Presented at the CCIM Institute's fall conference, CCIM Thrive, October 21, 2014, by The Economy Decoded panelist, Gary Ralston, CCIM.

1. The Economy Decoded
“What It Means for Commercial Real Estate”
Gary Ralston, CCIM, SIOR, CPM, CRE, CLS, CDP, CRX
Gary@SRDcommercial.com

3. Demand for Commercial Real Estate
• Real estate is space for people … to live in,
work in, shop in and store things in.
• Understanding people, employment and
income (money) is the basis for analyzing real
estate demand.
• Useful and convenient sources
– Census
• http://quickfacts.census.gov/qfd/index.html
– Bureau of Labor Statistics
• http://www.bls.gov/eag/

4. Demand for Commercial Real Estate is Correlated to Jobs
http://data.bls.gov/pdq/SurveyOutputServlet?
request_action=wh&graph_name=CE_cesbref1

5. Employment Establishment Survey (August 2014)
%
Total Nonfarm 139,118,000
Mining & Logging 918,000 0.66%
Construction 6,068,000 4.36%
Manufacturing 12,158,000 8.74%
Trade, Transportation & Utilities 26,440,000 19.01%
Information 2,667,000 1.92%
Financial 7,963,000 5.72%
Professional & Bus Services 19,302,000 13.87%
Education & Health Services 21,539,000 15.48%
Leisure & Hospitality 14,651,000 10.53%
Other 5,515,000 3.96%
Government 21,897,000 15.74%
www.bls.gov

6. Where Did the Jobs Go?
Aug-14 % date delta
Total Nonfarm 139,118,000 138,350,000 Dec-07 768,000
Mining & Logging 918,000 0.66% 726,000 Aug-07 192,000
Construction 6,068,000 4.36% 7,725,000 Jan-07 (1,657,000)
Manufacturing 12,158,000 8.74% 14,344,000 Aug-04 (2,186,000)
Trade, Trans & Utilities 26,440,000 19.01% 26,628,000 Aug-07 (188,000)
Information 2,667,000 1.92% 3,105,000 Aug-04 (438,000)
Financial 7,963,000 5.72% 8,341,000 Aug-07 (378,000)
Professional & Bus Services 19,302,000 13.87% 18,051,000 Dec-07 1,251,000
Education & Health Services 21,539,000 15.48% 18,861,000 Dec-07 2,678,000
Leisure & Hospitality 14,651,000 10.53% 13,550,000 Dec-07 1,101,000
Other 5,515,000 3.96% 5,516,000 Dec-07 (1,000)
Government 21,897,000 15.74% 21,626,000 Aug-04 271,000

7. Employment
Year USA CA TX FL
2004 131,785.0 14,744.1 9,498.1 7,508.1
2005 134,282.0 15,025.4 9,761.2 7,810.5
2006 136,486.0 15,296.2 10,057.1 7,995.9
2007 137,984.0 15,449.8 10,413.8 7,995.1
2008 137,421.0 15,283.9 10,634.1 7,703.4
2009 130,617.0 14,256.4 10,252.0 7,193.8
2010 130,395.0 14,217.8 10,343.1 7,185.6
2011 131,942.0 14,362.2 10,599.0 7,259.6
2012 134,111.0 14,700.5 10,883.4 7,397.2
2013 136,434.0 15,168.9 11,211.6 7,587.4
2014 139,004.0 15,492.5 11,607.8 7,795.9
• Nonfarm (establishment survey) employment as of July
• www.bls.gov

8. Demographic Shifts
• CA, TX and FL account for 27% of US population
• CA, TX and FL account for almost 45% of
population growth in the County
• TX is growing by almost 40,000 per month
– CA growing about 30,000 per month
– FL growing over 20,000 per month
• FL is now the 3rd most populated state
• CA, TX and FL account for about 25% of total US
jobs and almost 40% of job growth

9. 10 Year US Treasury Rate
At market close Fri Oct 17, 2014

10. NCREIT Cap Rates vs. 10 year UST
http://www.prea.org/research

11. US CMBS Issuance by Year
http://www.crefc.org/
7755
Oct 17, 2014

12. Source: Call Reports