GEORGE RATIU Director, Quantitative & Commercial Research National Association of REALTORS 2015 CCIM Commercial Real Estate Outlook Conference Wednesday, January 21, 2015 Coral Gables, FL
Where Are We at the Dawn of 2015? ECONOMIC OVERVIEW - Global Economies: Highlights - U.S. Economic Landscape: - 5 Years After the Great Recession - Lingering Impacts - Outlook - Florida Economy & Employment CRE OVERVIEW - Fundamentals - Investments - Lending - Outlook
Global Economies 14.0% GDP (2014) Unemployment Rate* 12.0% 10.0% 8.0% 6.0% 7.3% 6.0% 4.0% 2.0% 0.0% 2.3% 2.3% 0.8% U.S. Canada Euro area *Reporting period varies by country 3.0% 0.5% 0.2% 0.6% Britain Japan Brazil Russia China India Source: Economist Intelligence Unit
European Groundhog Day 30.0% GDP (2014) Unemployment Rate* 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 0.9% 1.1% 2.4% 0.9% 0.4% 1.4% 0.8% 3.0% -0.3% 0.7% 2.3% 3.3% 1.3% 2.0% 1.6% 3.0% -5.0% *Reporting period varies by country Source: Economist Intelligence Unit
Asian Economies 10.0% 9.0% GDP (2014) Unemployment Rate* 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 3.1% 2.4% 6.0% 5.0% 6.0% 3.1% 3.5% 3.6% 7.3% 2.0% 1.0% 0.7% 0.0% *Reporting period varies by country Source: Economist Intelligence Unit
Central/South American Economies GDP (2014) Unemployment Rate* 10.0% 8.0% 6.0% 5.0% 4.0% 2.0% 0.0% 0.2% 2.0% 2.1% -2.0% -4.0% -0.6% Argentina Brazil Chile Colombia Mexico Venezuela -3.1% *Reporting period varies by country Source: Economist Intelligence Unit
U.S. Economic Landscape
1947 - Q1 1948 - Q3 1950 - Q1 1951 - Q3 1953 - Q1 1954 - Q3 1956 - Q1 1957 - Q3 1959 - Q1 1960 - Q3 1962 - Q1 1963 - Q3 1965 - Q1 1966 - Q3 1968 - Q1 1969 - Q3 1971 - Q1 1972 - Q3 1974 - Q1 1975 - Q3 1977 - Q1 1978 - Q3 1980 - Q1 1981 - Q3 1983 - Q1 1984 - Q3 1986 - Q1 1987 - Q3 1989 - Q1 1990 - Q3 1992 - Q1 1993 - Q3 1995 - Q1 1996 - Q3 1998 - Q1 1999 - Q3 2001 - Q1 2002 - Q3 2004 - Q1 2005 - Q3 2007 - Q1 2008 - Q3 2010 - Q1 2011 - Q3 2013 - Q1 2014 - Q3 $ Billions Percentage About every ten years, we have the biggest crisis in 50 years. - Paul Volcker (Chairman of the Federal Reserve: Aug. 1979 to Aug. 1987) GDP, Annualized % Growth Real GDP 20000 1948-49 1980 20.0 15000 1953-54 1957-58 1970 1974-75 15.0 10000 1960 1981-82 2001 10.0 1990-91 2008-09 5000 5.0 0 0.0-5000 -5.0-10000 -10.0-15000 Source: BEA -15.0
U.S. Population Grows 139%: 1940-2013 132 181 227 282 304 316 1940 1960 1980 2000 2008 2013 Source: Census Bureau <- 37% -> <- 25% -> <- 24% -> <- 8% -> <- 4% ->
U.S. Labor Force Grows 154%: 1948-2013 61 70 107 143 154 155 1948 1960 1980 2000 2008 2013 Source: BLS <- 15% -> <- 53% -> <- 34% -> <- 8% -> <- 1% ->
