The Economic BackdropWhen will this cycle end?
11
35
57
72
87
91
105
119
0 25 50 75 100 125
Aug-80-Jun-81
Dec-70-Oct-73
Apr-75-Dec-79
Dec-01-Nov-07
Jul-09-????
Dec-82-Jun-90
Mar-61-Nov-69
Apr-91-Feb-01
Length of economic expansions (months)
Jan-
17
Mar
-18
May
-19
How far are we into the current economic expansion?Current expansion in 8th year; 4th longest since 1960
Source: NBER and Moody’s Analytics with data through October 2016.
Macro economic trends
Source: Moody’s Analytics, ECA, FRB, BLS, S&P Dow Jones Indices LLC, CoreLogic, Inc, FHFA, Freddie Mac, Fannie Mae
Labor market trends
Apartment Market ConditionsAre we at an inflection point?
Head-to-HeadWhich market has the better outlook over the next 12 months?
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 58,200 65,800 13% 47,200 46,700 -1%
3.2% 3.5% 30 3.5% 3.3% (15)
Occupancy rate 95.8% 95.6% (20) 95.8% 94.9% (90)
Rent growth (Y/Y) 7.9% 6.4% (152) 9.8% 2.2% (753)
MF permits (T12M) 16,052 11,709 -27% 7,926 8,910 12%SF permits (T12M) 8,493 9,540 12% 8,573 9,934 16%Total permits (T12M) 24,545 21,249 -13% 16,499 18,844 14%
SEATTLE DENVER
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 77,100 72,000 -7% 108,300 102,100 -6%
3.1% 2.8% (29) 4.7% 4.2% (47)
Occupancy rate 94.9% 94.9% 0 95.7% 95.6% (10)
Rent growth (Y/Y) 6.8% 5.4% (140) 6.2% 4.7% (150)
MF permits (T12M) 9,740 12,507 28% 19,962 21,532 8%SF permits (T12M) 19,276 21,998 14% 19,962 22,776 14%Total permits (T12M) 29,016 34,505 19% 39,924 44,308 11%
ATLANTA DALLAS
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 83,800 58,200 -31% 65,400 42,800 -35%
3.4% 2.3% (113) 3.5% 2.2% (129)
Occupancy rate 95.8% 94.7% (110) 94.7% 94.7% 0
Rent growth (Y/Y) 5.6% 3.0% (260) 7.4% 6.3% (110)
MF permits (T12M) 12,565 14,069 12% 6,108 7,305 20%SF permits (T12M) 6,945 6,663 -4% 14,972 18,159 21%Total permits (T12M) 19,510 20,732 6% 21,080 25,464 21%
SOUTH FLORIDA PHOENIX
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 83,800 58,200 -31% 65,400 42,800 -35%
3.4% 2.3% (113) 3.5% 2.2% (129)
Occupancy rate 95.8% 94.7% (110) 94.7% 94.7% 0
Rent growth (Y/Y) 5.6% 3.0% (260) 7.4% 6.3% (110)
MF permits (T12M) 12,565 14,069 12% 6,108 7,305 20%SF permits (T12M) 6,945 6,663 -4% 14,972 18,159 21%Total permits (T12M) 19,510 20,732 6% 21,080 25,464 21%
SOUTH FLORIDA PHOENIX
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 42,900 31,100 -28% 32,300 31,900 -1%
4.7% 3.2% (143) 3.7% 3.5% (17)
Occupancy rate 95.6% 95.3% (30) 96.4% 96.1% (30)
Rent growth (Y/Y) 5.4% 2.7% (270) 6.9% 5.4% (150)
MF permits (T12M) 9,796 9,084 -7% 6,716 8,382 25%SF permits (T12M) 11,731 12,724 8% 10,395 11,614 12%Total permits (T12M) 21,527 21,808 1% 17,111 19,996 17%
AUSTIN NASHVILLE
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 53,546 24,818 -54% 157,834 108,494 -31%
5.3% 2.3% (297) 2.4% 1.6% (79)
Occupancy rate 96.6% 95.7% (90) 97.0% 96.9% (10)
Rent growth (Y/Y) 11.5% -1.8% (1,330) 4.1% -0.2% (430)
