Glenn R. Mueller, Ph.D. Professor University of Denver Franklin L. Burns School of Real Estate & Construction Management & Real Estate Investment Strategist Dividend Capital Research glenn.mueller@du.edu
Occupancy Market Cycle Quadrants Phase 2 - Expansion Phase 3 - Hypersupply Demand/Supply Equilibrium Point Long Term Occupancy Average Phase - Recovery Phase 4 - Recession Source: Mueller, Real Estate Finance 995 Time
Occupancy Long Term Average Occupancy -3.0% 3 2 -.5% 0.3% Historic National Office Rental Growth.0%.7% 4 2.7% 5 7 6 4.0% 6.4% 0.5% 9 8 6.7% 0 2 2.5% 0.0% 30 Year Cycle - Periods 968-997 6.% 3.6% 3.3% 4 5 6 -.0% Time
Denver NON-AGR. EMPLOY. (000) 400.00 300.00 200.00 00.00 000.00 900.00 800.00 700.00 982 984 986 988 990 992 994 996 998 2000 2002 2004 2006 2008 200 202
94.0 0.5 92.0 0. 90.0 88.0 0.05 86.0 84.0 0 82.0-0.05 80.0 78.0-0. Denver Office Occupancy Denver Office Rent Growth
Office Market Cycle FORECAST 3rd Quarter, 205 Estimates Top Markets = 50% of all 54 largest markets = 0.25% Emp & 0.86% Pop growth Second Tier 7 Markets = 27% of 54 largest markets = 0.86% Emp &.23% Pop growth Chicago Long Island Los Angeles Milwaukee St. Louis Wash DC 2 3 Albuquerque Cincinnati Detroit East Bay Hartford+2 Kansas City Norfolk San Antonio 4 N. New Jersey Atlanta Stamford Cleveland Denver Ft. Lauderdale+ Houston Indianapolis Las Vegas+ Memphis Orange County Baltimore Boston Dallas FW Jacksonville Minneapolis New Orleans 6 7 5 Charlotte Columbus Miami Palm Beach Philadelphia Phoenix Richmond Sacramento San Diego San Jose Seattle Tampa NATION Oklahoma City Orlando Pittsburgh Riverside New York Portland Raleigh-Durham San Francisco+ 8 9 Austin Honolulu Nashville+ Salt Lake 0 Source: Mueller, 204 2 3 LT Average Occupancy 4 5 6
99.0 0.2 97.0 0.5 0. 95.0 0.05 93.0 0 9.0-0.05 89.0-0. 87.0-0.5 Denver INDUSTRIAL Occupancy Denver INDUSTRIAL Rent Growth
2 3 Richmond Long Island 4 Industrial Market Cycle FORECAST Hartford Milwaukee New Orleans+ Oklahoma City Orlando Philadelphia Phoenix Wash DC 5 Norfolk Orange County Sacramento Stamford 3rd Quarter, 205 Estimates Charlotte+ Cincinnati Columbus- Ft. Lauderdale+ Miami Minneapolis Pittsburgh NATION 8 Atlanta Boston Baltimore Chicago Cleveland Detroit East Bay Jacksonville Kansas City Las Vegas Memphis+ Nashville New York Raleigh-Durham St. Louis+ Tampa Houston Indianapolis N. New Jersey San Antonio San Diego Top 2 Markets = 50% of all 54 largest markets Second Tier 7 Markets = 27% of all 54 largest markets 6 7 9 0 Austin Dallas FW Honolulu Portland Riverside Seattle Denver Los Angeles+ Palm Beach+ Salt Lake San Francisco+ San Jose 2 Source: Mueller, 204 3 4 LT Average Occupancy 5 6
98.0 0. 96.0 0.08 0.06 94.0 0.04 92.0 0.02 90.0 0-0.02 88.0-0.04 86.0-0.06 Denver APT Occupancy Denver APT Rent Growth
4000 2000 0000 8000 6000 4000 2000-2000 APARTMENT ABSORPTION (units) APARTMENT COMP. (units)
