real estate fundaments “the facts of life” real estate fundamentals the facts of life

Real Estate Fundaments

“The Facts of Life”

Real Estate FundamentalsThe facts of Life

UNEMPLOYMENT AND RETAIL SALES

NOI forecast to decline 15% peak to trough

National Office Direct Class A Asking Rental Rates

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

2Q00

4Q00

2Q01

4Q01

2Q02

4Q02

2Q03

4Q03

2Q04

4Q04

2Q05

4Q05

2Q06

4Q06

2Q07

4Q07

2Q08

4Q08

2Q09

4Q09

CBD

Non-CBD

National Office CBD & Non-CBD Overall Absorption

7

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1994 1995 1996 1997 1998 1999 2000* 2001* 2002 2003 2004 2005 2006 2007 2008 2009**

CBD

Non-CBD

US Sales Volumes by Property Type 2007 - 2009

$51.5

$83.6

$61.4

$101.4

$208.2

$21.9

$12.1

$21.0

$38.3

$52.9

$3.5

$2.0

$3.5

$4.7

$5.6

$0 $50 $100 $150 $200 $250

Industrial

Hotel

Retail

Apartment

Office

Dollar Volume (billions)

2007 2008 2009Q2

NCREIF CAP RATES

CRE prices down 43% peak to date

CRE Debt Maturities and Equity Gap

Mirror, mirror on the wall….

• Mark Buono, Managing Director, Goldman, Sachs & Co.

• David Dorros, Managing Director, CB Richard Ellis

• Michael McDonald, Managing Director, Eastdil Secured, LLC

• Peter Muoio, Senior Principal, Maximus Advisors

• Marc Rosenberg, Executive Vice President, Cushman & Wakefield

U.S. Market Cycles CBD Office - Major Mkts (2009)

13

Growth Weakening

LA Central

Boston, Houston, Washington, D.C.

Market Equilibrium

Philadelphia

RecoveringSlow Growth

DallasDowntown NY, Minneapolis

Midtown Manhattan, San Francisco, Seattle,

CBRE thinks we might be 80% thru the cycle…