MF permits (T12M) 4,544 4,513 -1% 59,398 28,926 -51%SF permits (T12M) 474 564 19% 6,472 6,501 0%Total permits (T12M) 5,018 5,077 1% 65,870 35,427 -46%
SAN FRANCISCO NEW YORK
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 38,400 27,200 -29% 45,700 27,100 -41%
3.6% 2.4% (112) 3.4% 1.9% (144)
Occupancy rate 96.4% 95.4% (100) 95.7% 96.1% 40
Rent growth (Y/Y) 14.8% 4.0% (1,080) 7.8% 5.3% (250)
MF permits (T12M) 5,460 7,691 41% 4,391 8,273 88%SF permits (T12M) 6,532 7,561 16% 3,045 2,602 -15%Total permits (T12M) 11,992 15,252 27% 7,436 10,875 46%
PORTLAND SAN DIEGO
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 46,900 53,900 15% 41,100 38,000 -8%
4.2% 4.6% 43 3.4% 3.0% (36)
Occupancy rate 96.1% 96.0% (10) 95.8% 95.6% (20)
Rent growth (Y/Y) 7.7% 4.8% (290) 6.4% 5.7% (70)
MF permits (T12M) 5,830 8,592 47% 5,627 5,626 0%SF permits (T12M) 10,978 13,989 27% 8,327 10,693 28%Total permits (T12M) 16,808 22,581 34% 13,954 16,319 17%
ORLANDO TAMPA
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 49,600 12,100 -76% 63,700 81,400 28%
1.7% 0.4% (128) 2.0% 2.6% 52
Occupancy rate 94.7% 93.2% (150) 95.6% 95.7% 10
Rent growth (Y/Y) 3.2% -2.7% (590) 1.8% 2.2% 40
MF permits (T12M) 24,190 11,769 -51% 10,226 11,318 11%SF permits (T12M) 37,563 35,431 -6% 12,170 12,867 6%Total permits (T12M) 61,753 47,200 -24% 22,396 24,185 8%
HOUSTON WASHINGTON, DC
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 77,100 63,700 -17% 97,100 76,100 -22%
1.7% 1.4% (32) 2.3% 1.8% (54)
Occupancy rate 95.6% 95.2% (40) 96.3% 96.0% (30)
Rent growth (Y/Y) 3.8% 2.2% (160) 6.8% 3.9% (290)
MF permits (T12M) 6,952 9,098 31% 16,747 14,923 -11%SF permits (T12M) 7,760 7,873 1% 4,519 4,779 6%Total permits (T12M) 14,712 16,971 15% 21,266 19,702 -7%
CHICAGO LOS ANGELES
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 78,328 46,958 -40% 47,500 54,100 14%
3.0% 1.8% (127) 1.7% 1.9% 20
Occupancy rate 96.2% 95.9% (30) 95.7% 95.0% (70)
Rent growth (Y/Y) 5.2% 2.4% (280) 4.1% 0.9% (320)
MF permits (T12M) 7,884 7,555 -4% 5,297 4,864 -8%SF permits (T12M) 4,738 5,224 10% 6,374 6,809 7%Total permits (T12M) 12,622 12,779 1% 11,671 11,673 0%
PHILADELPHIABOSTON
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 38,891 28,495 -27% 24,000 15,700 -35%
3.6% 2.6% (107) 4.3% 2.7% (159)
Occupancy rate 95.9% 95.9% 0 95.5% 95.6% 10
Rent growth (Y/Y) 6.2% 4.1% (210) 6.1% 3.9% (220)
MF permits (T12M) 6,639 7,023 6% 4,073 3,262 -20%SF permits (T12M) 11,567 12,654 9% 8,353 9,185 10%Total permits (T12M) 18,206 19,677 8% 12,426 12,447 0%
RALEIGHCHARLOTTE
3Q-2015 3Q-2016 Chg 3Q-2015 3Q-2016 ChgJob growth (Y/Y) 25,000 18,900 -24% 34,300 26,400 -23%
3.8% 2.8% (104) 3.9% 2.9% (100)
Occupancy rate 95.9% 95.9% 0 95.5% 95.6% 10
Rent growth (Y/Y) 6.2% 4.1% (210) 6.1% 3.9% (220)
MF permits (T12M) 2,786 2,930 5% 3,152 4,259 35%SF permits (T12M) 3,723 4,157 12% 7,560 8,409 11%Total permits (T12M) 6,509 7,087 9% 10,712 12,668 18%
SALT LAKE CITY LAS VEGAS
SupplyAre we building too much?
