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2014 CALIFORNIA COMMERCIAL MARKET OUTLOOKNorthern California Commercial AssociationJanuary 24, 2014
Oscar WeiSenior Research Analyst
Overview
• Economic Outlook• California Housing Market Outlook• Commercial Market Outlook• Concluding Remarks
ECONOMIC OUTLOOK
So….what’s happening?
• Economy appears to be gaining strength
• Unemployment rate at 5 year low • “Tapering” has begun : $85B /month bond-buying reduced by $10B/month
• Rates headed higher in 2014• Tax Reform: Mortgage Interest Deduction is on the table
• Future of Fannie and Freddie? Highly profitable today
2005
2006
2007
2008
2009
2010
2011
2012
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Gross Domestic Product• 2012: 2.2%; 2013 Q3: 4.1%
ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
ANNUALLY QUARTERLY
2009 Largest Annual Drop since 1938 (-3.4%)
SERIES: GDPSOURCE: US Dept. of Commerce, Bureau of Economic Analysis
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13-1,000,000
-800,000
-600,000
-400,000
-200,000
0
200,000
400,000
600,000
800,000
U.S. Non-farm Job Growth• Recession Job Losses: 8.8 million• Since Jan’10: +7.4 million
MONTH TO MONTH CHANGE
SERIES: Employment GrowthSOURCE: US Bureau of Labor Statistics
Employment Growth, California vs. U.S.
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3-8
-6
-4
-2
0
2
4 California US
ANNUAL PERCENT CHANGE
SERIES: Total Nonfarm EmploymentSOURCE: US Bureau of Labor Statistics, CA Employment Development Division
Unemployment Rates Falling (Slowly) • California (8.5%) vs. United States (7.0%)
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
130%
2%
4%
6%
8%
10%
12%
14% CA US
SERIES: Unemployment RateSOURCE: US Bureau of Labor Statistics, CA Employment Development Division
Job Trends by California Metro Area
SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division
ANNUAL PERCENT CHANGE
Oakland
Fresno MSA
Inland Empire
Sacramento
Modesto
Los Angeles
Bakersfield
San Diego
Ventura
Orange County
San Francisco
Stockton MSA
San Jose
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
0.3%
0.3%
0.9%
1.5%
1.5%
1.7%
1.7%
1.8%
2.0%
2.1%
2.4%
2.5%
2.9%
• November 2013: CA +1.5%, +226,200
Consumer Confidence Index• December 2013: 78.1
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
30
20
40
60
80
100
120INDEX, 100=1985
SERIES: Consumer ConfidenceSOURCE: The Conference Board
2005
2006
2007
2008
2009
2010
2011
2012
2010
Q1
2010
Q2
2010
Q3
2010
Q4
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2013
Q1
2013
Q2
2013
Q3
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Personal Consumption• 2012: 1.9%; 2013 Q3: 2.0%
ANNUAL PERCENT CHANGE
ANNUALLY QUARTERLY
SERIES: Personal ConsumptionSOURCE: US Dept. of Commerce, Bureau of Economic Analysis
Retail Sales• December 2013: Up 4.0%
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3-15%
-10%
-5%
0%
5%
10%
15% Retail Sales Moving average (Retail Sales)
ANNUAL PERCENT CHANGE
SERIES: Retail Trade ReportSOURCE: US Census Bureau
U.S. Economic Outlook
Indicator 2008 2009 2010 2011 20122013p2014f
US GDP -0.3% -3.4% 2.4% 1.8% 2.8% 1.8% 2.8%
Nonfarm Job Growth -0.6% -4.4% -0.7% 1.2% 1.7% 1.6% 1.7%
