southern california cre overview

Southern California Commercial Real EstateOverview and Outlook

2014Al Pontius

Senior Vice President and National Director

February 2014

-9%

-6%

-3%

0%

3%

6%

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

Southern California United States

U.S. Employment vs. Southern California Employment

Y-O

-Y P

erce

nt

Ch

ang

e

* Through DecemberSouthern California includes Los Angeles, Orange County, Inland Empire and San Diego MSAsSources: Marcus & Millichap Research Services, BLS

Trailing 12 Months Job Growth*

Southern California: +115,500

United States: +2,322,000

U.S. Retail Sales Well Past RecessionUpward Momentum Slowing

Yea

r-O

ver-

Yea

r C

han

ge

$190

$220

$250

$280

$310

02 04 06 08 10 12 14*

Ret

ail S

ales

(B

il.)

Long-Term Total Retail Sales Monthly Retail Sales Excl. Auto and GasR

ec

es

sio

n

+14%

* Through JanuarySources: Marcus & Millichap Research Services, U.S. Census Bureau

$869/person

$952/person

-15%

-10%

-5%

0%

5%

10%

15%

20%

74 78 82 86 90 94 98 02 06 10 14*

250

350

450

550

650

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

Single-Family and Condo

$150

$175

$200

$225

$250 Single-Family Condo

* Through DecemberSources: Marcus & Millichap Research Services, National Association of Realtors

+10%+11%

Med

ian

Pri

ce (

000s

)

-1%

Ho

me

Sal

es (

000s

)

Median Home Prices Existing Home Sales

Y-O-Y Change

Y-O-Y Change

Single-Family Housing and Condo Market Improving Despite Recent Slowdown

Southern California Economic Overview

Migration Into Southern California

-160

-40

80

200

320

71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15*

Net

Mig

rati

on

(00

0s)

* ForecastSouthern California includes Los Angeles, Inland Empire, Orange County, and San Diego MSAsSources: Marcus & Millichap Research Services, U.S. Census Bureau

-8%

-4%

0%

4%

8%

Los Angeles Inland Empire Orange County San Diego United States

2000-2011 2012 2013 2014*

Y-O

-Y P

erce

nt

Ch

ang

e

Employment Growth Trends

08-09: -378,500 -143,800 -163,300 -91,400 -8,663,000

2010: +27,800 +5,900 +16,400 +11,000 +1,058,000

2011: +31,200 +6,900 +15,400 +13,200 +2,083,000

2012: +85,100 +34,400 +37,100 +29,500 +2,236,000

2013: +45,100 +13,500 +34,000 +22,900 +2,322,000

2014*: +81,000 +27,500 +39,100 +32,400 +2,700,000

* ForecastSources: Marcus & Millichap Research Services, U.S. Census Bureau

Single-Family Home Price Trends

$0

$200

$400

$600

$800


2000-2011 2012 2013 2014*

Med

ian

Ho

me

Pri

ce (

000s

)

* ForecastSources: Marcus & Millichap Research Services, National Association of Realtors

2005-11: -48% -57% -31% -42% -28%

2011-13: 30% 39% 22% 24% 24%

Apartment Market Overview and Outlook

0

3

5

8

10

Los Angeles Inland Empire Orange County San Diego

2007-2011 2012 2013 2014*

Un

it C

om

ple

tio

ns

(000

s)

Apartment Construction Trends

* ForecastSources: Marcus & Millichap Research Services, MPF Research

0.6%

0.7%

2.1%

1.3%

0%

3%

6%

9%

12%


2007-2011 2012 2013 2014*

Ave

rag

e V

acan

cy R

ate

Apartment Vacancy Rate Trends


Apartment Effective Rent Trends

-5%

0%

5%

10%

15%


2007-2011 2012 2013 2014*

Y-O

-Y P

erce

nt

Ch

ang

e


4%

5%

6%

7%

8%


2005-2011 2012 2013*

Ave

rag

e C

ap R

ate

Apartment Cap Rate Trends

* EstimateIncludes sales $1,000,000 and greaterSources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics

Office Market Overview and Outlook

0.0

1.2

2.4

3.6

4.8


2007-2011 2012 2013 2014*

Co

mp

leti

on

s (M

il. S

qft

.)

* ForecastSources: Marcus & Millichap Research Services, CoStar Group, Inc.

Office Construction Trends

0.2%

0.3%

1.0%

0.5%

0%

6%

12%

18%

24%


2007-2011 2012 2013 2014*

Ave

rag

e V

acan

cy R

ate

Office Vacancy Rate Trends


Office Asking Rent Trends

-10%

-5%

0%

5%

10%


2008-2011 2012 2013 2014*

Y-O

-Y P

erce

nt

Ch

ang

e


2%

4%

6%

8%

10%


2005-2011 2012 2013*

Ave

rag

e C

ap R

ate

Office Cap Rate Trends


Retail Market Overview and Outlook

0.0

2.0

4.0

6.0

8.0


2007-2011 2012 2013 2014*

Co

mp

leti

on

s (M

il. S

qft

.)

Retail Construction Trends


0.4%0.5%

0.3% 0.5%

0%

3%

6%

9%

12%


2007-2011 2012 2013 2014*

Ave

rag

e V

acan

cy R

ate

Retail Vacancy Rate Trends


Retail Asking Rent Trends

-30%

-20%

-10%

0%

10%


2008-2010 2012 2013 2014*

Y-O

-Y P

erce

nt

Ch

ang

e


2%

4%

6%

8%

10%


2005-2011 2012 2013*

Ave

rag

e C

ap R

ate

Retail Cap Rate Trends


Industrial Market Overview and Outlook

0

8

16

24

32


2007-2011 2012 2013 2014*

Co

mp

leti

on

s (M

il. S

qft

.)

Industrial Construction Trends

* EstimateSources: Marcus & Millichap Research Services, CoStar Group, Inc.

0.3%0.2%

3.5%

0.0%

0%

4%

8%

12%

16%


2007-2011 2012 2013 2014*

Ave

rag

e V

acan

cy R

ate

Industrial Vacancy Rate Trends


Industrial Asking Rent Trends

-20%

-10%

0%

10%

20%


2008-2011 2012 2013 2014*

Y-O

-Y P

erce

nt

Ch

ang

e


0%

3%

6%

9%

12%


2005-2011 2012 2013*

Ave

rag

e C

ap R

ate

Industrial Cap Rate Trends


Southern California Commercial Real EstateOverview and Outlook

2014Al Pontius

Senior Vice President and National Director

February 2014

southern california cre overview

Economy & Finance