2000.Jan 2000.May 2000.Sep 2001.Jan 2001.May 2001.Sep 2002.Jan 2002.May 2002.Sep 2003.Jan 2003.May 2003.Sep 2004.Jan 2004.May 2004.Sep 2005.Jan 2005.May 2005.Sep 2006.Jan 2006.May 2006.Sep 2007.Jan 2007.May 2007.Sep 2008.Jan 2008.May 2008.Sep 2009.Jan 2009.May 2009.Sep 2010.Jan 2010.May 2010.Sep 2011.Jan 2011.May 2011.Sep 2012.Jan 2012.May 2012.Sep 2013.Jan 2013.May 2013.Sep 2014.Jan 2014.May 2014.Sep Employment Lags Population Growth 18000 In Labor Force > Unemployed: 16 Yr + (SA, '000s) Not in Labor Force > Want a Job Now: 16 Yr + (SA, '000s) 16000 14000 2014.12: 8.7 M 12000 10000 8000 6000 4000 2014.12: 6.5 M 2000 0 Source: BLS
2000.Jan 2000.May 2000.Sep 2001.Jan 2001.May 2001.Sep 2002.Jan 2002.May 2002.Sep 2003.Jan 2003.May 2003.Sep 2004.Jan 2004.May 2004.Sep 2005.Jan 2005.May 2005.Sep 2006.Jan 2006.May 2006.Sep 2007.Jan 2007.May 2007.Sep 2008.Jan 2008.May 2008.Sep 2009.Jan 2009.May 2009.Sep 2010.Jan 2010.May 2010.Sep 2011.Jan 2011.May 2011.Sep 2012.Jan 2012.May 2012.Sep 2013.Jan 2013.May 2013.Sep 2014.Jan 2014.May 2014.Sep Unemployment 18000 In Labor Force > Unemployed: 16 Yr + (SA, '000s) Not in Labor Force > Want a Job Now: 16 Yr + (SA, '000s) 16000 14000 2014.12: 8.7 M 12000 10000 8000 6000 4000 2014.12: 6.5 M 2000 0 Source: BLS
2000.Jan 2000.May 2000.Sep 2001.Jan 2001.May 2001.Sep 2002.Jan 2002.May 2002.Sep 2003.Jan 2003.May 2003.Sep 2004.Jan 2004.May 2004.Sep 2005.Jan 2005.May 2005.Sep 2006.Jan 2006.May 2006.Sep 2007.Jan 2007.May 2007.Sep 2008.Jan 2008.May 2008.Sep 2009.Jan 2009.May 2009.Sep 2010.Jan 2010.May 2010.Sep 2011.Jan 2011.May 2011.Sep 2012.Jan 2012.May 2012.Sep 2013.Jan 2013.May 2013.Sep 2014.Jan 2014.May 2014.Sep Labor Force Participation Declines Labor Force Participation Rate: 16 yr + (SA, %) 68.0 67.0 66.0 65.0 67.3% in Jan 2000 64.0 63.0 62.0 61.0 62.7% in Dec 2014 60.0 Source: BLS
How is U.S. Economy at ½ Workforce?
1990 - Q1 1991 - Q2 1992 - Q3 1993 - Q4 1995 - Q1 1996 - Q2 1997 - Q3 1998 - Q4 2000 - Q1 2001 - Q2 2002 - Q3 2003 - Q4 2005 - Q1 2006 - Q2 2007 - Q3 2008 - Q4 2010 - Q1 2011 - Q2 2012 - Q3 2013 - Q4 2000.Q1 2000.Q4 2001.Q3 2002.Q2 2003.Q1 2003.Q4 2004.Q3 2005.Q2 2006.Q1 2006.Q4 2007.Q3 2008.Q2 2009.Q1 2009.Q4 2010.Q3 2011.Q2 2012.Q1 2012.Q4 2013.Q3 2014.Q2 Economic Growth Modestly Positive 21000 GDP Actual GDP Trend 10.00 Real GDP (SAAR, Chn.2009$) % Chg - Annual Rate 19000 17000 15000 13000 11000 9000 Impact on U.S. Economy: $2.5 Trillion Missing 8.00 6.00 4.00 2.00 0.00-2.00 7000 5000-4.00-6.00-8.00-10.00 Source: BEA
Consumers Remain Growth Engine Real GDP (SAAR, Bil.Chn.2009$) Consumer Spending Investments Net Exports Government Spending 18000.0 16000.0 14000.0 12000.0 10000.0 8000.0 6000.0 2007.Q4: $15.0 T 2014.Q3: $16.2 T 4000.0 2000.0 CONSUMER CONSUMPTION = 70% of ECONOMY 0.0-2000.0 Source: BEA