Unemployment 5.8% 9.3% 9.6% 8.9% 8.1% 7.6% 7.0%
CPI 3.8% -0.4% 1.6% 3.1% 2.1% 1.6% 2.1%Real Disposable Income, % Change 0.5% 0.9% 1.8% 1.3% 1.5% 1.5% 4.2%
SERIES: U.S. Economic OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
California Economic Outlook
Indicator 2008 2009 2010 2011 20122013p2014f
Nonfarm Job Growth -1.3% -6.0% -1.0% 1.2% 2.1% 2.2% 1.9%
Unemployment Rate 7.2% 11.3% 12.3% 11.8% 10.5% 9.0% 8.4%
Population Growth 0.8% 0.6% 0.7% 0.7% 0.7% 0.9% 0.9%Real Disposable Income, % Change 1.5% -3.9% 1.0% 1.9% 1.1% 1.3% 3.4%
SERIES: CA Economic OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CALIFORNIA HOUSING MARKET OUTLOOK
Sales of Existing Detached Homes• California, Dec. 2013 Sales: 361,890 Units, -5.9% YTD, -18.6% YTY
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3 -
100,000
200,000
300,000
400,000
500,000
600,000
700,000
*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes• California, December 2013: $438,040, Up 19.7% YTY
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3 $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000 P: May-07$594,530
T: Feb-09$245,230-59% frompeak
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Unsold Inventory Index• California, December 2013: 3.0 Months
Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question.
0
2
4
6
8
10
12
14
16
18
SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
California Housing Market Outlook
Indicator 2008 2009 2010 2011 20122013p2014f
SFH Resales (000s) 381.4 474.9 416.5 422.6 439.4 413.6 426.8
% Change 30.4% 24.5% -12.3% 1.4% 4.0% -5.9% 3.2%
Median Price ($000s) $348.5 $275.0 $305.0 $286.0 $319.3 $407.1 $431.5
% Change -37.8% -21.1% 10.9% -6.2% 11.6% 27.5% 6.0%
30-Yr FRM 6.0% 5.0% 4.7% 4.5% 3.7% 4.1% 5.3%
1-Yr ARM 5.2% 4.7% 3.8% 3.0% 2.7% 2.7% 3.1%
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
COMMERCIAL MARKETS OUTLOOK
Commercial Segments
Office Industrial
Retail
Multi-Family
CRE Transactions volume up slightly
SOURCE: Wells Fargo, Real Capital Analytics
Billions of Dollars
Prices up sharply over the past year
SOURCE: Wells Fargo, NCRIEF
CRE Cap Rate vs. 10-Year Treasury Yields
SOURCE: Wells Fargo, Real Capital Analytics
Percent Yield
Nonresidential construction spending bounced back in November…
SOURCE: U.S. Dept. of Commerce
… but will it continue to rise in 2014?
SOURCE: American Institute of Architects
OFFICE SPACE
Office Segment Drivers
Financial Services Business Services
Government
Other Services
U.S. Outlook - Office
OFFICE 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4
Vacancy Rate 16.0% 15.7% 15.7% 15.6% 15.6% 15.5% 15.5% 15.4%
Rent Growth 0.6% 0.6% 0.7% 0.6% 0.6% 0.6% 0.6% 0.7%
Net Absorption ('000 sq. ft) 10,268 9,844 9,209 13,423 13,449 10,561 12,069 10,066
Completions ('000 sq. ft) 7,220 6,635 5,500 11,745 9,882 9,957 8,254 7,520
Inventory ('000,000 sq. ft) 4,096 4,095 4,100 4,111 4,120 4,131 4,139 4,147
SOURCE: National Association of REALTORS®, REIS
Increasing Workplace Density
SOURCE: Cushman & Wakefield, Corenet Global 2013 Survey
Los
AngelesSacrament
oSan Diego
San Francisco
San Jose
2011-Q1 14.9 20.2 18.6 14.7 22.8
2011-Q2 14.9 19.8 18.3 14.8 23.0
