THE ECONOMY. THE ECONOMY PAYROLL JOBS (THOUSANDS) PAYROLL JOB GROWTH Selected Large Metro Areas | 12 Months Ending August 2017 PAYROLL JOBS (THOUSANDS)

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Presentation transcript:

THE ECONOMY

PAYROLL JOBS (THOUSANDS) PAYROLL JOB GROWTH Selected Large Metro Areas | 12 Months Ending August 2017 PAYROLL JOBS (THOUSANDS) Updated 10/17 - SB Source: Bureau of Labor Statistics, Delta Associates; October 2017.

UNEMPLOYMENT RATE. Selected Large Metro Areas | August 2016 vs UNEMPLOYMENT RATE * Selected Large Metro Areas | August 2016 vs. August 2017 National Rate 5.0% 4.5% Updated 10/17 - SB YoY Basis Point ∆ -50 -20 -70 -90 -60 -10 -30 +30 Source: Bureau of Labor Statistics, Delta Associates; October 2017. *Not seasonally adjusted.

PAYROLL JOBS (THOUSANDS) PROJECTED JOB GROWTH Washington Metro Area | 2000 - 2020 PAYROLL JOBS (THOUSANDS) Updated 10/17 – SB Source: Bureau of Labor Statistics, George Mason University Center for Regional Analysis, Delta Associates; October 2017.

PAYROLL JOB GROWTH Washington Metro Area | 12 Months Ending August 2017 72,500 -4,900 Updated 10/17 - SB - Job growth has been uneven, although steadier than the nation as a whole, due to the federal presence here. - Explosive growth of the 1980’s followed by the bust of 1990 - primarily we lost construction and FIRE jobs - Then the recovery of the 1990s - with a drag in the 1995-96 period due to government right sizing. JOB CHANGE Source: Bureau of Labor Statistics, Delta Associates; October 2017.

PAYROLL JOB GROWTH Washington Metro Area | 12 Months Ending August 2017 Updated 10/17 - SB - Job growth has been uneven, although steadier than the nation as a whole, due to the federal presence here. - Explosive growth of the 1980’s followed by the bust of 1990 - primarily we lost construction and FIRE jobs - Then the recovery of the 1990s - with a drag in the 1995-96 period due to government right sizing. JOB CHANGE Source: Bureau of Labor Statistics, Delta Associates; October 2017.

PAYROLL JOB GROWTH Washington Metro Area | 12 Months Ending August 2017 Updated 10/17 - SB - Job growth has been uneven, although steadier than the nation as a whole, due to the federal presence here. - Explosive growth of the 1980’s followed by the bust of 1990 - primarily we lost construction and FIRE jobs - Then the recovery of the 1990s - with a drag in the 1995-96 period due to government right sizing. JOB CHANGE Source: Bureau of Labor Statistics, Delta Associates; October 2017.

THE WASHINGTON METRO AREA APARTMENT MARKET

Class A Only Past 12 Months: 11,126 LONG-TERM ANNUAL APARTMENT ABSORPTION National Market Leaders Class A Only Past 12 Months: 11,126 UNITS (ALL CLASSES) Use all REIS data and remove text boxes. Add Boston as well as the remaining cities used in the ‘Payroll Job Growth’ slide. Wait for Will to obtain Long Term Annual Apartment Absorption for each area. Ask Jonathan for updates (most recent) Source: REIS, Delta Associates; October 2017. Note: Excludes NY metro to conserve scale.

CLASS A APARTMENT ABSORPTION Washington Metro Area | 2004 - 2020 Average Since 2008 = 7,999 Annual Average ~ 10,000 Long-Term Average = 7,023 MARKET-RATE UNITS Source: Delta Associates; October 2017. *12 months ending September 2017.

ABSORPTION PACE UNITS PER PROJECT PER MONTH Class A Projects in Initial Lease-Up | Washington Metro Area UNITS PER PROJECT PER MONTH NUMBER OF PROJECTS IN ACTIVE LEASE UP Updated 10/17 - SB Source: Delta Associates; October 2017.

STABILIZED APARTMENT VACANCY RATES Major Apartment Markets | Second Quarter 2017 National Vacancy Rate = 4.4% VACANCY RATE (ALL CLASSES) Updated 10/17 - SB Use all REIS data and remove text boxes. Add Boston as well as the remaining cities used in the ‘Payroll Job Growth’ slide. CHANGE Was to all three substates (weighted average) Source: REIS, Delta Associates; October 2017.