2000.Jan 2000.Aug 2001.Mar 2001.Oct 2002.May 2002.Dec 2003.Jul 2004.Feb 2004.Sep 2005.Apr 2005.Nov 2006.Jun 2007.Jan 2007.Aug 2008.Mar 2008.Oct 2009.May 2009.Dec 2010.Jul 2011.Feb 2011.Sep 2012.Apr 2012.Nov 2013.Jun 2014.Jan 2014.Aug 2000.Jan 2000.Aug 2001.Mar 2001.Oct 2002.May 2002.Dec 2003.Jul 2004.Feb 2004.Sep 2005.Apr 2005.Nov 2006.Jun 2007.Jan 2007.Aug 2008.Mar 2008.Oct 2009.May 2009.Dec 2010.Jul 2011.Feb 2011.Sep 2012.Apr 2012.Nov 2013.Jun 2014.Jan 2014.Aug I.V. Drip of Free Money Continues Boosting Confidence 7.0000 FRB Fed Funds Target Rate (EOP, %) 160.0 Consumer Confidence (SA, 1985=100) Consumer Sentiment (NSA, Q1.66=100) 6.0000 140.0 5.0000 120.0 4.0000 100.0 3.0000 80.0 2.0000 60.0 1.0000 40.0 0.0000 20.0 Source: Federal Sources: The Conference Board, University of Michigan
2000.Q1 2000.Q4 2001.Q3 2002.Q2 2003.Q1 2003.Q4 2004.Q3 2005.Q2 2006.Q1 2006.Q4 2007.Q3 2008.Q2 2009.Q1 2009.Q4 2010.Q3 2011.Q2 2012.Q1 2012.Q4 2013.Q3 2014.Q2 2000.Q1 2000.Q4 2001.Q3 2002.Q2 2003.Q1 2003.Q4 2004.Q3 2005.Q2 2006.Q1 2006.Q4 2007.Q3 2008.Q2 2009.Q1 2009.Q4 2010.Q3 2011.Q2 2012.Q1 2012.Q4 2013.Q3 2014.Q2 Growth of Household Assets Also Boosts Confidence 80000.000 Households & Nonprofit Org: Total Financial Assets (NSA, Bil.$) 30000.000 Households & Nonprofit Organizations: Total Real Estate Holdings (NSA, Bil.$) FRB 70000.000 25000.000 60000.000 50000.000 20000.000 40000.000 15000.000 30000.000 20000.000 10000.000 10000.000 2007.Q3: $52.6 > 2014.Q2: $66.8T 5000.000 2006.Q4: $25.0 > 2014.Q3: $23.2T 0.000 0.000 Source: Federal Reserve Board
Jan.2000 Sep.2000 May.2001 Jan.2002 Sep.2002 May.2003 Jan.2004 Sep.2004 May.2005 Jan.2006 Sep.2006 May.2007 Jan.2008 Sep.2008 May.2009 Jan.2010 Sep.2010 May.2011 Jan.2012 Sep.2012 May.2013 Jan.2014 Sep.2014 1960.Q1 1962.Q2 1964.Q3 1966.Q4 1969.Q1 1971.Q2 1973.Q3 1975.Q4 1978.Q1 1980.Q2 1982.Q3 1984.Q4 1987.Q1 1989.Q2 1991.Q3 1993.Q4 1996.Q1 1998.Q2 2000.Q3 2002.Q4 2005.Q1 2007.Q2 2009.Q3 2011.Q4 2014.Q1 Earnings and Credit 2015 Signs of Hope 10.00 Real Personal Income Excluding Transfer Receipts (SAAR, Chn.2009$) %Chg YoY CONSUMER CREDIT - YoY % Change (EOP, SA, Bil.$) Revolving Nonrevolving 8.00 20.00 6.00 15.00 4.00 2.00 0.00-2.00-4.00 10.00 5.00 0.00-5.00-6.00-10.00-8.00 Source: BEA -15.00 Source: Federal Reserve Board
Consumer Spending Moderate, Steady 50.00 Real Personal Consumption Expenditures: Services (SAAR, Chn.2009$) % Change - Annual Rate Real Personal Consumption Expenditures: Nondurable Goods (SAAR, Chn.2009$) % Change - Annual Rate Real Personal Consumption Expenditures: Durable Goods (SAAR, Chn.2009$) % Change - Annual Rate 40.00 30.00 20.00 10.00 0.00-10.00-20.00-30.00-40.00 Source: BEA
