Download CCIM`s Quarterly Market Trends

2Q • 14
QuarterlyMarketTRENDS
Headline Line HEADLINE
34%
July 2014 FOREWORD
Vacancy
Rate
Dear CCIM Institute members,
Welcome to the second-quarter 2014 edition of CCIM Institute’s Quarterly
Market Trends. The report provides timely insight into major commercial real
estate indicators for core income-producing properties. It is produced by the
National Association of Realtors® in conjunction with and for members of the
CCIM Institute, the premier provider of commercial real estate education.
The second-quarter 2014 report features commentary from Lawrence Yun, Ph.D.,
NAR chief economist, and George Ratiu, director of NAR’s quantitative and
commercial research. It also includes market analysis and data collected from
CCIM members that illustrate regional economic and transactional trends across the U.S. I’d like to thank
the CCIM members who participated in the survey and shared insights on their local markets.
I hope that the information provided in CCIM’s Quarterly Market Trends report provides both economic and
commercial real estate market information that will assist you in your business strategies in 2014 and beyond.
Help CCIM make this report even more valuable by participating in the next QMT survey. Watch your email
for details.
Sincerely,
Karl Landreneau, CCIM
2014 CCIM Institute President
[email protected]
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2Q • 14
QuarterlyMarketTRENDS
Headline Line HEADLINE
34%
Table of CONTENTS
Vacancy Rate
CCIM Transaction Survey Highlights. . . . . . . . . . . . . . . . . . . . . . . 4
Commercial Property Sector Analysis . . . . . . . . . . . . . . . . . . . . . . 5
Commercial Real Estate Market Update. . . . . . . . . . . . . . . . . . . . 10
Commercial Real Estate Forecast. . . . . . . . . . . . . . . . . . . . . . . . 13
U.S. Economic Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
U.S. Metropolitan Economic Outlook. . . . . . . . . . . . . . . . . . . . . . 21
Sponsors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
34%
Vacancy Rate
34%
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2Q • 14
Quarterly Market Trends
CCIM Transaction Survey HIGHLIGHTS
With rising deals and investor confidence, CCIM Institute members provided insights into their markets in
a May/June 2014 survey.
INVESTMENT CONDITIONS:
MULTIFAMILY RANKS HIGHEST
IN 2Q14
GREATEST DEAL FLOW
INCREASE: INDUSTRIAL
CREDIT CONDITIONS
AVERAGE RATING SCALE: 1 (LOW) TO 5 (HIGH)
2Q14 YOY % BY SECTOR
2Q14 YOY % BY SECTOR
5
70
70
60
60
50
50
40
40
30
30
20
20
10
10
4
3
2
1
0
0
0
OFFICE
MULTIFAMILY
INDUSTRIAL
RETAIL
HOSPITALITY
INDUSTRIAL
RETAIL
OFFICE
HOTEL
MULTIFAMILY
EXPECT CREDIT
CONDITIONS TO
IMPROVE
CONSIDER THE
CURRENT TIGHTNESS TO BE THE
NEW NORMAL
EXPECT CREDIT
CONDITIONS
TO TIGHTEN
FURTHER.
According to CCIM members, the
multifamily sector’s investment
conditions were the MOST FAVORABLE in 2Q14, followed by industrial,
retail, hospitality, and office.
Year-over-year deal flow saw
the BIGGEST GAINS in the
industrial sector, with 70% of
CCIM respondents reporting an
increase in transactions in 2Q14.
Current credit conditions are
expected to IMPROVE, according
to 60% of CCIM respondents,
while 35% consider the current
tightness to be the new normal.
About 54% OF CCIM MEMBERS
INDICATED MORE DEALS IN 2Q14
compared to same period the year before.
respondents said the cap rate gap
remained flat.
while 32% said prices are expected to
outperform rents.
Rents increased, with 55% OF CCIMs
INDICATING HIGHER RENTS YOY;
28% of respondents indicated similar
rents YOY.
48% OF CCIM RESPONDENTS
EXPECT TREASURY YIELDS TO
REMAIN ABOUT THE SAME; 21% of
respondents indicated that Treasury
yields will rise, but will only minimally impact cap rates due to the
current spreads; 10% of CCIMs said
Treasury yield increases will push up
cap rates.
66% OF RESPONDENTS INDICATED
MORE INQUIRIES RELATED TO
BUYING, while 10% said they
received more inquiries from clients
who wanted to sell assets.
Property prices continued to firm in
2Q14 with 33% of respondents
reporting prices similar to last year,
while 49% REPORTED HIGHER PRICES.
The CAP RATE GAP BETWEEN
BUYERS AND SELLERS NARROWED
IN 2Q14, according to 45% of CCIM
members. Forty-three percent of
Cap rates compressed slightly during
2Q14, with 54% OF RESPONDENTS
INDICATING RATES REMAINED THE
SAME AS LAST YEAR; 38% dealt
with lower rates.
About 46% OF RESPONDENTS
EXPECT RENTS AND PRICES TO
MOVE TOGETHER in the next few
years. Twenty-two percent said rent
growth will outpace price growth,
An average of 35% OF RESPONDENTS
INDICATED MEANINGFUL IMPROVEMENT IN CREDIT AVAILABILITY
compared to last year; 55% reported
marginal improvement.
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2Q • 14
Quarterly Market Trends
Commercial Property SECTOR ANALYSIS
NATIONAL OFFICE MARKETS
Office trends moderated in the second quarter for CCIM members:
l
l
l
l
l
Deal flow was higher for 50 percent of CCIM members (compared with 55 percent in 2Q13).
Property prices were higher for 43 percent of CCIM, while 34 percent found them to be flat.
Cap rates were even for 69 percent of CCIMs, and lower for 24 percent of respondents.
Rental income was flat for 28 percent of respondents; higher for 59 percent of CCIMs.
54 percent of respondents had more serious buying inquiries (compared with 51 in 2Q13).
FINANCE TRENDS (YoY) / Office Properties %
FINANCE OUTLOOK / Office Properties %
Credit availability is just
as tight as last year with
no improvement
Credit availability has
turned for the worse and is
even tighter than last year
Credit availability has only
marginally improved
Credit availability has
meaningfully improved
from last year
The current tight conditions
will be the new normal
Credit will become even
more difficult to access
over time
Credit will be more readily
accessible over time
0
0
10 20 30 40 50 60
Source: CCIM Institute, National Association of Realtors®
20
40
60
80
Source: CCIM Institute, National Association of Realtors®
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2Q • 14
Quarterly Market Trends
Commercial Property SECTOR ANALYSIS
NATIONAL INDUSTRIAL MARKETS
The industrial landscape recorded improvements during the second quarter:
l
l
l
l
l
Industrial deal flow was higher year-over-year for 70 percent of respondents (vs. 60 percent in 2Q13).
Prices were even for 40 percent of CCIMs, and higher for 52 percent of respondents.
Cap rates were flat for 60 percent, while 32 percent reported lower cap rates.
62 percent of CCIM members reported higher rents.
CCIM members reported 82 percent more buying inquiries during the quarter.
FINANCE TRENDS (YoY) / Industrial Properties %
FINANCE OUTLOOK / Industrial Properties %
Credit availability is just
as tight as last year with
no improvement
Credit availability has
turned for the worse and is
even tighter than last year
Credit availability has only
marginally improved
Credit availability has
meaningfully improved
from last year
The current tight conditions
will be the new normal
Credit will become even
more difficult to access
over time
Credit will be more readily
accessible over time
0
0
10 20 30 40 50
Source: CCIM Institute, National Association of Realtors®
10 20 30 40 50 60
Source: CCIM Institute, National Association of Realtors®
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2Q • 14
Quarterly Market Trends
Commercial Property SECTOR ANALYSIS
NATIONAL RETAIL MARKETS
The retail sector saw mild improvement in the second quarter:
l
l
l
l
l
Retail deals increased for 59 percent of CCIMs (compared with 63 percent in 2Q13).
Prices were higher for 44 percent of respondents and flat for 40 percent of respondents.
Cap rates were the same for 56 percent of CCIMs, and lower for 37 percent.
Rental income rose for 53 percent of CCIM members (vs. 67 percent in 2Q13).
CCIM members reported 62 percent greater buying inquiries during the quarter.
FINANCE TRENDS (YoY) / Retail %
FINANCE OUTLOOK / Retail Properties %
Credit availability is just
as tight as last year with
no improvement
Credit availability has
turned for the worse and is
even tighter than last year
Credit availability has only
marginally improved
Credit availability has
meaningfully improved
from last year
The current tight conditions
will be the new normal
Credit will become even
more difficult to access
over time
Credit will be more readily
accessible over time
0
20
40
Source: CCIM Institute, National Association of Realtors®
60
0
80
20
40
60
80
Source: CCIM Institute, National Association of Realtors®
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2Q • 14
Quarterly Market Trends
Commercial Property SECTOR ANALYSIS
NATIONAL APARTMENT MARKETS
As more supply entered the market, trends for apartment properties moved sideways:
l
l
l
l
l
46 percent of CCIM members reported more deals YOY (58 percent in 2Q13).