2011-Q3 15.0 19.8 18.1 14.7 22.3
2011-Q4 15.2 20.6 18.0 14.8 21.9
2012-Q1 15.6 20.6 17.5 14.2 20.8
2012-Q2 15.5 20.9 17.3 13.9 19.9
2012-Q3 15.7 20.9 16.8 13.4 19.6
2012-Q4 15.7 21.0 16.4 13.8 19.0
2013-Q1 15.7 21.4 16.4 13.5 19.1
2013-Q2 16.0 21.4 16.3 13.6 18.8
2013-Q3 15.8 21.3 16.3 13.3 18.6
Vacancy Rates for the Office Segment
SOURCE: National Association of REALTORS®, REIS
Los
AngelesSacrament
oSan Diego
San Francisco
San Jose
2011 15.2 20.6 18.0 14.8 21.9
2012 15.7 21.0 16.4 13.8 19.0
2013 P 16.0 21.3 16.2 13.0 17.8
2014 F 15.3 20.4 15.7 12.8 18.3
Vacancy Rates for the Office Segment
SOURCE: National Association of REALTORS®, REIS
Average Asking Rents for the Office Segment
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Los Angeles Sacramento San DiegoSan Francisco San Jose
Percent Change
SOURCE: National Association of REALTORS®, REIS
Average Asking Rents for the Office Segment
2011 2012 2013P 2014 F0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0.4
1.41
2.2
0.2 0.2 0.2
1.3
0.40.9
1.7
2.5
7.3
6.66
5.6
3.2 3.1
4.8 4.9
Los Angeles Sacramento San Diego San Francisco San JosePercent Change
SOURCE: National Association of REALTORS®, REIS
INDUSTRIAL SPACE
Industrial Segment Drivers
Manufacturing
Transportation & Logistics
Wholesale/Retail Trade
U.S. Outlook - Industrial
INDUSTRIAL 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4
Vacancy Rate 9.6% 9.4% 9.4% 9.2% 9.0% 8.9% 8.7% 8.6%
Rent Growth 0.5% 0.6% 0.6% 0.7% 0.6% 0.6% 0.6% 0.7%
Net Absorption ('000 sq. ft) 24,354 19,278 34,273 22,316 20,983 18,884 33,572 31,474
Completions ('000 sq. ft) 12,643 14,507 9,479 9,475 19,608 20,857 13,628 12,969
Inventory ('000,000 sq. ft) 8,421 8,441 8,450 8,433 8,453 8,474 8,488 8,501
SOURCE: National Association of REALTORS®, REIS
Los
AngelesSacrament
oSan Diego
San Francisco
San Jose
2011 5.1 14.2 9.0 13.1 17.9
2012 4.4 13.6 8.0 12.0 17.1
2013P 4.0 12.6 7.1 11.1 16.8
2014F 3.7 11.9 6.6 10.7 16.3
Vacancy Rates for the Industrial Segment
SOURCE: National Association of REALTORS®, REIS
Average Asking Rents for the Industrial Segment
2011 2012 2013P 2014F-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
-1.5
1.5
2.5 2.5
-1.2
1.2
2.62.8
-1.6
1.2 1.2
2.4
-1.2
0.5
1.5
2.7
1.51.2
0.7
2
Los Angeles Sacramento San Diego San Francisco San JosePercent Change
SOURCE: National Association of REALTORS®, REIS
RETAIL SPACE
Retail Segment Drivers
Retail sales Growth in economy & jobs
Consumer expenditures
Consumer credit
U.S. Outlook - Retail
RETAIL 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4
Vacancy Rate 10.7% 10.5% 10.5% 10.4% 10.3% 10.2% 10.0% 9.9%
Rent Growth 0.2% 0.4% 0.4% 0.4% 0.5% 0.5% 0.6% 0.6%
Net Absorption ('000 sq. ft) 4,297 2,990 2,866 3,059 4,161 4,342 4,161 5,428
Completions ('000 sq. ft) 1,981 1,645 1,848 1,508 3,505 3,028 3,402 3,474
Inventory ('000,000 sq. ft) 2,034 2,036 2,037 2,035 2,036 2,039 2,042 2,046
SOURCE: National Association of REALTORS®, REIS
Los
AngelesSacrament
oSan Diego San Francisco San Jose
2011-Q1 6.2 13.0 7.4 3.6 6.0
2011-Q2 6.2 12.7 7.3 3.8 6.1
2011-Q3 6.5 12.7 7.1 3.7 6.0
2011-Q4 6.5 12.4 6.7 3.7 6.0
2012-Q1 6.6 12.0 6.5 3.8 5.8
2012-Q2 6.3 11.9 6.4 3.9 5.9