2000.Jan 2000.Sep 2001.May 2002.Jan 2002.Sep 2003.May 2004.Jan 2004.Sep 2005.May 2006.Jan 2006.Sep 2007.May 2008.Jan 2008.Sep 2009.May 2010.Jan 2010.Sep 2011.May 2012.Jan 2012.Sep 2013.May 2014.Jan 2014.Sep 2000.Jan 2000.Sep 2001.May 2002.Jan 2002.Sep 2003.May 2004.Jan 2004.Sep 2005.May 2006.Jan 2006.Sep 2007.May 2008.Jan 2008.Sep 2009.May 2010.Jan 2010.Sep 2011.May 2012.Jan 2012.Sep 2013.May 2014.Jan 2014.Sep Business Activity Expanding Manufacturers' Activity (EOP, SA, Mil.$) ISM Index (SA, 50+ Increasing) 700000 Shipments New orders Inventories 65.0 ISM Manufacturing ISM Nonmanufacturing 650000 600000 60.0 550000 55.0 500000 50.0 450000 45.0 400000 40.0 350000 35.0 300000 30.0 Source: Census Bureau Source: Institute for
2000.Q1 2000.Q4 2001.Q3 2002.Q2 2003.Q1 2003.Q4 2004.Q3 2005.Q2 2006.Q1 2006.Q4 2007.Q3 2008.Q2 2009.Q1 2009.Q4 2010.Q3 2011.Q2 2012.Q1 2012.Q4 2013.Q3 2014.Q2 2000.Q1 2000.Q4 2001.Q3 2002.Q2 2003.Q1 2003.Q4 2004.Q3 2005.Q2 2006.Q1 2006.Q4 2007.Q3 2008.Q2 2009.Q1 2009.Q4 2010.Q3 2011.Q2 2012.Q1 2012.Q4 2013.Q3 2014.Q2 Trade and Productivity Boost Bottom Line 2800.0 2600.0 2400.0 2200.0 2000.0 1800.0 1600.0 1400.0 1200.0 International Trade (SAAR, Bil.Chn.2009$) Real Exports Real Imports 125.000 120.000 115.000 110.000 105.000 100.000 95.000 90.000 85.000 Productivity: Real Output (2005=100, SA) Business Sector Manufacturing Sector Nonfinancial Corporations 1000.0 80.000 Source: BEA Source: BLS
2000.Q1 2000.Q4 2001.Q3 2002.Q2 2003.Q1 2003.Q4 2004.Q3 2005.Q2 2006.Q1 2006.Q4 2007.Q3 2008.Q2 2009.Q1 2009.Q4 2010.Q3 2011.Q2 2012.Q1 2012.Q4 2013.Q3 2014.Q2 2000.Q1 2000.Q4 2001.Q3 2002.Q2 2003.Q1 2003.Q4 2004.Q3 2005.Q2 2006.Q1 2006.Q4 2007.Q3 2008.Q2 2009.Q1 2009.Q4 2010.Q3 2011.Q2 2012.Q1 2012.Q4 2013.Q3 2014.Q2 Corporate Balance Sheets Healthy 2000.0 Real Corporate Profits After Tax (SAAR, Bil.Chn.2009$) 2500 Corporate Cash/Cash Equivalent Holdings (NSA, Bil.$) 1800.0 1600.0 2000 1400.0 1200.0 1500 1000.0 800.0 1000 600.0 400.0 500 200.0 0.0 2014.Q3: $1.78 Trillion 0 2014.Q2 = $1.86 Trillion Source: BEA Source: Federal Reserve Board
2000.Jan 2000.Oct 2001.Jul 2002.Apr 2003.Jan 2003.Oct 2004.Jul 2005.Apr 2006.Jan 2006.Oct 2007.Jul 2008.Apr 2009.Jan 2009.Oct 2010.Jul 2011.Apr 2012.Jan 2012.Oct 2013.Jul 2014.Apr 2000.Jan 2000.Sep 2001.May 2002.Jan 2002.Sep 2003.May 2004.Jan 2004.Sep 2005.May 2006.Jan 2006.Sep 2007.May 2008.Jan 2008.Sep 2009.May 2010.Jan 2010.Sep 2011.May 2012.Jan 2012.Sep 2013.May 2014.Jan 2014.Sep Equity/Bond Markets 6000.00 5000.00 4000.00 3000.00 S&P 500 (EOP, 1941-43=10) NASDAQ (EOP, Feb 5, 1971=100) DJIA (EOP, May 26, 1896=40.94) 20000.00 18000.00 130.0000 125.0000 16000.00 120.0000 14000.00 115.0000 12000.00 110.0000 10000.00 105.0000 Dow Jones Corp Bond Index (EOP, 12/31/96=100) Industrial Financials Utility 2000.00 1000.00 0.00 8000.00 6000.00 4000.00 2000.00 0.00 100.0000 95.0000 90.0000 85.0000 80.0000 Source: Wall Street Source: Dow
Business Investments Rising Confidence 80.00 Real Private Nonresidential Investment (SAAR, Chn2009$, %Chg Annual Rate) Structures Equipment Intellectual Property 60.00 40.00 20.00 0.00-20.00-40.00-60.00-80.00 Source: BEA