Long-Term Average Rent Growth = 4.0% ANNUAL EFFECTIVE RENT GROWTH Class A Apartments | Washington Metro Area | 2004 - 2017 Long-Term Average Rent Growth = 4.0% 0.2% Updated 10/17 - SB Source: REIS, Delta Associates; October 2017. *12 months ending September 2017.

PROJECTS CURRENTLY UNDER CONSTRUCTION Northern Virginia Show all 3 sub state areas. In Lease-up Not Yet Leasing Source: Delta Associates; October 2017.

PROJECTS CURRENTLY UNDER CONSTRUCTION Suburban Maryland Show all 3 sub state areas. In Lease-up Not Yet Leasing Source: Delta Associates; October 2017.

PROJECTS CURRENTLY UNDER CONSTRUCTION District of Columbia Show all 3 sub state areas. In Lease-up Not Yet Leasing Source: Delta Associates; October 2017.

Class A Quarterly Absorption = 2,893 APARTMENT DELIVERIES Washington Metro Area | 2014 - 2017 Class A Quarterly Absorption = 2,893 MARKET-RATE UNITS CLASS A ADJUST YEARS Updated (10/17): Use ‘Tables’ and ‘Table 2.2’ tabs to update – Use ‘Concessions-Absorption Data Entry 1994+ excl BaltWash’ file in the Data Upload Project Folder to calculate the last 12 quarters of absorption -SB 2014 2015 2016 2017 Source: Delta Associates; October 2017.

36-MONTH APARTMENT DEVELOPMENT PIPELINE* Washington Metro Area | 2003 - 2017 MARKET-RATE UNITS Updated 10/17 - SB Source: Delta Associates; October 2017. *Market-Rate Units Planned and Under Construction. **As of Third Quarter.

Class A Projected Quarterly Absorption PROJECTED DELIVERIES 36-Month Development Pipeline | Washington Metro Area | 2017 - 2020 Class A Projected Quarterly Absorption = 2,500 MARKET-RATE UNITS CLASS A Updated 10/17 - SB 2017 2018 2019 2020 Source: Delta Associates; October 2017.

DEMAND AND SUPPLY PROJECTIONS Washington Metro Area Class A Apartments | 36 Months Ending September 2020 DEMAND Net Absorption: 10,000/Year = 30,000 SUPPLY MARKET-RATE UNITS (THOUSANDS) Planned and may deliver by 9/20: 6,329 units1 Under construction: 28,808 units2 Updated 10/17 - SB Use Table 2.1 and most recent pipeline tab Total = 35,137 units No VA Sub MD The District 1 Probable supply after projected attrition. 2 Includes unleased units at projects in lease-up. 2.9% 3.5% 4.9% Projected Stabilized Vacancy % at September 2020 Projected Stabilized Vacancy Rate at Sept. 2020: 3.5% Metro-Wide Source: Delta Associates; October 2017.

ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTH Washington Metro Area | 2004 - 2020 Long-Term Average = 4.0% Updated 10/17 - SB Get Long-Term average from “Snapshot Data” tab in A Tables. Source: Delta Associates; October 2017. * Annual rent growth at Third Quarter 2017 is 0.2%.

THE BALTIMORE METRO AREA APARTMENT MARKET

CLASS A APARTMENT ABSORPTION Baltimore Metro Area | 2008 - 2020 Annual Average ~ 2,000 10-Year Average = 1,689 MARKET-RATE UNITS Keep at 2007; Use 2016 number from 4Q 2016 Report, use 2016 number from 3Q 2016 Report. Update 2007-2015 w/ Anne Arundel/Howard County Source: Delta Associates; October 2017. *12 months ending September 2017.

EFFECTIVE RENT AND VACANCY RATE Class A Apartments | Baltimore Metro Area | 2000 - 2017 STABILIZED VACANCY RATE AVERAGE EFFECTIVE BASE RENT Updated 10/17 - SB Get Long-Term average from “Snapshot Data” tab in A Tables. 3.9% / YEAR LONG-TERM RENT GROWTH Source: Delta Associates; October 2017. * As of Third Quarter.

36-MONTH APARTMENT DEVELOPMENT PIPELINE* Baltimore Metro Area | 2005 - 2017 MARKET-RATE UNITS Updated 10/17 – SB Q4 2016 Report, Q3 2017 Report (Table 4.1); Update with Anne Arundel and Howard before 2015 Source: Delta Associates; October 2017. *Market-Rate Units Planned and Under Construction. **As of Third Quarter.