Prices were higher for 69 percent of respondents (vs. 51 percent in 2Q13).
Cap rates were flat for 26 percent of members and lower for 63 percent.
Rental income rose for 56 percent of CCIMs (vs. 49 percent in 2Q13).
77 percent of respondents said they received more serious buying inquiries.
FINANCE TRENDS (YoY) / Multifamily %
FINANCE OUTLOOK / Multifamily %
Credit availability is just
as tight as last year with
no improvement
Credit availability has
turned for the worse and is
even tighter than last year
Credit availability has only
marginally improved
Credit availability has
meaningfully improved
from last year
The current tight conditions
will be the new normal
Credit will become even
more difficult to access
over time
Credit will be more readily
accessible over time
0
20
40
Source: CCIM Institute, National Association of Realtors®
60
0
80
20
40
60
80
Source: CCIM Institute, National Association of Realtors®
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2Q • 14
Quarterly Market Trends
Commercial Property SECTOR ANALYSIS
NATIONAL HOTEL MARKETS
Activity in the hospitality sector dropped the second quarter:
l
l
l
Sales of hotels were higher for 50 percent of CCIMs (vs. 80 percent in 2Q13).
Prices increased for 50 percent of respondents YOY (vs. 40 percent in 2Q13).
Cap rates were higher for 50 percent of respondents.
FINANCE TRENDS (YoY) / Hospitality %
FINANCE OUTLOOK / Hospitality %
Credit availability is just
as tight as last year with
no improvement
Credit availability has
turned for the worse and is
even tighter than last year
Credit availability has only
marginally improved
Credit availability has
meaningfully improved
from last year
The current tight conditions
will be the new normal
Credit will become even
more difficult to access
over time
Credit will be more readily
accessible over time
0
20
40
Source: CCIM Institute, National Association of Realtors®
60
0
80
30
60
90
120
Source: CCIM Institute, National Association of Realtors®
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2Q • 14
Quarterly Market Trends
Commercial Real Estate Market UPDATE
Commercial real estate fundamentals
appeared to be favorable, with
declining vacancies, space absorption,
rent increases, and—to a lesser
degree—leasing
improvements,
according to the 2Q14 CCIM Market
Intelligence Survey results and a
range of industry data sources.
OFFICE
IN TECHNOLOGY AND ENERGY
34%
CENTERS, EMPLOYMENT
On a national basis, net absorption continued on a positive trend,
while moderate new construction Vacancy Rate
translated into vacancy declines.
Office absorption weathered the
first quarter well, despite anemic
job growth, and vacancy declined
nationally by 10 basis points. Net
absorption for office buildings rose
by 9.8 million square feet, based on
data from Reis. The increase was the during 4Q13, Washington, D.C., took
highest quarterly gain since the latter back the title of the tightest market,
half of 2007. In addition, supply of with a 9.7 percent availability rate.
GAINS LED TO STRONG
OFFICE DEMAND AND
HIGH RENT GROWTH.
new office space rose by 6.3 million
square feet during the quarter.
Job growth provided the major
differentiator in office performance
across markets. In technology and
energy centers, employment gains
led to strong office demand and high
rent growth. The top 10 markets by
growth in effective rent included San
Jose, Calif., San Francisco, Dallas,
Houston, Austin, Texas, Seattle, and
Oklahoma City. Washington, D.C.,
and New York continued their tussle
for top spot. After another reversal
Asking rents for office space advanced
0.7 percent in the 1Q14, according
to Reis. Effective rents rose by 0.8
percent during the same period,
averaging about $24 per square foot.
Asking rents are expected to grow by
2.5 percent this year.
INDUSTRIAL
In the wake of strong performance
figures in the latter part of 2013,
industrial fundamentals softened
during 1Q14 as the economy dipped.
Availability rates declined 10 basis
points from the previous quarter.
Net absorption for warehouses was
15.4 million square feet, while
absorption of flex space totaled 2.4
million square feet. Flex space
demand jumped more than 50
percent from 4Q13, as new supply
slowed in tandem with rising
demand. Completions of flex space
were a scant 150,000 square feet in
1Q14, according to Reis. New warehouse space came online to the tune
of 9.4 million square feet.
Regionally, distribution centers registered the strongest numbers. Markets
such as Houston and San Bernardino/
Riverside, Calif., posted rent growth
in excess of 3.0 percent during 1Q14.
Atlanta and Kansas City, Mo., also
showed upbeat rent growth with
identical increases of 2.9 percent.
Memphis, Tenn., and Chicago
recorded rent gains of 2.7 percent and
2.6 percent respectively. Asking rents
are estimated to grow 2.4 percent by
year-end as demand for space is
expected to remain strong.
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2Q • 14
Quarterly Market Trends
Commercial Real Estate Market UPDATE
RETAIL
growth, such as Houston, Atlanta,
and Denver also witnessed strong
demand. And during a prolonged
cold spell, warm tourist destinations
saw favorable demand, including Ft.
Lauderdale, Fla., Orange County,
Calif., and Palm Beach, Fla.
Retail leasing took the brunt of the
winter weather in 1Q14. National
vacancy rates stayed flat for the
quarter, as demand and supply
slowed down. Net absorption of
retail space totaled 698,000 square
feet, according to Reis. The main Retail asking rents increased by
driver in the decline seemed to have 0.4 percent in the first quarter, as
been the termination of Midwest- effective rents gained 0.5 percent,
based grocer Dominick’s operations. based on Reis data. Asking rents are
Its closing led to 2.6 million square expected to advance 2.0 percent by
feet of empty space. Construction of year-end.
new retail space was also impacted Vacancy Rate
by the weather—new supply reached
MULTIFAMILY
just 650,000 square feet in 1Q14.
34%
COASTAL MARKETS—
INCLUDING NEW YORK, SAN
FRANCISCO, SAN JOSE, AND
LOS ANGELES— REMAINED
THE TIGHTEST
IN TERMS OF
RETAIL VACANCY.
In line with differing regional
economic recoveries, retail fundamentals were split. Coastal markets,
including New York, San Francisco,
San Jose, and Los Angeles, remained
the tightest in terms of retail vacancy.
Markets with high employment
Apartments remained well positioned in the 1Q14. Demand for
apartments was positive, especially
in light of the weather and broader
economic trends. Net absorption
totaled 41,881 units, according to
Reis. Completions of new units
slowed down significantly, however,
reaching only 25,745 units. The
national vacancy rate declined 20
basis points.
New Haven, Conn., continued as
the tightest apartment market, with
a vacancy rate of just 2.3 percent
during the 1Q14. Several California
markets also registered low vacancies, including San Jose, San Diego,
and Riverside/San Bernardino.
Apartment asking rents have been
slowing down in light of very tight
DEMAND FOR APARTMENTS
WAS POSITIVE, ESPECIALLY
IN LIGHT OF THE
WEATHER AND BROADER
ECONOMIC TRENDS.
availability. In 1Q14, asking rents
advanced by 0.5 percent and effective
rents rose 0.6 percent, according to
Reis. Landlords may have gotten past
the peak of rent growth, especially
given the 96 percent occupancy rate
coupled with stagnant wages and
slow employment outlook. National
asking rents were $1,138 per unit in
the first quarter. Asking apartment
rents are expected to rise 4.0 percent
by year-end.
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2Q • 14
Quarterly Market Trends
Commercial Real Estate Market UPDATE
COMMERCIAL REAL ESTATE
INVESTMENT ACTIVITY
Sales of commercial real estate assets
at the lower-end of the price scale
rose 11 percent YOY and sale prices
increased approximately 4 percent,
according to National Association of
Realtors 1Q14 commercial real estate
data. Prices for properties at the
higher-end of the price range rose
14.8 percent, according to Real Capital
Analytics. In addition, commercial real
estate sales prices in the six major
markets rose at a faster rate (17.1
percent) than those in secondary and
tertiary markets (13.6 percent).
Cap rates for properties at the lower
end of the price spectrum averaged
8.2 percent in 1Q14, a 50 basis point
decrease from the previous quarter,
according to NAR data. Apartments
recorded the lowest average cap rate
for the quarter at 7.7 percent, while
office and retail cap rates averaged
8.0 percent and industrial properties
posted cap rates of 8.1 percent.