2000.Jan 2000.May 2000.Sep 2001.Jan 2001.May 2001.Sep 2002.Jan 2002.May 2002.Sep 2003.Jan 2003.May 2003.Sep 2004.Jan 2004.May 2004.Sep 2005.Jan 2005.May 2005.Sep 2006.Jan 2006.May 2006.Sep 2007.Jan 2007.May 2007.Sep 2008.Jan 2008.May 2008.Sep 2009.Jan 2009.May 2009.Sep 2010.Jan 2010.May 2010.Sep 2011.Jan 2011.May 2011.Sep 2012.Jan 2012.May 2012.Sep 2013.Jan 2013.May 2013.Sep 2014.Jan 2014.May 2014.Sep Employment Recovery Gains Momentum 600 400 One-month Payroll Job Changes (in thousands) J.08-D.09: 8.7M jobs cut 200 0-200 -400-600 2010-14 ytd: 11.2M jobs added -800-1000 Source: BLS
Service Industries Drive Growth 2010-14: Payroll Employment Growth by Sector (SA, 000s) Government Other services Leisure & hospitality Education & health services Prof & business services Financial activities Information Trade, transportation & utilities Manufacturing Construction Mining & Logging Source: BLS -1000-500 0 500 1000 1500 2000 2500 3000 3500
2000.Jan 2000.May 2000.Sep 2001.Jan 2001.May 2001.Sep 2002.Jan 2002.May 2002.Sep 2003.Jan 2003.May 2003.Sep 2004.Jan 2004.May 2004.Sep 2005.Jan 2005.May 2005.Sep 2006.Jan 2006.May 2006.Sep 2007.Jan 2007.May 2007.Sep 2008.Jan 2008.May 2008.Sep 2009.Jan 2009.May 2009.Sep 2010.Jan 2010.May 2010.Sep 2011.Jan 2011.May 2011.Sep 2012.Jan 2012.May 2012.Sep 2013.Jan 2013.May 2013.Sep 2014.Jan 2014.May 2014.Sep Inflation Remains Contained for Now 6.0 Overall CPI Core CPI (1982-84=100, %Chg YoY) 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0 Source: BLS
2000.Jan 2000.Oct 2001.Jul 2002.Apr 2003.Jan 2003.Oct 2004.Jul 2005.Apr 2006.Jan 2006.Oct 2007.Jul 2008.Apr 2009.Jan 2009.Oct 2010.Jul 2011.Apr 2012.Jan 2012.Oct 2013.Jul 2014.Apr 2000.Jan 2000.Sep 2001.May 2002.Jan 2002.Sep 2003.May 2004.Jan 2004.Sep 2005.May 2006.Jan 2006.Sep 2007.May 2008.Jan 2008.Sep 2009.May 2010.Jan 2010.Sep 2011.May 2012.Jan 2012.Sep 2013.May 2014.Jan 2014.Sep Energy Costs Reflect Rising U.S. Supply 160.00 140.00 Brent Nominal (EU Mkt Price, $/Barrel) Cushing West Texas Intermediate (Spot FOB, EOP, $/Barrel) Dec 2014: $63 16.00 14.00 12.00 Natural Gas Price (Henry Hub, LA, $/mmbtu) 120.00 100.00 80.00 60.00 40.00 20.00 Dec 2014: $53 10.00 8.00 6.00 4.00 2.00 0.00 0.00 Source: Wall Street Journal
U.S. Economic Outlook DECEMBER 2014 2013 2014 2015 2016 Annual Growth Rate, % Real GDP 2.2 2.5 3.1 3.0 Nonfarm Payroll Employment 1.7 2.0 2.1 2.1 Consumer Prices 1.5 1.2 2.0 3.2 Level Consumer Confidence 73 87 95 98 Percent Unemployment 7.4 6.2 5.6 5.5 Fed Funds Rate 0.1 0.1 0.4 1.6 3-Month T-bill Rate 0.1 0.1 0.7 1.9 Corporate Aaa Bond Yield 4.3 4.2 4.7 5.7 10-Year Gov t Bond 2.6 2.5 2.9 4.2 30-Year Gov t Bond 3.4 3.3 3.8 5.3 Source: National Association of REALTORS
Florida Economy & Employment