National Pipeline ActivityOctober 2016 compared to one year ago
Source: Axiometrics
October 2015 October 2016
Pipeline Phase Units Pipeline Phase Units
Planned 805,228 Planned 1,009,844
Under Construction 542,213 Under Construction 595,450
Lease Up 131,751 Lease Up 159,545
Grand Total 1,479,192 Grand Total 1,764,839
Top Markets for Projects Under ConstructionOctober 2016 compared to one year ago
Source: Axiometrics
Under Construction Units Under Construction Units New York, NY 36,629 New York, NY 44,382
Dallas, TX 32,676 Dallas, TX 42,341
Houston, TX 31,446 Houston, TX 32,740
Washington, DC 21,430 Washington, DC 26,291
Seattle, WA 20,295 Los Angeles, CA 23,689
Los Angeles, CA 19,853 Atlanta, GA 21,897
Atlanta, GA 19,314 Seattle, WA 18,312
Denver, CO 16,707 Charlotte, NC 15,029
October 2015 October 2016
High Rise Projects (9 floors or higher) Built Since 2000 by Year
Includes conversions; Source: Axiometrics
0
20
40
60
80
100
120
Num
ber o
f Pro
pert
ies
Including these markets:2015• Baton Rouge, LA• Canton, OH• Greensboro, NC• Spartanburg, SC
2016• Des Moines, IA• Grand Rapids, MI• Madison, WI• South Bend, IN
How Unit Mixes Differ from Existing Stock
Source: Axiometrics
45%
55%53%47%
0%
10%
20%
30%
40%
50%
60%
Studio/One Two/Three
Existing Stock 2013 or Newer
When Will Supply Begin to Slow?
Source: Axiometrics
-
5,000
10,000
15,000
20,000
25,000
30,000
35,0001Q
112Q
113Q
114Q
111Q
122Q
123Q
124Q
121Q
132Q
133Q
134Q
131Q
142Q
143Q
144Q
141Q
152Q
153Q
154Q
151Q
162Q
163Q
164Q
161Q
172Q
173Q
174Q
171Q
182Q
183Q
184Q
181Q
192Q
193Q
194Q
19
Uni
ts
Dallas Houston Los Angeles New York Seattle Washington, DC
Sources: Axiometrics, Wall Street Journal
Annual Rent Growth by SubmarketSan Francisco Bay Area
Source: Axiometrics
2014 2015 Sept. 2016
<2%2%-4%4%-6%>6%
Annual Rent Growth by SubmarketAustin
Source: Axiometrics
Sept. 20162015
90%
91%
92%
93%
94%
95%
96%
97%
98%
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Occupancy Rate Long-Term Average
<2%2%-4%4%-6%>6%
Supply and Demand in Equilibrium
Concessions Seattle & Southern California
Source: Axiometrics
Concessions Houston & Dallas/Ft. Worth
Source: Axiometrics
AffordabilityHeadline or reality?
Reported Rent-to-Income RatiosAs of 2015
Sources: MPF Research/RealPage, SeekingAlpha.com, Zillow*prior to sale **based on leases tracked by RealPage software
Incomes are Growing Fast for Market-Rate Apt. RentersBased on Rent Roll Data
Sources: MPF Research/RealPage
Product Class, Rent-to-Income Inversely CorrelatedBased on Rent Roll Data
Sources: MPF Research/RealPage
The Cheaper the Rent, the More Affordability is an IssueBased on Rent Roll Data
Sources: MPF Research/RealPage
The Cheaper the Rent, the More Affordability is an IssueBased on Rent Roll Data
Sources: MPF Research/RealPage
Demand & DemographicsMillennials vs. Boomers – how is demand shifting?
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2014
2015
2016
Quarterly 4Q Moving Avg.
Homeownership rate: how low can it go?
Home ownership rate (%)
Source: US Census Bureau
2.8
0.7
-0.5
2.1
3.22.9
2.1
-1.5-2.0
5.5
4.0
2.1
3.1
5.56.1
-3
-2
-1
0
1
2
3
4
5
6
7
2015-20 2020-25 2025-30
25-34 35-44 45-54 55-64 65-74 75+
Net population growth by age cohort (Mil.)
Source: US Census Bureau, National Population Projections 2014
41
Changing demographics: implications for demand?
Urban vs. SuburbanAre we overplaying the urban trend?
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Sources: MPF Research/RealPage
Chart provided by Dan Mahoney, LaSalle Investment Management
PredictionsWhat will 2017 hold?