NATIONAL AVERAGE CAP RATES (%)
0.0
2.0
4.0
6.0
8.0
10.0
Apt/Multifamily
Office CBD
Office Suburban
Industrial Warehouse
Industrial Flex
Retail
Hotel/Lodging
Development
Land
Source: CCIM Institute, National Association of Realtors®
CAP RATES BY REGION
CANADA
& MEXICO
EAST
MIDWEST
OTHER SOUTH
WEST
Apartment Cap Rate
5.5%6.5%7.1%9.3%6.9%5.7%
Office CBD Cap Rate
7.67.98.87.27.56.9
Office Suburban Cap Rate 10.08.58.87.78.47.5
Warehouse Cap Rate
6.27.98.37.28.16.9
Flex Cap Rate
6.38.38.67.98.47.2
Retail Cap Rate
5.87.48.17.77.77.1
Hotel Cap Rate. 7.98.17.97.97.6
Development Cap Rate.11.98.07.39.99.7
Land Cap Rate.12.27.59.58.18.8
© 2014 The CCIM Institute, National Association of Realtors®
INVESTMENT VALUE VS. PRICE RATIO
34%
Vacancy Rate
Office
3.0
Multifamily 3.0
Industrial3.2
Retail
3.0
Hospitality 3.0
0.0
1.0
2.0
3.0
4.0
5.0
© 2014 The CCIM Institute, National Association of Realtors®
Based on May/June 2014 CCIM transaction survey.
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2Q • 14
Quarterly Market Trends
Commercial Real Estate FORECAST
Due to a number of factors, the U.S. economy is expected to perform at a quicker pace during the remainder of
2014. However, the pace of growth remains muted, tempering expectations for commercial real estate. Absorption is
projected to continue growing, leading to declining vacancies across most property types. The forecast below projects
conditions for the commercial sector through 2015.
Commercial Real Estate / FORECAST THROUGH 2015
2Q143Q144Q141Q152Q153Q154Q152014 2015
OFFICE
Vacancy Rate
15.80%15.60%15.70%15.70%15.60%15.50%15.60%16.00%15.60%
Net Absorption 9,803 10,9809,020 11,36912,66313,35812,45239,67649,841
(‘000 sq. ft.)
Completions (‘000 sq. ft.) 6,745 5,504 5,652 10,15311,65310,60610,45523,53742,866
Inventory (‘000,000 sq. ft.) 4,1214,1264,1324,1424,1544,1644,1754,1324,175
Rent Growth
0.60%0.60%0.60%0.70%0.80%0.90%0.80%2.50%3.20%
INDUSTRIAL
Vacancy Rate
9.00%8.90%8.80%8.70%8.70%8.60%8.50%8.90%8.60%
Net Absorption 26,96232,35529,11919,28326,78232,13828,924107,849107,127
(‘000 sq. ft.)
Completions (‘000 sq. ft.) 23,73322,20214,54614,30921,12219,76012,94676,55868,137
Inventory (‘000,000 sq. ft.) 8,4738,4968,5108,5258,5468,5658,5788,5108,578
Rent Growth
0.60%0.60%0.70%0.60%0.70%0.70%0.60%2.40%2.60%
RETAIL
Vacancy Rate
10.00%9.90%9.80%9.90%9.80%9.80%9.70%10.00%9.80%
Net Absorption 3,3533,0954,2555,3734,5533,5336,15711,54319,616
(‘000 sq. ft.)
Completions (‘000 sq. ft.) 1,8422,1102,3423,3982,9353,2993,3688,40413,001
Inventory (‘000,000 sq. ft.) 2,0382,0402,0422,0462,0492,0522,0562,0422,056
Rent Growth
0.50%0.50%0.60%0.50%0.60%0.60%0.60%2.00%2.30%
MULTIFAMILY
Vacancy Rate
4.00%4.00%4.10%4.10%4.10%4.20%4.20%4.00%4.00%
Net Absorption (Units)
57,61255,39766,47644,08740,93039,23348,804221,366173,055
Completions (Units)
47,45046,16149,49530,03238,14634,83436,965178,655139,976
Inventory 10.110.210.210.310.310.310.410.210.4
(Units in millions)
Rent Growth
1.00%1.00%0.90%0.90%1.00%1.00%1.10%4.00%4.00%
Sources: National Association of Realtors® / Reis, Inc.
Copyright © 2014 NATIONAL ASSOCIATION OF REALTORS®. Reproduction, reprinting or retransmission in any form is prohibited without
written permission. For questions regarding this matter please e-mail [email protected].
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2Q • 14
Quarterly Market Trends
U.S. Economic OVERVIEW
Employment and job growth appear
to be the most important drivers of
the need for commercial real estate.
To a significant degree, the country’s
gross domestic product and jobs vary
together. The overall performance
of the economy has been mediocre
in recent years following the Great
Recession—growth has been positive
but somewhat less than what would
normally be expected. However,
economic growth is expected to pick
up over the next several years, which
should have a favorable impact on
the demand for commercial space.
GDP GROWTH RATE THROUGH 1Q14
10.0 %
8.0
6.0
4.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0
-10.0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
Source: Bureau of Economic Analysis
MAKING PROGRESS
AT MIDYEAR
The economy produced some disappointing results during 1Q14. Real
GDP growth was around -2.9 percent,
and unemployment was in the neighborhood of 6.7 percent, declining to
6.3 percent in May. The harsh winter
weather appears to have been a major
cause of the decline in GDP, but the
economy had already been performing
at a sluggish rate—essentially since
the end of the Great Recession.
Most economists expect the economy
to pick up in the forthcoming
months, and preliminary indications
suggest a growth rate in the neighborhood of 3 percent by the end of
the year. However, on a yearly basis
the overall GDP growth projection
for 2014 is 1.9 percent, along with
unemployment at 6.3 percent and
continued low inflation and interest
rates. In short, recent economic
performance could be termed as
mediocre with the economy now
expected to be on an uptrend.
However, a number of economic
uncertainties, such as energy problems from the Middle East, a
potential decline in the stock market
that shakes consumer confidence,
and a lack of enthusiasm and confidence about economic conditions,
may pose problems that cause
economic growth to be less than
would normally occur.
Real GDP growth for 2014 is
projected at 1.9 percent, below the
normal 3 percent growth rate.
However, exports will probably pick
up as foreign economies continue to
expand and business inventories
appear likely to increase. Therefore,
economic growth is projected to
resume for the rest of the year in the
neighborhood of 2.7 to 3 percent.
U.S. ECONOMY:
A DETAILED ANALYSIS
Economists analyze the economy in
terms of consumption, investment,
government expenditures, and net
exports when making projections
of economic activity. A focus on
the factors that could cause the four
categories to vary can show potential
upward or downward shifts in the
economy.
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 14
2Q • 14
Quarterly Market Trends
U.S. Economic OVERVIEW
Consumers account for approximately 70 percent of GDP economic
activity. The Consumer Confidence
Index is an indicator measures the
degree of optimism on the state of
the economy that consumers are
expressing through their activities
of saving and spending. The index
is issued by The Conference Board,
based on a monthly survey of 5,000
households. Opinions on current
conditions make up 40 percent of the
index, with expectations of future
conditions comprising the remaining
60 percent. The index has recovered
from its depth of 25.3 in February of
2009 during the Great Recession but
still continues to be somewhat lower
than would be expected in a normally
expanding economy. One would
expect an increase in consumption to
occur with an increase in consumer
confidence, part of which appears
to be currently driven by emotional
reactions to news reports. Assuming
continued economic recovery, the
uncertainties are probably more
towards the upside.
Recent fluctuations in household
wealth coupled with continued
job market problems have probably contributed to the currently
muted level of consumer confidence.
Changes in consumer confidence
can occur relatively quickly, so the
current Consumer Confidence Index
level and direction suggests that
good economic news could impact
CONSUMER CONFIDENCE INDEX
160
140
120
100
80
60
40
20
0
MO
YR
06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06
77 78 80 81 83 84 86 87 89 90 92 93 95 96 98 99 01 02 04 05 07 08 10 11 13
Source: The Conference Board
THE CCI HAS RECOVERED
FROM ITS DEPTH DURING
THE GREAT RECESSION,
BUT CONTINUES TO BE
LOWER THAN EXPECTED
IN A NORMALLY
EXPANDING ECONOMY.
the index, thereby setting the stage
for additional economic expansion
in terms of personal consumption
expenditures. Nevertheless, income
and wealth issues are relevant
in examining the overall level of
personal consumption expenditures.
Another factor affecting consumer
confidence appears to have been
declining median family income and
a lack of growth in worker earnings.
