D E L T A A S S O C I A T E S ’

0 9 . 2 9 . 2 0 1 5

WA S H I N G TO N / BA LT I M O R EMULTIFAMILY MARKET OVERVIEW

B y W i l l i a m R i c h , C R E P r e s i d e n t

R E A L E S T A T E M A R K E T O V E R V I E W

D E L T A A S S O C I A T E S ’

0 9 . 2 9 . 2 0 1 5

WA S H I N G TO N / BA LT I M O R EMULTIFAMILY MARKET OVERVIEW

THE ECONOMY

D E L T A A S S O C I A T E S ’R E A L E S T A T E M A R K E T O V E R V I E W

THE NATIONAL ECONOMY

Source: Delta Associates; December 2017.

PAYROLL JOB GROWTHSelected Large Metro Areas | 12 Months Ending October 2017

PA

YR

OL

L J

OB

S (

TH

OU

SA

ND

S)

Source: Bureau of Labor Statistics, Delta Associates; December 2017.

0

10

20

30

40

50

60

70

80

90

100

DFW LABasin

NY Atl Bos SouthFL

Hou Was SF Bay Phx Chi Denver

0%

1%

2%

3%

4%

5%

6%

Den DFW Bos SF Bay Was Phx S Fla Atl Hou LA NY Chi

October 2016 October 2017

National Rate

4.8%

4.1%

YoY BasisPoint ∆

UNEMPLOYMENT RATE *Selected Large Metro Areas | October 2016 vs. October 2017

*Not seasonally adjusted.

-80-10-100-120-110-130-70-30-90+40-80-10

Source: Bureau of Labor Statistics, Delta Associates; December 2017.

PROJECTED JOB GROWTHWashington Metro Area | 2000 - 2020

PA

YR

OL

L J

OB

S (

TH

OU

SA

ND

S)

-60

-40

-20

0

20

40

60

80

100

120

140

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

The District Sub MD No VA

20-Year Annual Average = 44,100/Year 4-Year Projected Average = 39,500/Year

Source: Bureau of Labor Statistics, George Mason University Center for Regional Analysis, Delta Associates; December 2017.

J O B C H A N G E

PAYROLL JOB GROWTHWashington Metro Area | 12 Months Ending October 2017

-5,000 1,000 7,000 13,000 19,000 25,000

Federal Government

Information

Wholesale Trade

Manufacturing

Financial Activities

Transportation/Utilities

State and Local Government

Retail Trade

Other Services

Construction/Mining

Leisure/Hospitality

Education/Health

Professional/Business Services

51,500

-5,100

Source: Bureau of Labor Statistics, Delta Associates; December 2017.

J O B C H A N G E

PAYROLL JOB GROWTHWashington Metro Area | 12 Months Ending October 2017

-5,000 1,000 7,000 13,000 19,000 25,000

Federal Government

Information

Wholesale Trade

Manufacturing

Financial Activities

Transportation/Utilities

State and Local Government

Retail Trade

Other Services

Construction/Mining

Leisure/Hospitality

Education/Health

Professional/Business Services

51,500

-5,100

Source: Bureau of Labor Statistics, Delta Associates; December 2017.

J O B C H A N G E

PAYROLL JOB GROWTHWashington Metro Area | 12 Months Ending October 2017

-5,000 1,000 7,000 13,000 19,000 25,000

Federal Government

Information

Wholesale Trade

Manufacturing

Financial Activities

Transportation/Utilities

State and Local Government

Retail Trade

Other Services

Construction/Mining

Leisure/Hospitality

Education/Health

Professional/Business Services

51,500

-5,100

Source: Bureau of Labor Statistics, Delta Associates; December 2017.

Total Federal

39.8%60.2%Non-Federal

10.7%

10.0%

19.1%

Total Federal

27.2%72.8%Non-Federal

7.7%

6.7%

12.8%

2010 2020

Other Federal Federal Wages & Salaries Procurement

GROSS REGIONAL PRODUCTWashington Metro Area

Source: GMU Center for Regional Analysis, Delta Associates; December 2017.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1950 1960 1970 1980 1990 2000 2010 2016

38%

11%

FEDERAL SHARE OF TOTAL EMPLOYMENTWashington Metro Area

Source: Bureau of Labor Statistics, Delta Associates; December 2017.

45

46

47

48

49

50

51

52

53

54

2010 2011 2012 2013 2014 2015 2016

SQ

UA

RE

FE

ET

(M

ILL

ION

S)

47

GSA LEASING TRENDSNational Capital Region

Source: General Services Administration, Delta Associates; December 2017.