Projected Stabilized Vacancy Rate at Sept. 2020: 4.2% Metro-Wide DEMAND AND SUPPLY PROJECTIONS Baltimore Metro Area Class A Apartments | 36 Months Ending September 2020 DEMAND Net Absorption: 2,000/Year = 6,000 SUPPLY MARKET-RATE UNITS Planned and may deliver by 9/20: 1,810 units1 Under construction: 6,425 units2 Updated 10/17 - SB Total = 8,235 units Baltimore Metro Area 1 Probable supply after projected attrition. 2 Includes unleased units at projects in lease-up. Projected Stabilized Vacancy Rate at Sept. 2020: 4.2% Metro-Wide Source: Delta Associates; October 2017.

ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTH Baltimore Metro Area | 2000 - 2020 Long-Term Average = 3.9% 10/17: update projections - SB Source: Delta Associates; October 2017. * Annual rent growth at Third Quarter 2017 is -0.7%.

THE WASHINGTON/BALTIMORE AREA CAPITAL MARKETS

APARTMENT INVESTMENT SALES Selected Metro Areas | 2008 - 2017 BILLIONS Edit colors for each bar Source: Real Capital Analytics, Delta Associates; October 2017. *Sales through September annualized.

CLASS A HIGH-RISE APARTMENT CAP RATES Washington Metro Area | 2006 – 2016 Updated 10/17 - SB Source: Delta Associates Market Maker Survey; October 2017.

THE WASHINGTON METRO AREA CONDOMINIUM MARKET

LARGEST CONDOMINIUM MARKETS Selected Metro Areas | 2016 UNITS (THOUSANDS) 10/17- Updated; Use table B25032 through American FactFinder; total 3 to 50 or more units - SB 121 Source: U.S. Census Bureau, Delta Associates; October 2017.

CONDOMINIUM SALES ACTIVITY Washington Metro Area | 12 Months Ending September 2017 Compared to Prior Year Down 26% - 50% Down more than 50% Down 1% - 25% Up more than 1% Source: Delta Associates; October 2017.

ANNUAL CONDOMINIUM RESALES Washington Metro Area | 2003 - 2017 Average From 2003 - 2007 = 17,890 UNITS Average Since 2013 = 15,023 Average From 2008 - 2012 = 11,280 Update 10/17 – SB Extend back to 2003. Change groupings (averages) into 3 separate ones afterwards. Source: Delta Associates; October 2017. *12 months ending August 2017.

EFFECTIVE NEW CONDOMINIUM SALES PRICE CHANGE Washington Metro Area | 2006 - 2018 0.6% Source: Delta Associates; October 2017. *12 months ending September 2017.

NEW CONDOMINIUM AVERAGE PRICE PER SF Washington Metro Area | Third Quarter 2017 Source: Delta Associates; October 2017.

NEW CONDOMINIUM AVERAGE PRICE PER SF Selected Downtown Areas in the U.S. | Third Quarter 2017* Source: The Mark Company, Miller Samuel Inc., Delta Associates, October 2017. *Third Quarter 2017 except for Manhattan, Brooklyn, and Queens which are as of Second Quarter 2017.

RESALE CONDOMINIUM SALES PRICE CHANGE Washington Metro Area | 2003 - 2017 Updated 10/17 - SB Source: Delta Associates; October 2017. * 12 months ending August 2017.

NEW CONDOMINIUMS ACTIVELY MARKETING OR UNDER CONSTRUCTION Washington Metro Area | 2003 - 2017 MARKET-RATE UNITS Updated 10/17 – SB Extend back to 2003. 2,776 Source: Delta Associates; October 2017. Note: Number of units are for September of each year.

MONTHS OF NEW CONDOMINIUM SUPPLY Washington Metro Area | 2004 - 2017 Updated 10/17 - SB Source: Delta Associates; October 2017. *Fourth Quarter Projection

MONTHS OF NEW CONDOMINIUM SUPPLY BY SUBMARKET Washington Metro Area | Third Quarter 2017 Use Q3 report. Make names of submarket white – the grey is hard to read. Source: Delta Associates; October 2017.

DEMAND AND SUPPLY PROJECTIONS Washington Metro Area Condominiums | 36 Months Ending September 2020 DEMAND Net Sales: 2,025/Year = 6,075 units SUPPLY Planned and May Begin Marketing by 9/20: 2,294 units1 MARKET-RATE UNITS Under Construction and/or Marketing: 2,776 units2 Updated 10/17 - SB Total = 5,070 units The District No VA Sub MD 1 Probable supply after projected attrition. 2 Includes unleased units at projects in lease-up. Source: Delta Associates; October 2017.