Stated in constant dollars, families do
not appear to have benefitted from
the economic recovery. These factors
tend to limit consumer spending from
what it would otherwise have been in
addition to creating rancorous press
coverage which also appears to negatively impact confidence. On a longer
term basis, there are numerous reports
in the press concerning the concentration of wealth and income in
upper-bracket individuals as the
economy changes. In contrast, about
one-third of American households
are reported as living hand-tomouth, meaning that they spend all
their paychecks.
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 15
2Q • 14
Quarterly Market Trends
U.S. Economic OVERVIEW
EMPLOYMENT’S EFFECTS
Employment trends and job availability have been difficult for many
consumers. The unemployment rate
continues to fall, based on people
actively seeking work. However,
unemployment continues to be high
relative to normal expectations. Most
of the recent drop in unemployment
appears to have occurred as a result been out of work for six months
of potential workers leaving the job or longer. The longer people are
market—and therefore not actively out of work, the more their skills
seeking employment. In addition, erode. If former workers are permaRateout of the job market,
the percentage of people actually in Vacancy
nently frozen
the work force has declined signifi- economic growth is negatively
cantly from a few years ago.
impacted. In addition, the number
As measured in terms of “Establish- of people working part-time due to
ment Employment” the number of economic reasons is substantial, and
people actually working has recov- workers entering the job markets are
ered from the depths of the Great reported as having difficulty finding
Recession, but we appear to have lost jobs with upscale growth potential.
34%
four years of employment growth as
a result of the Great Recession.
In order to meet the expanding job
needs of the U.S. economy due to
population growth, the economy
needs to add approximately 150,000
new jobs every month just to stay
even. Any jobs added above 150,000
can help to reduce the number of
unemployed and underemployed
potential workers. Employment
has accelerated modestly in recent
months, which should help to
continue the downward pressure on
the unemployment rate. However,
a significant number of people have
In the coming year, growth of
personal consumption expenditure
should at least equal what has been
experienced over the past year since
both job and GDP growth are positive. Considering all of the factors
mentioned, on balance we could even
see some upscale potential beyond
that which is projected. However, for
the longer run, in order for personal
consumption expenditures to achieve
significantly greater growth it may be
necessary for lower income earners to
leave part-time employment and to
participate to a greater degree in the
growth of the economy.
INVESTMENT
Both residential and business investments continue to recover from
the depths of the Great Recession.
Total investment is approximately
16 percent of the GDP and has
been rising. The change in private
inventories—which
makes
up
approximately 4 percent of total
investment—is, however, quite volatile and through a multiplier effect
can have some impact on GDP. For
the next few quarters any changes in
investment impacts on the economy
are likely to be positive.
Looking at quarterly changes in
investment, it is clear that inventory
investment is relatively small but is
also subject to fairly wide swings in
magnitude. During 1Q14, there was a
significant decline in business inventory investment, reportedly due to
weather. Companies were reported
as sharply cutting back on their
restocking of goods—partly due to
weather, partly due to demand. This
should reverse for the rest of the
year: The economy is on an upswing
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 16
2Q • 14
Quarterly Market Trends
U.S. Economic OVERVIEW
INVESTMENT TRENDS
RESIDENTIAL
INVENTORY CHANGE
NON-RESIDENTIAL
3000
2500
2000
1500
1000
500
0
-500
00
Q1
00
Q4
01
Q3
02
Q2
03
Q1
03
Q4
04
Q3
05
Q2
06
Q1
06
Q4
07
Q3
08
Q2
09
Q1
09
Q4
10
Q3
11
Q2
12
Q1
12
Q4
13
Q3
Source: National Association of Realtors®
and weather impacts are unlikely.
There do not appear to be any major
changes in investment likely over the
next year which would impact the
economic projections.
GOVERNMENT EXPENDITURES
Federal, state, and local government
expenditures account for approximately 19 percent of the GDP.
Measured on a constant dollar basis,
government expenditures have
declined slightly in recent years.
Looking to the future, one would
expect government expenditures to
stabilize and probably rise. Some of
the areas prominently mentioned
include medical, infrastructure,
education, and social services. However,
major changes in government
expenditures are unlikely this year
and will probably not affect current
economic projections in this paper.
NET EXPORTS
Net exports declined slightly during
the first quarter of 2014, accounting
for a portion of the negative 2.9 percent
decline: Exports declined and imports
increased. Foreign economies on
balance now seem to be on an expansionary track, suggesting a pickup in
exports in following quarters.
ADDITIONAL FACTORS
In addition to looking at the components of GDP, it is appropriate to
consider trends in monetary policy,
inflation, housing, and general
risks in making an economic forecast. Overall, the trends in these
areas seem to be favorable, further
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 17
2Q • 14
Quarterly Market Trends
U.S. Economic OVERVIEW
substantiating that there may be
some upscale potential to the forecast and continued evidence that the
expansion will continue.
MONETARY POLICY
In the case of monetary policy, the
good news is that interest rates are
projected to remain relatively low
by historical standards. Credit standards have been unreasonably tight
in recent years, largely as part of the
fallout from the Great Recession. In
recent months there has been some
easing in terms of credit availability,
and hopefully this will continue.
The Federal Reserve is expected to
continue decreasing quantitative
easing, and an interest rate hike
seems likely at some point in late
2014 or 2015. However, none of the
possible changes that seem likely in
monetary policy are seen as having a
significantly negative impact on the
economic forecast.
INFLATION
Inflation has been relatively modest
in recent years. The Federal Reserve
has indicated that an inflation rate of
2 percent would provide the appropriate stimulation to the economy.
A major component of the inflation
rate is the cost of housing, which
factors very heavily into the CPI and
is based to a significant degree on
INFLATION: PERCENT CHANGE YOY
ALL ITEMS
6
5
4
3
2
1
0
-1
-2
-3
1998
2000
2002
ALL ITEMS EXCL. FOOD & ENERGY
2004
2006
2008
2010
2012
Source: Federal Reserve Board
imputed homeowner costs based
on apartment rents. In the past
year, apartment rents have been
increasing, and the impact will be
an increase in the reported inflation
rate. In addition, declining unemployment should eventually put
upward pressure on prices. However,
the inflation outlook does not appear
to have a significant impact on the
current economic forecast.
MANUFACTURERS’ SHIPMENTS
Manufacturers’ shipments declined
in January—presumably due to
weather--but subsequently resumed
their upward trend. Shipments
are an indicator of the strength of
the economy and substantiate the
current economic forecast.
HOUSING
Housing is a major economic driver.
The sale of an existing home adds
approximately $30,000 to the GDP,
and the sale of a new single family
home adds over $250,000 to the GDP.
Home sales for new and existing
homes have been climbing out of the
valley created by the Great Recession.
However, several factors have been
holding sales back.
Although interest rates have been
and continue to be low by historic
standards, credit availability has been
excessively restrictive. In the case of
new construction, small builders,
who have typically accounted for
approximately one half of new
construction, have been unable to
obtain adequate access to credit or
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 18
2Q • 14
Quarterly Market Trends
U.S. Economic OVERVIEW
U.S. ECONOMIC OUTLOOK / Actual and Forecasted
2013 2013 2013 2013 2014
2014
2014 2015 2015
ANNUAL
Q1Q2Q3Q4 Q2 Q3 Q4 Q1 Q2 2012
20132014
2015
HISTORYFORECAST* HISTORY
FORECAST*
GDP g.r. (%)
1.12.54.12.4
Non-farm Payroll
Employment, g.r. (%)
1.91.71.61.8
Consumer Prices, g.r. (%) 1.2
0.4
2.2
1.1
Unemployment Rate (%) 7.77.57.27.0
30-Year Government
3.03.13.73.7
Bond Yield (%)
30-Year Fixed 3.53.74.44.3
Mortgage Rate (%)
Consumer Confidence 63758174
(1985=100)
2.8 3.0 3.0 2.9 2.9
2.81.9 2.4 2.9
1.7
2.8
6.3
3.4
1.9
3.5
6.0
4.6
1.71.7 1.6 1.8
2.1 1.4
2.5
3.5
8.17.4 6.4 6.0
2.93.4 3.7 4.7
4.3 4.5 4.8 5.1 5.4
3.74.0 4.5 5.5
83 84 84 85 87
6773 83 87
1.5
3.0
6.2
3.6
1.6 1.8
3.0
3.4
6.2 6.1
3.9 4.3
*Forecast as of March 2014
Source: National Association of Realtors
©
were eliminated by the Great Recession. In any case, this has had a
major negative impact on housing
permits for single family and multifamily units, which have been in the
neighborhood of a million units
per year or less instead of the
expected 1.5 million units yearly. In
addition, the Millennials are the
next generation for home ownership, but so far that has not occurred.