2000 - Jan 2000 - Sep 2001 - May 2002 - Jan 2002 - Sep 2003 - May 2004 - Jan 2004 - Sep 2005 - May 2006 - Jan 2006 - Sep 2007 - May 2008 - Jan 2008 - Sep 2009 - May 2010 - Jan 2010 - Sep 2011 - May 2012 - Jan 2012 - Sep 2013 - May 2014 - Jan 2014 - Sep 2000 - Jan 2000 - Aug 2001 - Mar 2001 - Oct 2002 - May 2002 - Dec 2003 - Jul 2004 - Feb 2004 - Sep 2005 - Apr 2005 - Nov 2006 - Jun 2007 - Jan 2007 - Aug 2008 - Mar 2008 - Oct 2009 - May 2009 - Dec 2010 - Jul 2011 - Feb 2011 - Sep 2012 - Apr 2012 - Nov 2013 - Jun 2014 - Jan 2014 - Aug July 1992 = 100 Florida Economy Growing 165 160 Philadelphia FRB Coincident Economic Activity Index U.S. Florida 4 Philadelphia FRB Leading Economic Activity Index (6-Mo % Chg Forecast Of Coincident Ind.) U.S. Florida 155 3 150 2 145 1 140 135 130 125 Nonfarm payroll employment Unemployment rate Avg. hours worked in manufacturing Wages and salaries 0-1 -2-3 -4-5 Source: Federal Reserve Bank of Philadelphia -6 Source: Federal Reserve Bank of Philadelphia
CCIM Quarterly Market Trends Sources: CCIM, NAR
2000 - Jan 2000 - May 2000 - Sep 2001 - Jan 2001 - May 2001 - Sep 2002 - Jan 2002 - May 2002 - Sep 2003 - Jan 2003 - May 2003 - Sep 2004 - Jan 2004 - May 2004 - Sep 2005 - Jan 2005 - May 2005 - Sep 2006 - Jan 2006 - May 2006 - Sep 2007 - Jan 2007 - May 2007 - Sep 2008 - Jan 2008 - May 2008 - Sep 2009 - Jan 2009 - May 2009 - Sep 2010 - Jan 2010 - May 2010 - Sep 2011 - Jan 2011 - May 2011 - Sep 2012 - Jan 2012 - May 2012 - Sep 2013 - Jan 2013 - May 2013 - Sep 2014 - Jan 2014 - May 2014 - Sep Florida Employment Recovery 100 One-month Payroll Job Changes (in thousands) 80 60 40 20 0-20 -40-60 -80 Source: BLS
2000 - Jan 2000 - Jun 2000 - Nov 2001 - Apr 2001 - Sep 2002 - Feb 2002 - Jul 2002 - Dec 2003 - May 2003 - Oct 2004 - Mar 2004 - Aug 2005 - Jan 2005 - Jun 2005 - Nov 2006 - Apr 2006 - Sep 2007 - Feb 2007 - Jul 2007 - Dec 2008 - May 2008 - Oct 2009 - Mar 2009 - Aug 2010 - Jan 2010 - Jun 2010 - Nov 2011 - Apr 2011 - Sep 2012 - Feb 2012 - Jul 2012 - Dec 2013 - May 2013 - Oct 2014 - Mar 2014 - Aug Florida Employment: Selected Industries Florida Payroll Nov 2014: 7.9M 1800 1600 Payroll Employment (in thousands) Construction Manufacturing Trade, Transp., Utilities Financial Ed & Health Leisure & Hospitality Information Other Government 1400 1200 1000 800 600 400 200 0 Source: BLS
2010 - Jan 2010 - Mar 2010 - May 2010 - Jul 2010 - Sep 2010 - Nov 2011 - Jan 2011 - Mar 2011 - May 2011 - Jul 2011 - Sep 2011 - Nov 2012 - Jan 2012 - Mar 2012 - May 2012 - Jul 2012 - Sep 2012 - Nov 2013 - Jan 2013 - Mar 2013 - May 2013 - Jul 2013 - Sep 2013 - Nov 2014 - Jan 2014 - Mar 2014 - May 2014 - Jul 2014 - Sep 2014 - Nov Florida Employment MSAs Private Payroll Employment Change (period-to-period, thousands) Jacksonville Orlando Miami-Ft Lauderdale-Miami Beach Tampa-St Petersburg-Clearwater 40 30 Miami lost 236,800 jobs in 2008-09 20 10 0-10 -20-30 -40-50 Miami added 247,100 net jobs over 2010-2014.11 Source: BLS
