U.S. Real Estate Markets: by the numbers

Transcription

1 U.S. Real Estate Markets: by the numbers NAREIM Spring Executive Officers Meeting March 18, 2013

2 U.S. sales transaction volume growth likely slowed from 60 percent+ in 2011 to close to 30 percent for 2012 U.S. total transaction volume by product type apartment, industrial, office and retail $450 Total transaction volume ($ billions) $400 $350 $300 $250 $200 $150 $100 $50 64% Projected fullyear volume growth 30% 15-20% $ * 2013* Apartment Industrial Office Retail Properties of at Least $5 Million, portfolio, including entity-level transactions are included in these data *Projections as of early March 2013 Source: Jones Lang LaSalle Research, Real Capital Analytics

3 Transaction volumes by market for 2012 relative to 2011: Gateway markets strong, as well as secondary markets with continued rising appeal; expect continuance in 2013 Total transaction volume by market (ranked by order of volume) apartment, industrial, office and retail Properties of at Least $5 Million, entity-level transactions are included in these data Source: Jones Lang LaSalle Research, Real Capital Analytics

4 Non-primary markets of Seattle and Austin come out ahead with largest annual increases as they gain further ground % Change 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% 138% Seattle 131% Austin Total transaction volume by market (ranked in order of year-over-year gains) apartment, industrial, office and retail 105% San Jose 50% 48% 43% 42% Properties of at Least $5 Million, entity-level transactions are included in these data Source: Jones Lang LaSalle Research, Real Capital Analytics San Francisco Los Angeles Denver Phoenix 32% 29% 25% 22% Dallas Houston 2012 Y/Y Increase or Decrease Manhattan San Diego 9% 7% Atlanta Chicago -1% -5% Boston DC

5 U.S. Office transaction market share by type of market While competition has increased in preferred primary markets, share grew in secondary and tertiary markets in 2012, as investors remain in search of yield; expect continuance in 2013 Percent of all office building transactions by dollar volume 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6% 3% 7% 39% 43% 38% 45% 48% 55% 53% 54% 5% 5% 6% 6% 7% 50% 47% 42% 41% 52% 53% 45% 11% 44% 48% 45% 6% 3% 5% 38% 38% 56% 59% * Properties of at Least $5 Million, entity-level transactions are included in these data Source: Jones Lang LaSalle Research, Real Capital Analytics Primary Secondary Tertiary 43% 52%

6 Occupancy rate for transacted properties reaches new historical high level at Q4 2012: Safety remains strongly desired Occupancy rate of transacted U.S. properties office, industrial, retail, multifamily 92.3% Average occupancy rate at transaction, dollar-weighted 92% 90% 88% 86% 84% 82% 80% 78% 76% 74% 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 Includes property sales of at least $5 million, entity-level transactions included in data *Estimates based on preliminary Q4 data as of early Jan 2013 Source: Jones Lang LaSalle Research, Real Capital Analytics

7 U.S. occupancy rate: All office properties vs. those transacted Investor flight to safer properties still prominent throughout market recovery 92% 90.9% 90% 88% 86% 84% 82% 80% 78% Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q4 2012* Average office occupancy rate Transacted office assets continue to have significantly greater average occupancy than overall office market; with Q highest since Q Occupancy - All Office Properties Occupancy-Traded Office Properties Avg. occupancy of transacted properties is dollar-weighted, includes property sales of at least $5 million, entity-level transactions included *Preliminary data as of early Jan 2013 for transacted property average Source: Jones Lang LaSalle Research, Real Capital Analytics

8 Core office cap rates in the country s major markets tighten Seattle % OR San Francisco CA % NV Los Angeles % WA ID AZ UT MT WY NM CO ND SD NE KS OK MN IA MO AR WI IL IN TN MI Chicago % KY OH SC NC NY PA NJ DE VT MA NH ME CT RI New York WV MD Washington, DC VA % Boston % % TX Houston % LA MS AL GA FL Cap rate 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% Core office cap rate range NY DC BOS SEA SFO LA HOU CHI Market

9 Cross-Border Capital Into the U.S. Source of Capital Volume in $US Billions # of Properties Canada $ Singapore $ Germany $ Switzerland $ UK $ South Korea $ Israel $ France $ Kuwait $ Other $ Total $ Properties and portfolios of $2.5 M and greater, past 12 months, February 2013 Source: Jones Lang LaSalle Research, Real Capital Analytics