Family formation for Millennials
has been slower than expected,
possibly due to a combination of
factors such as the slow economy,
changing social customs, debt levels,
and expectations as a result of the
Great Recession. Between 2007 and
2014, median incomes for the generation segment aged 25 to 34 (the
typical age for a first-time home
purchase) have decreased at a rate
of 9 percent.
For the short run, none of the
negative factors impacting housing
appear likely to get worse in the next
year; in fact, there appears to be a
modest increase in lending as well as
job growth, so any risk to the
economic forecast is upwards rather
than downwards.
RISKS: UNCERTAINTIES
AND PROBLEMS
In the short term, the major risks to
the economy are a dip in consumer
confidence or higher energy prices.
Consumer confidence has continued
its fragile recovery, but a major
pullback in the possibly overheated
stock market would again have
potentially major impacts on household balance sheets. This could work
its way through the economic system,
resulting in declining consumption
and falling GDP.
The international outlook is also
a risk, particularly in terms of a
potential energy problem and
accompanying higher gasoline prices.
Middle East turmoil could become a
threat to the economy, particularly if
curtailed shipments from Iraq caused
oil prices to increase. Decreased
consumer demand due to spending
on energy might limit economic
growth. Iraq accounts for approximately 1.7 percent of global crude
consumption. An interruption of
Iraqi oil would raise prices and create
heightened uncertainty in financial
markets, possibly depressing the
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 19
2Q • 14
Quarterly Market Trends
U.S. Economic OVERVIEW
values of various assets. The short
term impact could be substantial,
probably wiping out GDP growth.
Longer term, energy markets could
adapt to the loss of product.
Longer term, the major risks appear
to be associated with household
formation and job creation. Household formation has been relatively
slow in recent years. The major
drivers of residential and commercial real estate demand in the long
run are household formation and
job creation. Both have been slower
than expected. Explanations for slow
household formation include the
state of the economy, changing social
mores, a slow job market, and rising
levels of consumer debt. Explanations for slow job creation include
the impacts of the Great Recession
as well as technological change and
major realignments in the economy.
Both household formation and job
creation appear likely to be picking
up in the foreseeable future.
34%
Vacancy Rate
ECONOMIC CLIMATE BY REGION
The regional economic
climate is booming
The regional economic
climate is level
The regional economic
climate is moderately positive
The regional economic
climate is stagnant
The regional economic
climate is weak
CANADA
& MEXICO
–
EAST
MIDWEST
2.9%
3.6%
OTHER SOUTH
WEST
20.8%
32.9%
25.4%
–
11.8
21.4
8.3
8.2
5.1
40.0
70.6
60.7
58.3
56.5
50.8
–
2.9
3.6
–
1.2
–
–
11.8
10.7
12.5
1.2
18.6
© 2014 The CCIM Institute, National Association of Realtors®
Based on May/June 2014 CCIM transaction survey.
ECONOMIC RATE
0.0
1.0
2.0
3.0
4.0
5.0
REGIONAL Average 3.8
NATIONAL Average 3.2
© 2014 The CCIM Institute, National Association of Realtors®
Based on May/June 2014 CCIM transaction survey.
ECONOMIC OUTLOOK
For the next year, the economy
appears to be in a slow growth
mode—an economy expanding
at slower than expected rates. The
economic outlook is favorable for
supporting at least the current level
of commercial sales and rentals; in
addition, based on cutbacks during
the Great Recession there appears to
be a level of pent-up demand, so on
balance the outlook for commercial
real estate is positive.
The positive factors associated with
the economic outlook include rising
home prices, easing credit terms,
reasonable energy prices, recovery
from global economic slowdowns,
recovering consumer balance sheets,
and the potential for additional
household formation. Uncertainties with the international situation
(energy, recessions, and political
instability) coupled with lingering
consumer confidence issues are the
negatives. On balance, the economic
forecast is positive and, to the degree
there is uncertainty and risk, the
outcomes are probably more towards
the upside than the downside. In
short, the economic environment is
moderately favorable for commercial
real estate.
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 20
2Q • 14
Quarterly Market Trends
U.S. Metropolitan ECONOMIC OUTLOOK
The leading market index uses an array
of factors to assess the relative health of
an individual market. The factors
include job creation, unemployment
claims, bankruptcy filings, and permits
for construction. The first two factors
provide an indication of potential
business expansion/contraction as well
as of labor market health and a leading
indicator of multifamily rental growth.
Bankruptcy filings allude to the health
of the business environment, while
the permits data point to business
plans and have an indirect impact on
inventories.
The leading indicator is weighted
based on both the current measure
as well as its recent trend or lagged
measures. These weighted measures
are then added to create a score.
This score is then ranked relative to
a fixed scale where a measure of 85
or better indicates a robust market,
75 to 85 a strong market, 65 to 75 an
average market, and a score below 65
coincides with a weak market.
LEADING INDICATOR INDEX
CITY
STATE
SCORE
LEADING BANKRUPTCY UNEMPLOYMENT UNEMPLOYMENT EMPLOYMENT
INDICATOR
FILINGS CLAIMS
RATE as of 2014
(APR 2014 vs. (2014 vs. 2013)* (2014 vs. 2013)**
APR 2013)**
TOTAL PERMITS
(2014 vs. 2013)**
Phoenix
AZ B 78.13 -15% -3%
6.2% 2.2%16%
Tucson
AZ D 62.50-15% -3%
6.4% 0.7%-5%
Los Angeles
CA
C
68.75
-27%
4%
7.8%
2.1%
0%
San Bernardino/Riverside
CA
B
75.00
-27%
4%
9.2%
2.4%
57%
Sacramento
CA C 71.88 -27% 4%
7.6% 2.7%49%
San Diego
CA
C
71.88
-27%
4%
6.7%
2.2%
29%
San Francisco
CA
B
75.00
-27%
4%
5.7%
2.2%
-3%
San Jose
CA
B
78.13
-27%
4%
5.9%
4.0%
18%
Colorado Springs
CO
B
84.38
-15%
-7%
7.4%
1.3%
7%
Denver
CO A 87.50 -15% -7%
5.8% 2.8%15%
Hartford
Washington
CT C 71.88 -8% -8%
DCC71.88 -1% 6%
7.1% 0.7%-15%
4.8% 0.2%7%
Jacksonville
FL D 62.50 -6% -6%
6.1% 3.3%-6%
Miami
FL
6.4%
Orlando
FL B75.00 -6%-6%
5.9% 4.5%3%
Tampa-St. Petersburg
FL
6.5%
B
D
75.00
62.50
-6%
-6%
-6%
-6%
3.2%
2.6%
29%
-10%
Atlanta
GA C 65.63 -9%-11%
6.9% 2.0%44%
Chicago
Indianapolis
IL C 68.75 -7% -7%
IN B 78.13 -7%-15%
7.7% 0.7%43%
5.3% 2.0%44%
Lexington
KY C 68.75 -6%-10%
6.6% 0.2%38%
Louisville
KY C 71.88 -6%-10%
7.1% 0.8%17%
New Orleans
LA
Boston
MA B 84.38 -22%-12%
B
75.00
-1%
-22%
4.7%
1.3%
-1%
5.5% 1.2%34%
*April 2013 through March 2014 vs. April 2012 through March 2013
**May 2013 through April 2014 vs May 2012 through April 2013
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 21
2Q • 14
Quarterly Market Trends
U.S. Metropolitan ECONOMIC OUTLOOK
LEADING INDICATOR INDEX
CITY
STATE
SCORE
LEADING BANKRUPTCY UNEMPLOYMENT UNEMPLOYMENT EMPLOYMENT