THE WASHINGTON METRO AREA HOUSING MARKET

D E L T A A S S O C I A T E S ’R E A L E S T A T E M A R K E T O V E R V I E W

0%

50%

100%

150%

200%

250%

300%

350%

Ch

icag

o

Atl

anta

Pit

tsb

urg

h

Min

nea

po

lis

Bal

tim

ore

Ph

oen

ix

Dal

las

New

Yo

rk

Ho

ust

on

Ph

ilad

elp

hia

Bo

sto

n

Mia

mi

Was

hin

gto

n

Den

ver

Seat

tle

San

Die

go

Los

An

gele

s

San

Fra

nci

sco

194.9%

PRICE CHANGESSelected Large Metro Areas | 1997 – Q2 2017

PR

ICE

CH

AN

GE

S R

EF

LE

CT

ED

IN

P

UR

CH

AS

E-O

NL

Y I

ND

ICE

S

Source: FHFA, Delta Associates; December 2017.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Seat

tle

Po

rtla

nd

Las

Veg

as

Dal

las

Det

roit

Den

ver

San

Die

go

Tam

pa

Bo

sto

n

San

Fra

nci

sco

Ch

arlo

tte

Was

hin

gto

n

Los

An

gele

s

Min

nea

po

lis

Ph

oen

ix

Atl

anta

Mia

mi

New

Yo

rk

Cle

vela

nd

Ch

icag

o

6.3%

Source: S&P/Case-Shiller, Delta Associates; December 2017. Note: Seasonally adjusted purchase-only index.

PRICE CHANGESHome Price Indices | September 2016 – September 2017

HO

ME

PR

ICE

IN

DE

X G

RO

WT

H

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Washington Metro Area

U.S. 20-City Composite

% C

HA

NG

E

Source: S&P/Case-Shiller, Delta Associates; December 2017. Note: Index change during 12-month period ending August of given year.

PERCENT CHANGE IN HOME PRICESWashington Metro Area vs. 20-City Composite | 2007 - 2017

-30%

-20%

-10%

0%

10%

20%

30%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Core Inner Outer

12

-MO

. T

RA

ILIN

G A

VG

.

PR

ICE

CH

AN

GE

Source: MRIS, Delta Associates; December 2017. *Core: DC, Arlington, Alexandria. Inner: Fairfax, Montgomery, Prince George’s, Fairfax City, Falls Church. Outer: Loudoun, Prince William, Frederick.

2009 2010 2011 2012 2013 20152014 2016 2017

HOME SALES AVERAGE PRICE CHANGEWashington Metro Area by Sub-Area* | 2009 - 2017

0

25

50

75

100

125

150

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

DA

YS

ON

MA

RK

ET

Inner

Core

Outer

Market Average at Q3 2017:39 Days on Market

Source: MRIS, Delta Associates; December 2017. *Core: DC, Arlington, Alexandria. Inner: Fairfax, Montgomery, Prince George’s, Fairfax City, Falls Church. Outer: Loudoun, Prince William, Frederick.

AVERAGE DAYS ON MARKETWashington Metro Area by Sub-Area* | Existing Homes

0

3

6

9

12

15

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

07 08 09 10 11 12 13 14 15 16 17

12

-MO

NT

H P

RIC

E C

HA

NG

EM

ON

TH

S O

F IN

VE

NT

OR

Y*

12-Month Price Change(left axis)

Months of Inventory(right axis)

Source: MRIS, Delta Associates; December 2017. *Months of inventory at current sales pace for last month in each quarter.

PRICE CHANGE AND INVENTORYWashington Metro Area | 2007 - 2017

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000M

ar '0

7

Sep

'07

Mar

'08

Sep

'08

Mar

'09

Sep

'09

Mar

'10

Sep

'10

Mar

'11

Sep

'11

Mar

'12

Sep

'12

Mar

'13

Sep

'13

Mar

'14

Sep

'14

Mar

'15

Sep

'15

Mar

'16

Sep

'16

Mar

'17

Sep

'17

LIS

TIN

GS

Source: MRIS, Delta Associates; December 2017.

10-Year Average at end of September 2017:

19,946 Listings

September 2017: 15,280 Listings

FOR-SALE LISTINGSWashington Metro Area | Existing Homes

0.0

2.0

4.0

6.0D

istr

ict

Falls

Ch

Pr

Geo

Ale

x

Pr

Will

Ffx

Cit

y

Arl

Ffx

Cn

ty

Lou

Mo

nt

Fred

(M

D)

Fau

q

September 2016

September 2017

September 2017: 2.8 Months September 2016:

2.8 Months

Source: MRIS, Delta Associates; December 2017. *Months of Inventory at September 2017. Figure reflects number of listings divided by homes sold in one month.

