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Real Estate Markets & The Economy: An Empirical View

Real Estate Markets & The Economy: A Conceptual View

Digital Economy Paradigm Information All Levels Integration & Globalization of Markets Securitization of Debt & Equity Speed of Adjustment & Volatility

Three Evaluation Elements Efficiency Effectiveness Equity

The Three Stages of IT Economic Development Development of Technology Gestation for Aggregation, Access, Integration, Implementation, Adoption and Branding Maturation- Reintegration of Cyberspace with Bricks and Mortar

Real Estate Investment Analysis IS Risk Management

Identify Risks Risk Modification Strategies Alter Risk Evaluate Risk Removal Strategies

Yes, Virginia, there are three things that matter in Real Estate Investment Decision Making LOCATION, LOCATION, LOCATION

LOCATION Macro-Environment Sub-Region, City Level, Neighborhood Property Specific

GDP Growth % Source: Dept. of Commerce

Consumer Confidence Index Source: Conference Board

Personal Consumption Growth Rate % Source: BEA, DOC

Real Retail Sales Growth: Less Autos % Source: US Census

Growth in Consumer Credit % Source: Federal Reserve

Unemployment Rates: US & California % Source: BLS

Employment Growth Rate by Sector: December 1997 to December 1998 % Source: BLS

Annual Employment Change, California and US, 1973-Q Source: FCREUE from BLS data.

Capacity Utilization in Manufacturing % Source: Federal Reserve

Growth Rate of Real NonResidential Fixed Investment % Source: Bureau of Economic Analysis

Fixed Business Investment As Proportion of GDP (Including Structures & Equipment) Source: BEA

Residential Fixed Investment As Proportion of GDP Source: BEA

Interest Rates: 6 month vs. 30 year % Source: Federal Reserve

Spread Between MBS and 10 yr. Treasuries Source: FNMA, Federal Reserve %

Change In Consumer Price Index & Producer Price Index % Source: Bureau of Labor Statistics

Change in Labor Productivity in Manufacturing Source: BLS %

Change in Unit Labor Costs: Nonfarm Business Sector Source: BLS %

US Exports & Imports as Percentage of GDP % Source: Dept. of Commerce

US Trade Balance in Goods & Services $, Bill. Source: US Census Bureau

US Export Performance 1998 % Change Source: US Census Bureau

US Import Performance 1998 % Change Source: US Census Bureau

Growth Rate for Prices of Asian Imports % Source: DOC

Growth Rate of Export and Import Price Indices (EPI & IPI) % Source: DOCNote: EPI is ex-agricultural goods & IPI is ex-oil

Asian Exchange Rates: 1989=1 Source: Asian WSJ

Asian Exposure: US vs. California Percent of trade with Asia in total foreign trade ? Source: FCREUE calculations from US Dept. of Commerce & Census Bureau data

California's Computer Industry & Asia Source: FCREUE from MISER $, Bill.

Countervailing Drivers For US Economy Consumer is Happy (For the Moment) Employment Growth is Uneven Fixed Business Investment Remains Strong Housing Sector is Relatively Robust

Countervailing Drivers For US Economy Stable Energy Prices World-wide Generated Price Inertia High Real Interest Rates Low Nominal Interest Rates

Countervailing Drivers For US Economy Monetary & Fiscal Policy Prerogatives Export-Import Imbalance

Debt Owed By Non-Financial Sectors: As of 4th Quarter 1998 Source: Federal Reserve Flow of Funds

Commercial Mortgages: Assets Held by Sector $, Bill. Source: FRB

Net Commercial Mortgage Flows $, Bill. Source: Federal Reserve; Annualized quarterly data

CMBS Issuance $, Billions Source: Commercial Mortgage Alert, Lehman Brothers

Equity Capital Raised By REITS $, Millions Source: NAREIT, Lehman Brothers

Source: FHLMC

Median Sales Price of Existing Homes: US & California $, Thousands Source: NAR, CAR

Existing Single Family Home Sales Source: NAR Millions

US Housing Starts: Single Family & Multi-Family In Thousands. Source: US Bureau of the Census

Home Price Index Northern and Southern California Source: Real Estate Research Councils of Northern/Southern CA Price Index, April 1990=100

United States Office Vacancy Rates % Source: CB Commercial

US Residential Vacancy Rates % Source: CB Commercial

California’s Fastest Growing Large Sectors Annual Percent Change, Midyear Source: FCREUE from California EDD data.

California’s Fastest Growing Metropolitan Areas Annual Percent Change, Midyear Source: FCREUE from California EDD data.

California Metropolitan Areas with Largest Annual Employment Increases Midyear Source: FCREUE from California EDD data.

California Population and Household Growth Annual Percent Change, Source: FCREUE from California Dept. of Finance data.

Percent Change in Median Home Price Major California Metropolitan Areas * Includes Santa Clara. Source: California Association of Realtors.

Housing Affordability Index: US Vs. Selected California Areas, 1989, 1991, 1993 and 1999 Source: California Association of Realtors.

California Residential Building Permits Total Number of Units, E Source: FCREUE from Construction Industry Research Board data.

US Apartment Rents per Sq.Ft.: $/Sq.Ft Source: NREI

US Apartment Price per Sq.Ft.: $/Sq.Ft Source: NREI

US Office Price per Sq.Ft.: $/Sq.Ft Source: NREI

US Office Rent per Sq.Ft.: $/Sq.Ft Source: NREI

US Warehouse Rent per Sq.Ft.: $/Sq.Ft Source: NREI

US Warehouse Price per Sq.Ft.: $/Sq.Ft Source: NREI

US Retail Price per Sq.Ft.: $/Sq.Ft Source: NREI

US Retail Cap Rates.: Source: NREI

US Warehouse Cap Rates.: Source: NREI

US Office Cap Rates.: Source: NREI

US Apartment Cap Rates.: Source: NREI