INDICATOR
FILINGS CLAIMS
RATE as of 2014
(APR 2014 vs. (2014 vs. 2013)* (2014 vs. 2013)**
APR 2013)**
TOTAL PERMITS
(2014 vs. 2013)**
Baltimore
MD B 75.00 -3%-10%
5.9% 1.8% 2%
Detroit
MI C 65.63 -14% -8%
8.1% -0.3%19%
Minneapolis
MNB 78.13-14% -6%
4.5% 1.6% 1%
St. Louis
MO
C
71.88
-16%
-1%
7.3%
0.7%
0%
Kansas City
MO
C
65.63
-16%
-1%
6.3%
0.6%
4%
Greensboro/Winston-SalemNC B 78.13 -13%-45%
6.7% 0.3%31%
Raleigh-Durham
NC B 84.38 -13% -45%
5.1%
Charlotte
NC B 78.13-13%-45%
6.3% 2.0% 8%
Omaha
Albuquerque
NE B 81.25-11%-13%
NMD 62.50 -9%-13%
4.1% 1.7% -2%
7.2% -1.2% 9%
Las Vegas
NV
8.5%
B
84.38
-20%
-16%
4.1%-12%
3.0%
13%
Buffalo
NY B 75.00 -10%-11%
6.3% 0.7%52%
New York
NY
7.0%
C
71.88
-10%
-11%
1.1%
53%
Cleveland
OH C 68.75 -4%-16%
7.0% 0.6%18%
Columbus
OH B 78.13 -4%-16%
4.8% 0.9% -2%
Cincinnati
OH B 84.38 -4%-16%
5.5% 1.7%24%
Oklahoma City
OK
4.7%
B
75.00
-10%
-14%
2.8%
12%
Tulsa
OK B 75.00-10%-14%
5.0% 1.7% -2%
Portland
OR C 71.88 -7%-11%
6.3% 2.8% 3%
Pittsburgh
PA C 71.88 -6% -7%
5.6% 0.5%21%
Philadelphia
PA C 71.88 -6% -7%
6.3% 0.5%24%
Providence
RI B 81.25 -11%-11%
8.5% 1.0%14%
Charleston
SC B 81.25 -3%-13%
4.7% 1.4% 7%
Columbia
SC B 81.25 -3%-13%
5.0% 1.7% -1%
Greenville
SC B 78.13 -3%-13%
4.5% 2.6%41%
Knoxville
TN C 71.88 -5%-11%
5.4% 2.0%19%
Nashville
TN B 75.00 -5%-11%
5.0% 3.1%48%
Chattanooga
TN D 62.50 -5%-11%
6.3% 0.8%50%
Memphis
TN D 56.25 -5%-11%
7.8% 0.2% -2%
Austin
TX A 87.50-13% -4%
4.3% 3.5%-4%
Dallas
TX A 87.50 -13% -4%
5.3% 3.8%20%
Houston
TX A 90.63 -13% -4%
5.2% 3.1%12%
San Antonio
TX
5.0%
A
96.88
-13%
-4%
2.2%
9%
*April 2013 through March 2014 vs. April 2012 through March 2013
**May 2013 through April 2014 vs May 2012 through April 2013
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 22
2Q • 14
Quarterly Market Trends
U.S. Metropolitan ECONOMIC OUTLOOK
LEADING INDICATOR INDEX
CITY
STATE
SCORE
LEADING BANKRUPTCY UNEMPLOYMENT UNEMPLOYMENT EMPLOYMENT
INDICATOR
FILINGS CLAIMS
RATE as of 2014
(APR 2014 vs. (2014 vs. 2013)* (2014 vs. 2013)**
APR 2013)**
TOTAL PERMITS
(2014 vs. 2013)**
Salt Lake City
UT
44%
Richmond
VA B 81.25 -8%-11%
B
84.38
-8%
-11%
3.8%
1.4%
5.4% 1.7% 1%
Seattle
WA A 87.50 -12% -7%
5.0% 2.9%10%
Milwaukee
WI B 75.00 -9%-12%
6.3% 1.5%24%
Birmingham
AL C 68.75 -5%-12%
6.1% 1.0%15%
Little Rock
AR
C
65.63
-5%
-10%
6.1%
0.7%
-23%
New Haven
CT
B
75.00
-8%
-8%
7.3%
1.3%
11%
Wichita
KS B 78.13 -5% -9%
5.8% 0.6%11%
Rochester
NY B 75.00-10%-11%
6.1% 0.3% -8%
Syracuse
NY C 65.63-10%-11%
6.4% -0.3% -1%
Dayton
OH C 68.75 -4% -16%
5.8%
0.3%-22%
Ventura County
CA
7.0%
2.0%
Westchester
NY B 75.00 -10% -11%
4.6% -0.3%-17%
Norfolk/Hampton Roads
VA
5.5%
B
B
78.13
75.00
-27%
-8%
4%
-11%
-0.3%
8%
2%
Tacoma
WA C 71.88 -12% -7%
6.9% 0.3%10%
Orange County
CA
5.0%
C
65.63
-27%
4%
-0.3%
67%
Palm Beach
FL
C
71.88
-6%
-6%
6.4%
2.8%
5%
Fairfield County
CT
B
78.13
-8%
-8%
6.0%
0.7%
17%
Fort Lauderdale
FL
B
78.13
-6%
-6%
5.5%
3.3%
29%
Fort Worth
TX
A
87.50
-13%
-4%
5.2%
2.9%
20%
Long Island
NY
B
78.13
-10%
-11%
5.2%
0.8%
53%
Northern New Jersey
NJ
C
71.88
-4%
-18%
6.9%
0.5%
37%
Oakland-East Bay
CA
C
71.88
-27%
4%
6.5%
1.6%
-3%
Suburban Maryland
MD
B
78.13
-3%
-10%
4.4%
0.3%
7%
Suburban Virginia
VA
B
84.38
-8%
-11%
3.6%
0.1%
7%
Durham
NC A 93.75 -13%-45%
5.0% 1.5%23%
Raleigh-Cary
NC B 84.38 -13% -45%
5.1%
4.1%-12%
Central New Jersey
NJ
5.8%
0.5%
B
78.13
-4%
-18%
33% *April 2013 through March 2014 vs. April 2012 through March 2013
**May 2013 through April 2014 vs May 2012 through April 2013
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 23
2Q • 14
Quarterly Market Trends
SPONSORS
CCIM INSTITUTE
Since 1969, the Chicago-based CCIM Institute has conferred the Certified Commercial Investment Member (CCIM)
designation to commercial real estate and allied professionals through an extensive curriculum of 160 classroom
hours and professional experiential requirements. Currently, there are 9,000 CCIMs in 1,000 markets in the U.S. and
31 countries worldwide. Another 3,000 practitioners are pursuing the designation, making the Institute one of the
largest commercial real estate networks in the world. An affiliate of the National Association of REALTORS®, the
CCIM Institute’s recognized curriculum, networking programs, and the powerful technology tool, Site To Do Business (site analysis and demographics resource), positively impact and influence the commercial real estate industry.
Visit www.ccim.com for more information.
CCIM INSTITUTE 2014 EXECUTIVE LEADERSHIP
B.K. Allen, CCIM
Interim Executive
Vice President/CEO
[email protected]
Karl Landreneau, CCIM
President
Steven W. Moreira, CCIM
First Vice President
Mark Macek, CCIM
President-Elect
Craig Blorstad, CCIM
Treasurer
CCIM Institute
430 North Michigan Ave.,
Suite 800
Chicago, IL 60611
312-321-4460
www.ccim.com
NATIONAL ASSOCIATION OF REALTORS®
The Mission of the National Association of REALTORS® Research Division is to collect and disseminate timely, accurate and comprehensive real estate data and to conduct economic analysis in order to inform and engage members,
consumers, and policy makers and the media in a professional and accessible manner.
The Research Division monitors and analyzes economic indicators, including gross domestic product, retail sales,
industrial production, producer price index, and employment data that impact commercial markets over time.
Additionally, NAR Research examines how changes in the economy affect the commercial real estate business, and
evaluates regulatory and legislative policy proposals for their impact on REALTORS,® their clients and America’s
property owners.
The Research Division provides several products covering commercial real estate including:
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l
Commercial Real Estate Outlook Commercial Real Estate Lending Survey
l
l
Commercial Real Estate Quarterly Market Survey
Commercial Member Profile
To find out about other products from NAR’s Research Division, visit www.realtor.org/research-and-statistics.
NATIONAL ASSOCIATION OF REALTORS® RESEARCH DIVISION
Lawrence Yun, PhD
Sr. Vice President,
Chief Economist
[email protected]
George Ratiu
Director, Quantitative &
Commercial Research
[email protected]
Ken Fears
Director, Regional
Economics & Housing
Finance Policy
[email protected]
National Association of
REALTORS®
500 New Jersey Ave. N.W.
Washington, D.C. 20001
800-874-6500
www.realtors.org
©2014 The CCIM Institute and National Association of REALTORS.® All rights reserved.
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 24
2Q • 14
Quarterly Market Trends
CONTRIBUTORS
David Ellermann
Ellermann Brokerage
Chicago IL
John McLaughlin
McLaughlin Investments, Inc.
Boston MA
Michel Hibbert
Charles Dunn Company
Los Angeles CA
David Aikens
KW Commercial
Louisville KY
Grant Ackerly
R.P. Hubbell and Company, Inc.
Poughkeepsie NY
Jason Bantel
Lee & Associates
Central Florida, LLC
Orlando FL
Mike Stuhlmiller
Stuhlmiller Realty
Hayden ID
Tyler Smith
PRG Investments
Louisville KY
Jennifer Gray
Jennifer Gray Commercial Realty
Southlake TX
Lucio Cantu
RE/MAX Commercial
San Antonio TX
Gary Tang
Hannah Investment, Inc.
