the economy decoded at ccim thrive 2014 - gary ralston, ccim

The Economy Decoded“What It Means for Commercial Real Estate”

Gary Ralston, CCIM, SIOR, CPM, CRE, CLS, CDP, CRXGary@SRDcommercial.com

Demand for Commercial Real Estate• Real estate is space for people … to live in,

work in, shop in and store things in. • Understanding people, employment and

income (money) is the basis for analyzing real estate demand.

• Useful and convenient sources– Census

• http://quickfacts.census.gov/qfd/index.html

– Bureau of Labor Statistics• http://www.bls.gov/eag/

http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CE_cesbref1

Demand for Commercial Real Estate is Correlated to Jobs

%

Total Nonfarm 139,118,000

Mining & Logging 918,000 0.66%

Construction 6,068,000 4.36%

Manufacturing 12,158,000 8.74%

Trade, Transportation & Utilities 26,440,000 19.01%

Information 2,667,000 1.92%

Financial 7,963,000 5.72%

Professional & Bus Services 19,302,000 13.87%

Education & Health Services 21,539,000 15.48%

Leisure & Hospitality 14,651,000 10.53%

Other 5,515,000 3.96%

Government 21,897,000 15.74%

Employment Establishment Survey (August 2014)

www.bls.gov

Aug-14 % date delta

Total Nonfarm 139,118,000 138,350,000 Dec-07 768,000

Mining & Logging 918,000 0.66% 726,000 Aug-07 192,000

Construction 6,068,000 4.36% 7,725,000 Jan-07 (1,657,000)

Manufacturing 12,158,000 8.74% 14,344,000 Aug-04 (2,186,000)

Trade, Trans & Utilities 26,440,000 19.01% 26,628,000 Aug-07 (188,000)

Information 2,667,000 1.92% 3,105,000 Aug-04 (438,000)

Financial 7,963,000 5.72% 8,341,000 Aug-07 (378,000)

Professional & Bus Services 19,302,000 13.87% 18,051,000 Dec-07 1,251,000

Education & Health Services 21,539,000 15.48% 18,861,000 Dec-07 2,678,000

Leisure & Hospitality 14,651,000 10.53% 13,550,000 Dec-07 1,101,000

Other 5,515,000 3.96% 5,516,000 Dec-07 (1,000)

Government 21,897,000 15.74% 21,626,000 Aug-04 271,000

Where Did the Jobs Go?

Year USA CA TX FL2004 131,785.0 14,744.1 9,498.1 7,508.1

2005 134,282.0 15,025.4 9,761.2 7,810.5

2006 136,486.0 15,296.2 10,057.1 7,995.9

2007 137,984.0 15,449.8 10,413.8 7,995.1

2008 137,421.0 15,283.9 10,634.1 7,703.4

2009 130,617.0 14,256.4 10,252.0 7,193.8

2010 130,395.0 14,217.8 10,343.1 7,185.6

2011 131,942.0 14,362.2 10,599.0 7,259.6

2012 134,111.0 14,700.5 10,883.4 7,397.2

2013 136,434.0 15,168.9 11,211.6 7,587.4

2014 139,004.0 15,492.5 11,607.8 7,795.9

Employment

• Nonfarm (establishment survey) employment as of July• www.bls.gov

Demographic Shifts

• CA, TX and FL account for 27% of US population• CA, TX and FL account for almost 45% of

population growth in the County• TX is growing by almost 40,000 per month

– CA growing about 30,000 per month– FL growing over 20,000 per month

• FL is now the 3rd most populated state • CA, TX and FL account for about 25% of total US

jobs and almost 40% of job growth

At market close Fri Oct 17, 2014

10 Year US Treasury Rate

NCREIT Cap Rates vs. 10 year UST

http://www.prea.org/research

US CMBS Issuance by Year

http://www.crefc.org/

7575

Oct 17, 2014

Source: Call Reports