10 Market Destination of Cross-Border Capital Market Destination Volume in $US Billions # of Properties Manhattan $ San Francisco $ Los Angeles $ Chicago $ Houston $ Seattle $ Phoenix $ Hawaii $ Inland Empire $ Other $ Total $ Properties and portfolios of $2.5 M and greater, past 12 months, February 2013 Source: Jones Lang LaSalle Research, Real Capital Analytics

11 United States Office February 7, 2013 hart of the week Nearly half of all suburban construction starts in Houston, with around two thirds in Texas Source: Jones Lang LaSalle As of Q4 2012, the a significant majority of new construction starts are in suburban markets, compared to only 939,816 square feet in CBD markets. However, the proportion of suburban construction underway is smaller as a proportion of total development. Geographically, almost all new suburban construction starts are in the South, with the exceptions being Baltimore, Boston, Portland and Suburban Maryland, which comprise only a small portion of new suburban starts.

12 hart of the week

13 hart of the week

14 Chicago February 14, 2013 Chart of the week Tech salaries on the rise in Chicago $86,000 $85,000 $84,000 $83,000 $82,000 $81,000 $80,000 $79,000 $78,000 Source: Dice.com, Crain s Overall tech salaries have climbed nearly 5.7 percent since Between 2009 and mid-2012, the number of computer systems design jobs in the Chicago area grew by 13 percent outpacing total job growth of 2.4 percent, according to federal data. Competition among growing firms has led to lofty signing bonuses and generous amenities to woo top talent according to a January 2013 report from hiring firm, Dice.com. In addition to salaries and benefits, redesigned workplaces and flexibility are key for attracting top performing employees.

15 Denver February 14, 2013 hart of the week Subleases, subleases, subleases Sublease breakdown by submarket There are currently 143 subleases throughout the Denver metro area ranging in size from 750 square feet to 134,790 square feet. The CBD and Southeast Suburban have the highest number of subleases at 28.0 percent (40 subleases) and 32.9 percent (47 subleases), respectively. The average size of subleases is 11,124 square feet, with 42.7 percent (61 subleases) under 5,000 square feet and just 4.2 percent (6 subleases) above 50,000 square feet (and just 1 sublease above 100,000 square feet). The average time on the market of subleases is 13 months. The average full service rate of subleases is $19.35 per square foot. The average time remaining on subleases is 36 months. Sublease breakdown by size Sources: Jones Lang LaSalle Research, CoStar

16 New York February 14, 2013 hart of the week Trophy leasing ac0vity s0ll dependent on financial and legal services Health Services 3% Government/Public Administration 7% Legal Services 20% Real Estate 4% Technology/Telecomm 1% Other 2% Insurance 7% Advertising/Marketing/ Public Relations 3% Business Services 8% Financial Services 45% Financial and legal services continue to drive the demand for trophy space, accounting for 65 percent of Manhattan Trophy leasing activity in The contraction of financial and legal firms contributes to the high Manhattan Trophy vacancy rate of 14.2 percent, as space is returned to the market.

17 hart of the week

18 hart of the week

19 Washington, DC February 14, 2013 hart of the week 1,387 days and counting here are some reminders of time gone by since the last time legislators passed a federal budget Average price of a gallon of unleaded gas: $2.05 On April 29, 2009 ipad not yet released Michael Jackson still alive Newcomer artist Lady Gaga tops the charts with Poker Face Since that date, U.S. national debt has grown by $5.3 trillion to $16.5 trillion Source: Jones Lang LaSalle, Consumer Reports, TreasuryDirect.gov, Billboard.com As government gridlock impedes economic growth in the Washington, DC region, the world in which we live continues to evolve. When put into context of world events and pop culture, the lack of progress within government becomes increasingly apparent. Since the Metropolitan Washington, DC commercial real estate market is interconnected with the federal government and the area s tenant base requires budget clarity to make long-term leasing decisions political compromise will be necessary to reignite activity in the market and put the region on a more sustainable path toward long-term growth.

20 For more information, please contact: Michael Zietsman Head, Southwest Region Capital Markets Managing Director Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. Jones Lang LaSalle Brokerage, Inc., California license # Jones Lang LaSalle Americas, Inc., California license #