Albany CA
David Luebke
Hendricks Commercial Properties
Beloit WI
Mike Carroll
Sealy Realty Co., Inc.
Tuscaloosa AL
Jim Purgerson
Citizens Bank & Trust
Baton Rouge LA
Sheng-Hong Eric Wang
Yuanta Asset Mgt.
Taipei
Shannon Mar
Guarantee Real Estate
Fresno CA
Frank Leatherman, MAI
Leatherman Real Estate Services
Raleigh NC
John Lutz
Lutz Commercial Realty
Union NJ
Linda Sorkin
Aukamp Brokerage & Consulting
Matthews NC
Steven Caravelli
Coldwell Banker Commercial
San Francisco CA
Cyril Crocker
Keller Williams
Washington DC
Brian Sorrentino
ROI Commercial Real Estate, Inc
Las Vegas NV
Steve Johnson
Red Sky Partners LLC
Brookfield WI
Anthony Strauss
Colliers
Minneapolis MN
Joe Milkes
Milkes Realty Valuation
Plano TX
Ian Levin
Nathan Levin Co.
Salem OR
Jeff Sage
Realty Development
Aspen CO
Sammie Kessner
US National Commercial
Real Esate Services
Las Vegas NV
Tom Davies
Norris & Stevens
Portland OR
J.R. Fulton
J.R. Fulton & Associates
Oklahoma City OK
James Gerdts
SquareHat Real Estate
Raleigh NC
Brian Resendez
Sperry Van Ness
Portland OR
Ryan Haedrich
Haedrich & Co., Inc.
Redding CA
Steve Caton
Caton Commercial Real Estate
Group
Plainfield IL
Simeon Spirrison
Adelphia Properties
Oak Brook IL
Dolf deVos
IPMG, Inc.
Corvallis OR
William Shopoff
The Shopoff Group
Irvine CA
Dan Naylor
Mericle Commercial Real Estate
Wilkes-Barre PA
John Schutzius
Industrial Commercial Realty and
Investment Corp
Aurora IL
Diane Baer Yecko
Capital Realty Group
Pittsburgh PA
Gary Hunter
Westlake Associates, Inc.
Seattle WA
Maire Herron
CIC
Jackson WY
Lydia Bennett
CRE West Coast LLC
Bellingham WA
Nancy Fish
Park Place Real Estate
Kalamazoo MI
Stephen Jacquemin
S.J. Financial Group
St Louis MO
Terry Phillips
The Phillips Group, Inc.
Vancouver WA
Lloyd Miller
Morris Realty Group
Memphis TN
Robert Resneder
US Trust
Dallas TX
Lee Ehlers
Investors Realty, Inc.
Omaha NE
Jody Elder
Cushman & Wakefield
Cornerstone
Nashville TN
Gary Best
KW Commercial Division
Tucson AZ
Lauren Nasser
Arthur Kowitz Realty
Daytona Beach FL
James J. Katon
Integra Realty Resources
Charlotte NC
Gina Dingman
Annette Xollier
Able Real Estate
Philadelphia PA
Alan Doak
Colliers International
Ottawa OH
Jim Kasten
Kasten Long Commercial Group
Phoenix AZ
Garry Adams
Capital Realty, Inc.
Sherman Oaks CA
Reuben Trinidad
Hoff & Leigh - Colorado Springs
Colorado Springs CO
Rob Burlingame
CBRE
San Antonio TX
Peter A. Frandano
Southport Realty
Southport NC
Trent Grothues
Pollan Hausman Real Estate
Services, LLC
Houston TX
Trent Frankum
Tan, Frankum & Associates
Manila
Todd Balsiger
JLL
Minneapolis MN
James Milner
James R. Milner III
Boone NC
Anthony Ricco
Sperry Van Ness/
Bluestone & Hockley
Portland OR
Dan Mincher
The Vollman Company, Inc.
Sacramento CA
John Levinsohn
Levi Investment Realty, inc.
Indianapolis IN
Rick Padelford
Realty Executives Commercial
Tempe AZ
Ira Korn
Coldwell Banker Commercial
Meridian
Rochester NY
Jeff Eales
Birtcher Anderson Realty
San Juan Capistrano CA
Eugene Heathman
Garland Realty R , LLC
Ruidoso NM
Edward T. Herbert
HCR Associates Realtors
Nashville TN
Brad Welborn
Colonial Square Realty, Inc.
Fort Myers FL
Eric Duxstad
Frost Bank
San Antonio TX
Bruce Johnson
Block Real Estate Services, LLC
Kansas City MO
Rick Colon
Cassidy Turley
Tampa FL
Cal Northam
Prudential Floberg Realtors
Billings MT
Gary Lee
Jones Lang LaSalle
Atlanta GA
Nicole Willoughby
Associated Bank
Milwaukee WI
Alan Stamm
century 21 consolidated
Las Vegas NV
Paul Mader
MTC Commercial RE
Castro Valley CA
Marguerite Haverly
CBRE
Albuquerque NM
David Staruch CCIM GRI
Century 21 Jim White & Associates
Treasure Island FL
Arch Jeffery
De Rito Partners, Inc.
Phoenix AZ
Shahid K. Abdulla
PlainsCapital Bank
San Antonio TX
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E Laurens Nicholson
Lee & Associates
Greenville SC
John Capes
KW Commercial Realty
Augusta GA
Mike Milovick
Royal LePage Grand Valley Realty
Kitchener
Robert Powell
Powell Realty Advisors, LLC
Dallas TX
David Schnitzer
Venture Commercial
Dallas TX
Karen Johnson
NAI MLG Commercial
Milwaukee WI
Kenneth Kujawa
Century 21 Signature Realty
Saginaw MI
Beverly Keith
Trinity Partners
Raleigh NC
Rocket Glass
Inland Pacific Commercial
Properties
San Diego CA
25
2Q • 14
Quarterly Market Trends
CONTRIBUTORS
Tom Baker
KW Commercial
Eagan MN
Brad Alton
NAI Commercial
Edmonton
Mike Eurchuk
Realty Executives Meridian
Edmonton
Chad Heer
RE/MAX Results Commercial
Saint Paul MN
Jeffrey Stanton
MC Management
Bellaire TX
Joe R. Romero
Cauwels & Stuve Realty and Development Advisors LLC
Albuquerque NM
Peter Kravaritis
IHDA
Chicago IL
Thomas Knaub
Colliers International
Phoenix AZ
Reagan Schwarzlose
JP Morgan Chase Dallas TX
Arielle Dorman
Kidder Mathews
Bellevue WA
John Cohoat
Browning Investments
Indianapolis IN
Jeff Wilke
Graham & Company
Huntsville AL
Brian Spring
NAI Spring
Canton OH
Todd Gannet
Equitable Metropolitan
West Orange NJ
Edward Miller
Colliers International
Tampa FL
Todd Mitchell
Columbia Property Trust
Atlanta GA
Rick Ikeler
SRS Real Estate Partners
Dallas TX
Rick Gonzalez
Crosby + Associates, Inc.
Tavares FL
Roger Cobb
Selwyn Property Group
Charlotte NC
Andrew Joyner
The Simpson Company
Gainesville GA
John John
REMAX Boone Realty
Columbia MO
Jerry Fiume
NAI Cummins Real Estate
Akron OH
David Auel
Avison Young
Pittsburgh PA
Michael Merker
NAI Park Capital
Guelph
D. Robb
Encon Commercial
Santa Fe Springs CA
Don Sebastian
Coldwell Banker Commercial
McMahan Co.
Lexington KY
Asok Agarwal
Re/Max Commercial
Glendale CA
Katy Welsh
Hunter Real Estate
West Palm Beach FL
Matt Boehlke
Regus
Maple Grove MN
John Floyd
Crye-Leike Commercial Property
Management
Brentwood TN
Bruce Bauer
Bauer Appraisal Group, Inc.
Albany NY
Michael McNally
Pacific Commercial Management
San Diego CA
Bill Crawford
Crawford Associates
Greenville SC
Lyman Whitlatch
The Whitlatch Group
Visalia CA
Matt Carter
Joyner Commercial,
The Commercial Division
of Berkshire Hathaway C
Nick Miner
ORION Investment Real Estate
Scottsdale AZ
Peter Aburrow
Encore Real Estate
Dallas TX
Rhonda Reap-Curiel
Coldwell Banker Reap Realty
Alexandria LA
Lizby Eustis
Keller Williams Realty
Mandeville LA
Patrick Bell
Dunes Properties
Charleston SC
Vikki Keyser
Keller Williams Commercial
Sarasota FL
Gary Maitha
Upland Group, Inc.