2000 - Jan 2000 - May 2000 - Sep 2001 - Jan 2001 - May 2001 - Sep 2002 - Jan 2002 - May 2002 - Sep 2003 - Jan 2003 - May 2003 - Sep 2004 - Jan 2004 - May 2004 - Sep 2005 - Jan 2005 - May 2005 - Sep 2006 - Jan 2006 - May 2006 - Sep 2007 - Jan 2007 - May 2007 - Sep 2008 - Jan 2008 - May 2008 - Sep 2009 - Jan 2009 - May 2009 - Sep 2010 - Jan 2010 - May 2010 - Sep 2011 - Jan 2011 - May 2011 - Sep 2012 - Jan 2012 - May 2012 - Sep 2013 - Jan 2013 - May 2013 - Sep 2014 - Jan 2014 - May 2014 - Sep Florida Unemployment Matches U.S. 14 Unemployment Rate U.S. Florida Miami-M.Beach-Kendall 12 10 8 6 4 2 0 Source: BLS
Commercial Real Estate
% Change, Quarter-over-quarter Percent Change, Quarterly 2008.Q4 2009.Q1 2009.Q2 2009.Q3 2009.Q4 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 2013.Q4 2014.Q1 2014.Q2 2014.Q3 2009.Q2 2009.Q3 2009.Q4 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 2013.Q4 2014.Q1 2014.Q2 2014.Q3 CRE Fundamentals in Line with Economy 10% 5% New Construction Leasing Volume 20% REALTOR Commercial Leasing Trends Leasing Volume Leasing Rates Lease Concessions 0% 15% -5% 10% -10% 5% -15% 0% -20% -5% -25% -10% -30% Source: National Association of Realtors -15% Source: National Association of Realtors
Square Feet 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Office Lags: Employment/Efficiencies U.S. Office Fundamentals Completions Net Absorption Vac % 150,000,000 100,000,000 50,000,000 0-50,000,000-100,000,000 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0-150,000,000 0.0 Source: NAR, Reis
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Square Feet Industrial: International Trade/Online Commerce U.S. Industrial Fundamentals Completions Net Absorption Vac % 150,000,000 14.0 100,000,000 12.0 10.0 50,000,000 8.0 0 6.0 4.0-50,000,000 2.0-100,000,000 0.0 Source: NAR, Reis
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Square Feet Retail: Consumer Confidence U.S. Retail Fundamentals Completions Net Absorption Vac % 40,000,000 12.0 30,000,000 10.0 20,000,000 10,000,000 0 8.0 6.0-10,000,000 4.0-20,000,000 2.0-30,000,000 0.0 Source: NAR, Reis
Square Feet Apartment: Population Growth U.S. Apartment Fundamentals Completions Net Absorption Vac % 250,000 9.0 200,000 8.0 7.0 150,000 6.0 100,000 5.0 4.0 50,000 3.0 0 2.0 1.0-50,000 0.0 Source: NAR, Reis
Rents Bode Well for Investments U.S. Asking Rents % Chg Office Industrial Retail Apartment 12.0 10.0 8.0 6.0 4.0 2.0 0.0-2.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-4.0-6.0 Source: NAR, Reis