MONTHS OF FOR-SALE INVENTORYWashington Metro Area | September 2016 and September 2017

MO

NT

HS

OF

IN

VE

NT

OR

Y

A

T S

AL

ES

PA

CE

*

0

20,000

40,000

60,000

80,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

HO

US

ING

UN

ITS

SO

LD

Source: MRIS, Delta Associates; December 2017. *Total for 12 months ending September 2017.

RESALE VOLUME OF ALL HOUSING TYPESWashington Metro Area | 2007 - 2017

105

75

4544

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

DA

YS

ON

MA

RK

ET

Source: MRIS, Delta Associates; December 2017.

10-Year Average= 63 Days

*At Third Quarter (all other years at Fourth Quarter).

12-MONTH AVG. DAYS ON MARKET – EXISTING HOMESWashington Metro Area | 2006 - 2017

12,776

40,074

15,280

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

HO

US

ING

UN

ITS

LIS

TE

D

Source: MRIS, Delta Associates; December 2017. Note: Listings at end of Third Quarter.

ACTIVE LISTINGS FOR ALL HOUSING TYPESWashington Metro Area | 2003 - 2017

PE

RC

EN

T O

F S

ING

LE

-FA

MIL

YD

ET

AC

HE

D T

O T

OT

AL

PE

RM

ITS

52.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Source: U.S. Census, Delta Associates; December 2017. Note: Used annual data at metropolitan level.

RATIO OF SINGLE-FAMILY DETACHED PERMITSWashington Metro Area | 1-Unit Permits vs. Total Permits

THE WASHINGTON METRO AREA APARTMENT MARKET

D E L T A A S S O C I A T E S ’R E A L E S T A T E M A R K E T O V E R V I E W

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

DFW Hou Atl Was LA Basin Phx Denver Chi South FL Bos SF Bay

UN

ITS

(A

LL

CL

AS

SE

S)

Note: Excludes NY metro to conserve scale.

LONG-TERM ANNUAL APARTMENT ABSORPTIONNational Market Leaders

Class A Only Past 12 Months: 11,126

Source: REIS, Delta Associates; December 2017.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

04 05 06 07 08 09 10 11 12 13 14 15 16 17* 18 19 20

MA

RK

ET

-RA

TE

UN

ITS

*12 months ending September 2017.

Long-Term Average = 7,023

Average Since 2008 = 7,999

Source: Delta Associates; December 2017.

Annual Average ~ 10,000

CLASS A APARTMENT ABSORPTIONWashington Metro Area | 2004 - 2017

CLASS A APARTMENT ABSORPTIONWashington Metro Area | 2004 - 2020

4.4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

LA Balt NY Phi Chi Phx Wash Atl DFW Bos Hou

VA

CA

NC

Y R

AT

E (

AL

L C

LA

SS

ES

)STABILIZED APARTMENT VACANCY RATESMajor Apartment Markets | Second Quarter 2017

National Vacancy Rate = 4.4%

Source: REIS, Delta Associates; December 2017.

In Lease-up

Not Yet Leasing

Source: Delta Associates; December 2017.

PROJECTS CURRENTLY UNDER CONSTRUCTIONNorthern Virginia

APARTMENT DELIVERIESWashington Metro Area | 2014 - 2017

0

1,000

2,000

3,000

4,000

5,000

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

The District Sub MD No VA

Class A Quarterly Absorption = 2,893

CL

AS

S A

M

AR

KE

T-R

AT

E U

NIT

S

2015 2016 20172014

Source: Delta Associates; December 2017.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

MA

RK

ET

-RA

TE

UN

ITS

*Market-Rate Units Planned and Under Construction.**As of Third Quarter.

Source: Delta Associates; December 2017.

36-MONTH APARTMENT DEVELOPMENT PIPELINE*Washington Metro Area | 2003 - 2017

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

The District Sub MD No VA

CL

AS

S A

M

AR

KE

T-R

AT

E U

NIT

S

Class A Projected Quarterly Absorption

= 2,500

2018 2019 20202017

Source: Delta Associates; December 2017.