Tempe AZ
James Kaiser
Heartland Properties, Inc
Council Bluffs IA
Dan Joyner REALTORS
Greenville SC
Eric Higgins
Colliers International
Birmingham AL
Michael Shaffer
Skogman Commercial
Cedar Rapids IA
Todd Hamilton
Cutler Commercial
Scottsdale AZ
Marc Veras
RE Commercial LLC
Appleton WI
Lisa Campbell
Coldwell Banker Morris
Bend OR
Scot E Hall
Wolf Realty Inc.
Glendale AZ
Helen Jobes
Kennedy Wilson
Austin TX
David Kearney
Remax Sabre Realy
Port Coquitlam
Lyle Gilbertson
Cassidy Turley
St. Louis MO
George Spirrison
Adelphia Properties
Oak Brook IL
April Thompson
Healthcare REIT
Jupiter FL
Dave Winder
Cushman & Wakefield
Commerce
Boise ID
Julie Teague
Hull Storey Gibson
Augusta GA
Jay Verro
NAI Platform
Albany NY
Eric Rehn
Kennedy Wilson
Brokerage Group
Walnut Creek CA
Kenneth Crimmins
Blau and Berg
Short Hills NJ
David R Dunn
Sperry Van Ness/ Dunn Commercial
Arlington TX
Todd Clarke
NM Apartment Advisors
Albuquerque NM
Allen Gump
Colliers International
Dallas TX
Paul Lynn
Paul A. Lynn & Associates, LLC
Houston TX
Shannon Mar
Guarantee Real Estate
Fresno CA
Hal Alpert
Alpert Commercial Real Estate
Vacaville CA
Timothy L Skinner
Keaty Real Estate
Lafayette LA
John Orr
Colliers International
Charleston SC
Michael Armanious
KW Commercial
Tacoma WA
Samuel Ivey
GHI Ventures, LLC
Marietta GA
Brian Wolford
Paradigm Tax Group
Houston TX
Baltazar Cantu
Colliers International
Monterrey TX
Olga Hallstedt
Results! Commercial Real Estate
Grand Rapids MI
Wayne Shulman
Newmark Grubb Knight Frank
Chicago IL
Corey Schneider
Passaic NJ
George Barnett
Century 21 Foote-Ryan
Plattsburgh NY
David Wieder
CPI
San Antonio TX
Tom Corbett
First Venture Properties, LLC
Wilson NC
James Mangas
Best Corpoarate Real Estate
Upper Arlngton OH
Soozi Jones Walker
Commercial Executives
Las Vegas NV
Craig Evans
Cassidy Turley
New York NY
John Capes
KW Commercial VIP Group, LLC
Augusta GA
David Victorio
Coldwell Banker Commercial NRT
Manfield TX
T.J. Woosley
Hal Woosley Properties, Inc.
Bellevue WA
Ted Taylor
Grandbridge Real Estate Capita
Miami FL
Tim Mills
CBRE
San Diego CA
Chris Jacobson
CBRE
Minneapolis MN
Lily Seymour
Gershman Commercial Real Estate
St. Louis MO
Mike Wells
Wells Asset Management Inc
Dallas TX
Joanne Birtz
Lifro Ltd
Medicine Hat
Travis Newton
Florida Blue (BCBS)
Jacksonville FL
Paul Kenny
Paul Kenny & Matt Bogue Commercial Real Estate
Sun Valley ID
Todd Hamilton
Cutler Commercial
Scottsdale AZ
Dalerie Wu
STC Management
Whittier CA
Lee Farris
Farrmont Realty Group, Inc.
Phoenix AZ
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E Rick Egitto
Inverness Properties
Englewood CO
Nancy Fish
Park Place Real Estate
Kalamazoo MI
26
2Q • 14
Quarterly Market Trends
CONTRIBUTORS
Mark Thiessen
RE/MAX Professionals
Winnipeg ND
Thomas Pollom
Cassidy Turley
Indianapolis IN
Bruce Johnson
Block Real Estate Services
Kansas City MO
Dewey Struble
Dewey Struble CCIM
Reno NV
Brent McLean
Eugene Industrial
Real Estate, LLC
Eugene OR
Eric Rehn
Kennedy Wilson Brokerage Group
Walnut Creek CA
Rich Musgrove
Hotel Asset Value Enhancement
Walnut Creek CA
Giancarlo Da Prato
IDI- Industrial Developments
International
El Paso TX
Todd Younghans
Coldwell Banker Commercial
Georgetown
Ken Krawczyk
K.S.K. Services Inc
Pewaukee WI
Erik Schwetje
EWS Advisors
Winter Park FL
Doug Prickett
Lionstone Investments
Houston TX
C.J.Webb
Grandbridge Real Estate Capital
Charlotte NC
Sean KL Jackson
Keller Williams Tri-Valley Realty
Livermore CA
Scot E Hall
Wolf Realty Inc.
Glendale AZ
Benjamin Bach
Cushman & Wakefield Waterloo
Region
Kitchener-Waterloo, Ontario,
Canada
Linda Larabee
TriStone Realty Management, LLC
Houston TX
H. Winston Hines
HWH Properties
Chesnee SC
Douglas Page
SVN high Desert Commercial
Idaho Falls ID
Forrest Gibson
PRG Developments Inc
Jacksonville FL
Lon Lundberg
Mark Bottles Real Estate Services
Eagle ID
Max Finkle
ReMax Renaissance Realtors
Chattanooga TN
Gregg Waller
Long and Foster
Vienna VA
Salvatore Vitale
RE Commercial
Appleton WI
Peter Rasmusson
Lee & Associates
Elmwood Park NJ
Keith Thomas
RE/MAX Parkside
Olympia WA
Brandon Saylor
Colliers International
Albuquerque NM
Karen Higgins
WestMark Realtors
Lubbock TX
Bill Whitlatch
The Whitlatch Group
Visalia CA
Patty Burns
Fickling & Company
Macon GA
Kelly Keesee
RE/MAX Lubbock
Lubbock TX
Steve Massell
Lee and Associates
Atlanta GA
Todd LaPlante
Five Points Commercial
Real Estate, Inc.
Huntington Beach CA
Scott Babcock
CBSHOME Commercial
Omaha NE
Dale DeBoer
DeBoer Commercial Real Estate
Modesto CA
Tim Miller
Close~Converse Inc.
Baxter MN
Gerard R.C. Pastrano
Sperry Van Ness/
The Pastrano Grp
San Antonio TX
Michael Johsz
AT&T
Tustin CA
Bill Ginder
Caldwell Companies
Houston TX
Kane Morris-Webster
Colliers International
Orlando FL
Bob White
Adams Commercial Real Estate
Decatur GA
Colin Khan
Commercial Property Realty
Ann Arbor MI
Simon Asef
DMC Real Estate
North Hollywood CA
Dan Dowd
Cole Taylor Bank
Chicago IL
Daphne Zollinger
Daphne Real Estate
Denton TX
Hunter Swearingen
Ciminelli Real Estate Services
Tampa FL
Michael Manning
Main Place Liberty Group
Buffalo NY
Russell Hur
BBG
Austin TX
Stephanie Chang
NAI Maestas & Ward
Albuqeurque NM
Greg J. Hrabcak
HER Commercial
Columbus OH
Philip Corriher
The Chambers Group
Charlotte NC
Wes Schollenberg
Avison Young
Winnipeg
Ethan Horn
Ryan, LLC
Denver CO
Bill Puddephatt
First Service Bank
Little Rock AR
Peter Kordonowy
Summerhill Commercial
Real Estate, LLC
Chanhassen MN
Mike Mausteller
Harvey Lindssay Commercial
Real Estate
Newport News VA
Joel Miller
Sperry Van Ness
Geneva IL
Jack Williams
Colliers International
Southfield MI
Palmer Bayless
Emerge Real Estate Services
Roswell GA
Jack Strollo
Broadway Brokerage, LLC
Lakeland FL
Kara Rafferty
Jones Lang LaSalle
Dallas TX
Danny Morales
Hartman Income REIT
Houston TX
Brian D. Harris
REOC San Antonio
San Antonio TX
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 27
2Q • 14
QuarterlyMarketTRENDS
Headline Line HEADLINE
34%
ancy Rate
Help the CCIM Institute make its QuarterlyMarketTRENDS data
more valuable: Provide your market and transaction information by
responding to future quarterly CCIM Market Intelligence Surveys.
Visit www.ccim.com/resources to learn more about
CCIM’s Quarterly Market Trends report.
QU ART ERLY MARKE T TR ENDS u NATIONA L A S S OC IATIO N O F R E A LT O R S ® A N D C C I M I N S T I T U T E 28