional Bldgs. +6% +11% -14% -2% -15% -2%
20.8 31.0 9.7 9.2 12.4 12.9
Manufacturing Bldgs. +51% +49% -69% -5% +35% +4%
201.2 122.4 94.3 100.0 94.7 104.6
Single Family Housing -26% -39% -23% +6% -5% +10%
60.3 38.2 17.9 21.0 23.6 28.0
Multifamily Housing -13% -37% -53% +17% +13% +18%
121.3 121.1 123.6 119.0 99.6 94.8
Public Works +8% -0- +2% -4% -16% -5%
19.0 31.9 21.2 28.5 42.0 32.0
Electric Utilities +7% +68% -34% +34% +48% -24%

24. Risks to the Forecast
Baseline Forecast Recession Forecast
2011 2012 2011 2012
Total Construction -4% -0- -5% -7%
Commercial Bldgs. +6% +8% +5% -6%
Institutional Bldgs. -15% -2% -15% -3%
Manufacturing Bldgs. +35% +4% +30% -5%
Single Family Housing -5% +10% -6% -2%
Multifamily Housing +13% +18% +12% -5%
Public Works -16% -5% -17% -7%
Electric Utilities +48% -24% +45% -35%