00.December June December June December June December June December June December June December June December June December June December June December June December June December June December CRE Volume and Prices Advance Billions $ Volume $180.0 $160.0 $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $- '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 220.00 200.00 180.00 160.00 140.00 Moody's/RCA CPPI - Composite Apartment Retail Industrial Office Year-Over-Year % Change 200% 150% 100% 50% 0% -50% -100% '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Source: Real Capital Analytics 120.00 100.00 80.00 Source: Real Capital Analytics
CRE Recovery Broadens Across Markets Sales Volume (YoY % Chg) Sales Prices (YoY % Chg) Major CRE Markets REALTOR CRE Markets Moody s/rca CPPI - Major Markets 200% Deals > $2.5M 10.0% REALTOR CRE Markets 150% 5.0% 100% 0.0% 50% -5.0% 0% -10.0% -15.0% -50% -20.0% -100% -25.0% Sources: NAR, Real Capital Analytics
CCIM Quarterly Market Trends Highlights Sources: CCIM, NAR
CRE Lending Rebounds 100% Change in Lending Conditions over Past Year 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011 2012 2013 2014 Eased Significantly Eased Somewhat Not Changed Tightened Somewhat Tightened Significantly Source: NAR
CRE Lending Sources Diversify Lenders - Real Capital Analytics REALTORS Lending Sources 100% 90% Private/Other 100% 90% Small Business Administration REITs 80% 70% 60% 50% 40% Reg'l/Local Bank National Bank Int'l Bank Insurance Co. Gov't Agency 80% 70% 60% 50% 40% Regional Banks Public Cos. Private Investors Other National Banks Local/Comm. Banks 30% Financial Inst. 30% Life Insurance Cos. 20% 10% CMBS 20% 10% International banks Credit Unions 0% 2009 2010 2011 2012 2013 Source: Real Capital Analytics 0% 2011 2012 2013 2014 CMBS Source: NAR
Commercial Outlook: Positive OFFICE 2014 2015 2016 Vacancy Rate 16.2% 15.7% 15.6% Net Absorption ('000 sq. ft.) 35,586 48,841 55,026 Completions ('000 sq. ft.) 27,073 42,154 44,460 Rent Growth 2.6% 3.3% 3.6% INDUSTRIAL 2014 2015 2016 Vacancy Rate 8.9% 8.5% 8.1% Net Absorption ('000 sq. ft.) 110,652 102,463 105,780 Completions ('000 sq. ft.) 81,009 71,349 62,097 Rent Growth 2.4% 2.9% 3.1% RETAIL 2014 2015 2016 Vacancy Rate 9.8% 9.6% 9.4% Net Absorption ('000 sq. ft.) 11,350 18,871 23,792 Completions ('000 sq. ft.) 7,747 11,711 15,924 Rent Growth 2.0% 2.5% 3.0% MULTI-FAMILY 2014 2015 2016 Vacancy Rate 4.0% 4.1% 4.2% Net Absorption (Units) 216,296 171,167 143,626 Completions (Units) 180,796 210,669 165,339 Rent Growth 4.0% 3.9% 3.5% Sources: NAR / Reis, Inc. 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 10yr UST* Cap Rate Spread (bps) 700 600 500 400 300 200 100 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Source: Real Capital Analytics
/ research-and-statistics www.ccim.com/resources/qmt GEORGE RATIU Director, Quantitative & Commercial Research National Association of REALTORS 2015 CCIM Commercial Real Estate Outlook Conference Wednesday, January 21, 2015 Coral Gables, FL