2012-Q3 6.1 12.4 6.4 3.9 5.9
2012-Q4 6.2 12.7 6.3 3.7 6.0
2013 –Q1 6.1 12.9 6.4 3.6 5.9
2013-Q2 6.1 12.7 6.2 3.9 6.0
2013-Q3 6.0 12.5 6.2 3.9 5.8
Vacancy Rates for the Retail Segment
SOURCE: National Association of REALTORS®, REIS
Los
AngelesSacrament
oSan Diego
San Francisco
San Jose
2011 6.5 12.4 6.7 3.7 6.0
2012 6.2 12.7 6.3 3.7 6.0
2013 P 6.0 12.5 6.2 4.0 5.8
2014 F 5.6 12.1 6.1 3.7 6.0
Vacancy Rates for the Retail Segment
SOURCE: National Association of REALTORS®, REIS
Average Asking Rents for the Retail Segment
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Los Angeles Sacramento San DiegoSan Francisco San JosePercent
Change
SOURCE: National Association of REALTORS®, REIS
Average Asking Rents for the Retail Segment
2011 2012 2013P 2014 F-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0.60.9
1.5
2.2
-0.5 -0.6
1.31.6
0
0.9
1.7
2.1
-0.6
0.4
1.4
1.9
0.2
0.8
2.11.9
Los Angeles Sacramento San Diego San Francisco San Jose
Percent Change
SOURCE: National Association of REALTORS®, REIS
MULTI-FAMILY
Pent-up demand continues to drive multifamily sector, while new supply still falls short
• Market conditions in multifamily rental housing have tightened since the housing crisis began; Renter share in California larger than US
• Sustained low household formation has caused unprecedented pent-up demand;
• New supply falls far short of potential demand;
• Key factor limiting rent growth: wages.
• Credit dings keep many households in the rental market and out of the housing market
0
1
2
3
1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
Household formation plunged during the Great Recession, well below its trend pace
Percent change over year ago
Fitted Trend
Source: U.S. Census Bureau, Haver Analytics.
Pent-Up Demand for Housing is RealHousehold Formation will Rebound with Jobs
30,000
31,000
32,000
33,000
34,000
35,000
36,000
37,000
38,000
11,400,000
11,600,000
11,800,000
12,000,000
12,200,000
12,400,000
12,600,000
12,800,000
13,000,000
13,200,000
13,400,000
Total Population, CaliforniaNumber of Households, California (right axis)Projected linear estimate
In t
hou
san
ds
377K
575K
U.S. Outlook – Multi-Family
MULTI-FAMILY 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4
Vacancy Rate 4.0% 3.9% 3.9% 3.9% 4.0% 4.0% 4.0% 4.0%
Rent Growth 1.0% 1.1% 1.2% 1.4% 1.2% 1.1% 1.0% 1.0%
Net Absorption (units) 64,954 63,554 74,606 79,787 47,091 49,005 56,658 58,571
Completions (units) 31,851 37,155 33,929 43,284 35,170 44,672 40,793 43,289
Inventory (units in imillions) 9.9 9.9 10.0 10.1 10.1 10.1 10.2 10.2
SOURCE: National Association of REALTORS®, REIS
Los
AngelesSacrament
oSan Diego
San Francisco
San Jose
2011-Q1 4.6 5.7 4.0 4.0 3.4
2011-Q2 4.4 5.4 3.7 3.8 3.2
2011-Q3 4.2 5.4 3.4 3.6 3.1
2011-Q4 3.9 4.8 3.1 3.4 2.9
2012-Q1 3.7 4.4 3.0 3.2 2.7
2012-Q2 3.6 4.3 3.0 3.1 2.5
2012-Q3 3.5 4.2 3.0 3.2 2.7
2012-Q4 3.3 3.8 2.7 3.3 2.8
2013-Q1 3.2 3.7 2.4 3.2 2.5
2013-Q2 3.2 3.6 2.5 3.1 3.0
2013-Q3 3.2 3.4 2.3 3.1 2.9
Vacancy Rates for the Multi-Family Segment
SOURCE: National Association of REALTORS®, REIS
Los
AngelesSacrament
oSan Diego
San Francisco
San Jose
2011 3.9 4.8 3.1 3.4 2.9
2012 3.3 3.8 2.7 3.3 2.8