LT Average Occupancy 2 3 Apartment Market Cycle FORECAST 4 5 3rd Quarter, 205 Estimates 6 Detroit 7 Las Vegas Honolulu 8 9 Source: Mueller, 204 Baltimore Cincinnati East Bay Milwaukee New York Sacramento- San Diego- 0 Riverside+3 Atlanta Boston Chicago Columbus- Dallas FW Hartford Jacksonville Long Island Los Angeles Miami 2 Charlotte Cleveland Ft. Lauderdale Houston Indianapolis Kansas City Memphis Minneapolis Nashville New Orleans- N. New Jersey Philadelphia Pittsburgh Portland Richmond Salt Lake San Jose NATION 3 Austin Denver Orlando Raleigh-Durham Seattle Wash DC Norfolk 4 5 6 Oklahoma City Orange County Palm Beach Phoenix San Antonio San Francisco Stamford St. Louis Tampa
95.0 0.5 94.5 0. 94.0 93.5 0.05 93.0 0 92.5-0.05 92.0 9.5-0. 9.0-0.5 Denver Retail Occupancy Denver Retail Rent Growth
Retail Market Cycle FORECAST 3rd Quarter, 205 Estimates Atlanta Columbus+ Dallas FW Las Vegas Milwaukee Nashville N. New Jersey Philadelphia Phoenix Sacramento Cleveland Detroit St. Louis 2 3 4 5 New Orleans+ Orlando Palm Beach Tampa+ NATION 6 Chicago Cincinnati Kansas City Memphis Norfolk Oklahoma City Orange County Richmond Riverside 7 Charlotte Ft. Lauderdale Hartford Indianapolis Jacksonville San Antonio Stamford Baltimore Houston+ Long Island Los Angeles Raleigh-Durham Seattle Denver Portland 8 9 Austin East Bay+ Minneapolis Pittsburgh San Diego San Jose Wash DC LT Average 0 Source: Mueller, 204 Boston Honolulu Miami New York Salt Lake San Francisco 2 Occupancy 3 4 5 6
80.0% 5.0% 75.0% 0.0% 70.0% 5.0% 65.0% 0.0% 60.0% -5.0% 55.0% -0.0% 50.0% -5.0% Denver HOTEL Occupancy Denver HOTEL Rent Growth
Norfolk 2 3 Cincinnati Hartford Richmond 4 Hotel Market Cycle FORECAST 5 Columbus Jacksonville Riverside Sacramento San Antonio Stamford 3rd Quarter, 205 Estimates Dallas FW Oakland St. Louis Salt Lake Kansas City+ Memphis Oklahoma City Phoenix Raleigh-Durham 6 7 Baltimore Cleveland Detroit Indianapolis Milwaukee Orange County Charlotte+ Las Vegas+ Nashville New Orleans Wash DC NATION 8 9 0 2 LT Average Occupancy N. New Jersey Philadelphia Atlanta+ Chicago Houston Los Angeles Minneapolis Tampa+ Austin Boston Denver East Bay Ft. Lauderdale Honolulu Orlando Pittsburgh+3 Portland San Diego+ San Francisco San Jose Seattle Long Island Miami New York Palm Beach Source: Mueller, 204 3 4 5 6
Property Price Cycle Real Capital Analytics Real Commercial Property Price Index (CPPI) Current Price Recovery from 2007 Peak % CBD Office 08% Apartment 6% Retail 84% Industrial 90% Suburban Office 80% Source: Real Capital Analytics, Inc., September 204.
Major Market Pricing 260.00 RCA CPPI Major Markets % of 07 Peak 240.00 220.00 200.00 80.00 60.00 40.00 San Francisco 39% Los Angeles 24% New York 22% Wash DC03% Texas 02% Boston 00% Chicago 89% 20.00 00.00 80.00 http://www.rcanalytics.com
Second Tier Market Pricing 240.00 RCA CPPI 2 nd Tier Markets % of 07 Peak 220.00 200.00 80.00 60.00 40.00 20.00 00.00 Denver % Hartford 06% Seattle 04% Philly 00% Miami 85% Atlanta 75% Tampa 75% Orlando 73% Jacksonville 67% Las Vegas 6% 80.00 60.00 http://www.rcanalytics.com