2005 Outlook for U.S. Construction November 12, 2004 Cliff Brewis Senior Director Editorial McGraw-Hill Construction

U.S. Macroeconomic Picture The economy is working through the mid-2004 “soft patch”

Status at State Level Recession Flat Expanding

Issues Impacting Recovery Pattern of Economic Expansion – Annual GDP %+1.9%+3.0%+4.3%+3.5% Jobless Recovery –Productivity –Off Shore Employment –Oil/Health Care Cost of Money –Deficit –Inflation International –Iraq/Middle East –China/India Increasing Costs of Material –Tied to China/India –Impacts different Building Sectors

U.S. Construction Market Indicators

Colorado

Major U.S. Construction Sectors By major sector, the construction start pattern has diverged.

U.S. Single Family Housing Construction continues to be robust... Single Family Housing Starts million units +7% million units +9% million units +8% million units -7%

U.S. Single Family Housing

Colorado: Single Family

U.S. Income Properties -- Stores Store Construction msf - 8% msf +10% msf +3% msf +3% (msf = million of sq. ft.)

Colorado: Retail

U.S. Income Properties -- Offices Office Construction msf -30% msf -9% msf +8% msf +10%

U.S. Income Properties -- Offices

Office Building Factors Year 2004 (Jan. - Sept.) Top 10 Metro Areas for Office Building Ranked by square feet of new office starts 1.Wash. DC+16%6.Chicago-19% 2.New York+181%7.Baltimore+36% 3.Atlanta+53%8.Tampa+24% 4.Phoenix -6%9.Las Vegas+140% 5.Dallas+21%10.San Diego+123% Tech-Related Markets : 11.Seattle+113% 25.Boston+19% 66.Austin-40% 72.San Jose-37% 160.San Francisco-92%

Colorado: Offices

U.S. Income Properties -- Hotels Hotel Construction msf - 25% msf +13% msf +4% msf +13%

Colorado: Hotels

U.S. Income Properties -- Multifamily Housing Multifamily Housing ,000 units -3% ,000 units +10% ,000 units -2% ,000 units +2%

Colorado: Multi-Family

U.S. Institutional Buildings School construction still strong, but slipping. Educational Buildings msf -7% msf -5% msf -10% msf +3%

U.S. Institutional Buildings

Change in K-12 Student Enrollments, By State, Source: National Center for Education Statistics

Colorado: Education

U.S. Institutional Buildings Healthcare Facilities msf +6% msf -6% msf -6% msf +2% Healthcare facilities settling back from a robust 2002.

Colorado: Medical

U.S. Public Works Highways, Bridges 2002 $43.5 billion +1% 2003 $42.5 billion -2% 2004 $40.6 billion -5% 2005 $42.5 billion +5% Highways and bridges now settling back...

U.S. Total Construction for 2004/2005 Billions of Dollars _ Total Construction % +1% +5% +9% +2% Single Family Housing % +15% +13% +14% -3% Income Properties % -9% +6% +11% +9% Institutional Bldgs % -1% % +7% Manufacturing Bldgs % -33% +19% +9% +15% Public Works % +5% -6% +4% +2%

Colorado

Points of Perspective – U.S. Construction Total Construction by Cycle Cyclical Trough (T) = 100, Based on Constant Dollars

Questions? Cliff Brewis Senior Director Editorial McGraw-Hill Construction 130 Doolittle Dr Ste 1 San Leandro, CA x14