2013 P 3.1 3.2 2.1 3.1 2.8
2014 F 3.2 3.0 2.3 3.1 3.1
Vacancy Rates for the Multi-Family Segment
SOURCE: National Association of REALTORS®, REIS
Average Asking Rents for the Multi-Family Segment
0
0.5
1
1.5
2
2.5
Los Angeles Sacramento San DiegoSan Francisco San Jose
Percent Change
SOURCE: National Association of REALTORS®, REIS
Average Asking Rents for the Multi-Family Segment
2011 2012 2013 P 2014 F0
1
2
3
4
5
6
1.1
3.33.6 3.5
1.4
2.3
1.7
2.7
2 2.1
3
4
4.65
4.7 4.74.6 4.6
5.4
4.5
Los Angeles Sacramento San Diego San Francisco San Jose
Percent Change
SOURCE: National Association of REALTORS®, REIS
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
New Housing Permits• California, Nov. 2013: 6,673 Units, Up 40.6% YTD
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
30
5,000
10,000
15,000
20,000
25,000 Single Family Multi-Family
New Housing Permits• Los Angeles County, November 2013: 1,683 Units, Up 37.9% YTD
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
30
500
1,000
1,500
2,000
2,500
3,000
3,500 Single Family Multi-Family
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
New Housing Permits• Sacramento County, Nov. 2013: 113 Units, +53.5% YTD
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
30
200
400
600
800
1,000
1,200
1,400 Single Family Multi-Family
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
New Housing Permits• San Diego County, Nov. 2013: 1,256 Units, +37.2% YTD
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
30
500
1,000
1,500
2,000
2,500
3,000 Single Family Multi-Family
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
New Housing Permits• San Francisco County, Nov. 2013: 466 Units, +103.4% YTD
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
30
200
400
600
800
1,000
1,200 Single Family Multi-Family
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
New Housing Permits• Santa Clara County, Nov. 2013: 365 Units, +4.7% YTD
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
30
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000 Single Family Multi-Family
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
CONCLUDING REMARKS
Commercial RE OutlookOfficeDemand for office space increases, as employment rises, but is
affected by firms’ decision to increase workplace density Markets with high concentrations of energy or tech companies
see stronger growthDecline in vacancy rate accompanied with moderate growth in
rents
Industrial Demand for industrial spaces remains strong as online shopping
continues to growVacancy rates low in LA and OCRents rising modestly in 2013 and 2014Construction activity remains strong
SOURCE: National Association of REALTORS®
Commercial RE OutlookRetailThe market remains in slow motion as retailers continue to be cautious
Growth has been uneven due to the increasing divide of the consumer base
Rent will inch up slightly
Multi-FamilyPent-Up demand continues to fuel the apartment rental market
Vacancy rate dropped to 4.0% in 2014(from 5.2% in 2011)Rent growth subdued in near term as wage and salary growth remain sluggish
SOURCE: National Association of REALTORS®
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