John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP Inland Empire & San Diego County Economies John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP

U.S. Jobs At A Record Level

Add Potential Workers: Given Up Or Part Time 18.0% Add Potential Workers: Given Up Or Part Time 10.6% 7.4% 3.7%

Inflation Worry 3.9% 2.3%

Interest Rates: 4 Short Term Rate Increases 4.83% 3.20%

Yield Curve: Potential Recession Predictor 2 Year to 10 Year 0.30%

California Job Gains/Losses

Inland Empire Population Greater Than 25 of 50 States Greater Than 21 of 50 States City Population  Murrieta 113,541 Temecula 113,181 Menifee 91,902 Wildomar 36,287 Area 354,911 City Population  San Diego 1,419,845 Chula Vista 267,503 Area 1,687,348

Inland Empire’s Powerful Job Growth! Percent 2018e above 2007 I.E. CA US 15.9% v. 9.8% v. 8.2%

San Diego Co.’s Strong Job Growth Percent 2018e above 2007 SD CA US 11.6% v. 9.8% v. 8.2%

Job Growth by Major Regions

Job Growth Fastest 2017 Job Growth Rates in CA!

Unemployment Rates City/CDP Labor Force Unemployed Rate San Diego city 726,600 23,000 3.2% Chula Vista 124,100 4,400 3.5% Temecula 38,600 1,600 4.0% Murrieta 55,600 1,800 3.3% Menifee 55,800 1,900 Wildomar 17,500 700 3.8%

Poverty Falling With Job Creation City/CDP Children All San Diego city 13.1% 18.3% Chula Vista 12.5% 11.5% Temecula 8.4% 6.3% Murrieta 5.7% 5.2% Menifee 6.8% 6.9% Wildomar 16.1% 22.5% 23.5% 16.4% 16.4% 12.3%

Educational Challenge City/CDP HS or Less AA+ San Diego city 26.8% 53.4% Chula Vista 40.3% 36.4% Temecula 45.4% Murrieta 30.2% 44.1% Menifee 38.3% Wildomar 23.9% 46.3% 45.3% 32.0% 29.2%

Real Estate Performance Logistics

Inland Empire Job Growth by Sector, 2011-2018e 23.5% Of Job Growth

San Diego County Job Growth by Sector, 2011-2018e 6.7% Of Job Growth

E-Commerce 1.1% 9.6% 15.5%

Port Volumes – LA/LB

Cargo Tonnage: Port of San Diego Break Bulk Cargo

Industrial Rates & Vacancies Lease Rates Per Square Foot Per Month Inland Empire $0.53 3.9% Ventura $0.70 2.5% Los Angeles $0.89 1.1% Orange $0.91 1.5% San Diego $0.90 4.1% Source: CB Richard Ellis

Industrial Space Lease Rates $0.94 $0.92 $0.84 $0.56

ONT Airport Cargo Record Volume 17.7%

Air Cargo Tonnage, San Diego International Airport 0.3%

Industrial Construction Locations

Real Estate Performance Manufacturing

Real Estate Performance

Manufacturing Job Growth Inland Empire 2011-2018 4.0% of Job Growth

Manufacturing Job Growth San Diego County 2011-2018 7.7% of Job Growth

U.S./CA Manufacturing Job Growth

CA Electrical Cost +74.6% +83.5% +135.4%

Natural Gas A Bargain

Marijuana?

Real Estate Performance Residential

Home Volume Annual 2017 Sales Banning 572 Beaumont 1,451 Calimesa 178 Pass Area 2,201

All Home Sales San Diego County

Home Prices – Inland Empire FHA Conforming Loan Limit: $405,950 +3.7% 3rd Quarter 2018 Temecula $601,500 Murrieta $492,600 Menifee $423,900 Wildomar $462,700 -10.2% 3rd Quarter 2018 Temecula $479,800 Murrieta $432,500 Menifee $342,300 Wildomar $297,100

Home Prices – San Diego County FHA Conforming Loan Limit: $649,750 33.5% 10.8% September 2018 Chula Vista $510,000 San Diego $585,000 SD Co. - all $575,000

Price Competition Highest Price Gaps In History

Apartment Rates/Vacancy, 2018 Inland Empire $1,487 3.8% San Diego $1,978 3.9% Ventura $1,983 3.9% Orange $2,035 4.1% Los Angeles $2,267 4.0% Source: USC Lusk Center For Real Estate

Construction Job Growth 2011-2018 12.3% Of Job Growth

2011-2018 11.6% Of Job Growth

Real Estate Performance Office

Bachelor’s Degree or Higher, 2017

Median Household Incomes, 2017

Office Market Absorption Sq. Feet 2018 YTD Los Angeles 1,583,481 Orange 410,916 Inland Empire 395,011 San Diego 352,363 Ventura 343,492

Office Market Rates E-Commerce Hurts Market Market Sq.FT./Mo. Los Angeles $3.58 San Diego $2.96 Orange $2.94 Ventura $2.09 Inland Empire $1.96

Office Vacancies Market Sq. Ft./Mo. Inland Empire 9.1% San Diego 9.8% Orange 10.9% Los Angeles 13.3% Ventura 13.5%

13.1%

Air Passengers, San Diego 6.7%

Private Sectors Needing Educated Workforce Inland Empire 2011-2018 1.9% of Job Growth

Private Sectors Needing Educated Workforce San Diego County 2011-2018 12.5% of Job Growth

Real Estate Performance Retailing Hurt by E-Commerce

Population Forecast, 2018-2045

Median Household Income

Net Retail Absorption 2018 YTD San Diego 280,599 Orange 196,271 Ventura 134,533 Inland Empire 56,665 Los Angeles -235,355

Retail Vacancy Rates 3rd Quarter 2018 Orange 3.3% San Diego 4.4% Los Angeles 5.1% Ventura 6.9% Inland Empire 8.5%

Retail Rates Per Sq. Ft. Sept-2018 Inland Empire $2.05 Orange $2.40 San Diego $2.44 Los Angeles $2.48 Ventura $2.53

Summary

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