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1 GLOBAL RESEARCH AND CONSULTING
HOUSING PRICES CONTINUE TO GROWS&P/Case-Shiller Home Price Index
Source: S&P Case-Shiller Index
GLOBAL RESEARCH AND CONSULTING
U.S. PROPERTY MARKET FUNDAMENTALS
3 GLOBAL RESEARCH AND CONSULTING
Source: CBRE Research, CBRE Econometric Advisors
PROPERTY SECTOR TRAJECTORY
2013 Q4Past Cyclic
High“Natural Rate”
Year Back to "Natural Rate"
Office Vacancy Rate 15.0 16.8 / 2010 13 to 15 2013
Industrial Availability Rate 11.5 14.5 / 2010 9 to 10 2015
Retail Availability Rate 12.0 13.2 / 2011 9 to 10 2016
Multifamily Vacancy Rate 5.3 7.4 / 2009 5 to 6 2010
4 GLOBAL RESEARCH AND CONSULTING
PROPERTY SECTOR TRENDS
OFFICE• Urbanization & densification• Impact of workplace strategy• Investor interest in suburban, non-gateway markets• Tech markets leading the way
INDUSTRIAL• Supply chain efficiencies• Peak manufacturing productivity• Impact of e-commerce• More speculative construction but still in check
RETAIL• High-street retail still strong• E-commerce growing impact• Omni channel strategies• Shrinking retail footprints
5 GLOBAL RESEARCH AND CONSULTING
S
L
M
N
AC
D
D
L
P
P
SW
A
B
D
N
S
H
San Diego
Orange County O
Atlanta
Dallas (Suburban)
Boston
Seattle
U.S. OFFICE RENT CYCLE Q4 2013
Source: CBRE Research
6 GLOBAL RESEARCH AND CONSULTING
RENT GROWTH LED BY TECH MARKETS5-Year Annualized Rent Growth (%), Largest 20 Office Markets
Source: CBRE Econometric Advisors
7 GLOBAL RESEARCH AND CONSULTING
Source: CBRE Research, CBRE Econometric Advisors
Completions, Net Absorption & Vacancy Rate
OFFICE OUTLOOK
FORECAST
8 GLOBAL RESEARCH AND CONSULTING
REAL ESTATE INVESTMENT TRENDS
Increased global interest in U.S. markets
2013 saw the beginning of interest rate increases. In 2014, look for the end of cap rate compression and a new era of NOI growth.
Expect improved economic performance to correspond with interest rate increase
Expect spreads to between primary & secondary markets to compress
9 GLOBAL RESEARCH AND CONSULTING
Sales Volume ($ Billions)
NATIONAL INVESTMENT SALES
Source: Real Capital Analytics
10 GLOBAL RESEARCH AND CONSULTING
U.S. Ten Year Treasury Bonds
INTEREST RATE
Source: Federal Reserve
FORECAST
11 GLOBAL RESEARCH AND CONSULTING
Q2 Survey of economists places the 10-year treasury at 3.5% at the end of 2014
A RANGE OF OPINIONS
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
2013.3 2013.4 2014.1 2014.2 2014.3 2014.4 2015.1 2015.2 2015.3 2015.4
Ten Year Treasury, %
GLOBAL RESEARCH AND CONSULTING
THE ECONOMY AND REAL ESTATE
GARY BARAGONADIRECTOR, RESEARCH & ANALYSISJANUARY 2014