PROJECTED DELIVERIES36-Month Development Pipeline | Washington Metro Area | 2017 - 2020

0

2

4

6

8

10

12

14

No VA Sub MD The District

Net Absorption:10,000/Year = 30,000

DEMAND

SUPPLY

Planned and maydeliver by 9/20: 6,329 units1

Under construction: 28,808 units2

Total = 35,137 units

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

MA

RK

ET-R

ATE

UN

ITS

(TH

OU

SAN

DS)

DEMAND AND SUPPLY PROJECTIONSWashington Metro Area Class A Apartments | 36 Months Ending September 2020

Source: Delta Associates; December 2017.

-4%

-2%

0%

2%

4%

6%

8%

10%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018 2019 2020

Long-Term Average = 4.0%

Source: Delta Associates; December 2017. * Annual rent growth at Third Quarter 2017 is 0.2%.

ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTHWashington Metro Area | 2004 - 2020

THE WASHINGTON METRO AREA CONDOMINIUM MARKET

D E L T A A S S O C I A T E S ’R E A L E S T A T E M A R K E T O V E R V I E W

0

100

200

300

400

500

600

700

NY South FL Chi LA Basin Bos Wash SF Bay Sea TampaBay

Den

121

UN

ITS

(T

HO

US

AN

DS

)LARGEST CONDOMINIUM MARKETSSelected Metro Areas | 2016

Source: U.S. Census Bureau, Delta Associates; December 2017.

CONDOMINIUM SALES ACTIVITYWashington Metro Area | 12 Mos. Ending September 2017 Compared to Prior Year

Source: Delta Associates; December 2017.

Down 26% - 50%

Down more than 50%

Down 1% - 25%

Up more than 1%

*12 months ending August 2017.

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

UN

ITS

Average From 2003 - 2007 = 17,890

Average From 2008 - 2012 = 11,280

Average Since 2013 =15,023

Source: Delta Associates; December 2017.

ANNUAL CONDOMINIUM RESALESWashington Metro Area | 2003 - 2017

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1.3%

0.6%

Source: Delta Associates; December 2017.

EFFECTIVE NEW CONDOMINIUM SALES PRICE CHANGEWashington Metro Area | 2006 - 2018

*12 months ending September 2017.

$1,164

$1,028

$714 $675

$611

$537

$363

$189 $160

$0

$200

$400

$600

$800

$1,000

$1,200

Upper NW DC Central DC Mideast DC Cap East DC Arl/Alex Mont Ffx/FC Lou/PrWm Pr. George's

Source: Delta Associates; December 2017.

NEW CONDOMINIUM AVERAGE PRICE PER SFWashington Metro Area | Third Quarter 2017

$2,100

$1,164 $1,127 $1,118$1,039 $1,032 $1,028

$802$714 $691 $677

$399

$0

$300

$600

$900

$1,200

$1,500

$1,800

$2,100

$2,400

Manhattan Upper NWDC

SanFrancisco

Brooklyn Seattle Central DC Queens L.A. Mideast DC San Diego Capitol EastDC

BaltimoreCity

*Third Quarter 2017 except for Manhattan, Brooklyn, and Queens which are as of Second Quarter 2017.Source: The Mark Company, Miller Samuel Inc., Delta Associates, December 2017.

NEW CONDOMINIUM AVERAGE PRICE PER SFSelected Downtown Areas in the U.S. | Third Quarter 2017*

-0.7%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

* 12 months ending August 2017.Source: Delta Associates; December 2017.

RESALE CONDOMINIUM SALES PRICE CHANGEWashington Metro Area | 2003 - 2017

0

4,000

8,000

12,000

16,000

20,000

24,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MA

RK

ET

-RA

TE

UN

ITS

2,776

Note: Number of units are for September of each year.Source: Delta Associates; December 2017.

NEW CONDOMINIUMS ACTIVELY MARKETING OR U/CWashington Metro Area | 2003 - 2017

12.5

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

*Fourth Quarter Projection

MONTHS OF NEW CONDOMINIUM SUPPLYWashington Metro Area | 2004 - 2017

Source: Delta Associates; December 2017.

Source: Delta Associates; December 2017.

MONTHS OF NEW CONDOMINIUM SUPPLYWashington Metro Area | Third Quarter 2017

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

The District No VA Sub MD

Net Sales:2,025/Year = 6,075 units

D E M A N D

SUPPLY

Planned and MayBegin Marketing by 9/20: 2,294 units

1

Under Construction and/or Marketing: 2,776 units

2

Total = 5,070 units

MA

RK

ET

-RA

TE

UN

ITS

1 Probable supply after projected attrition.2 Includes unsold units at projects selling.

Source: Delta Associates; December 2017.

DEMAND AND SUPPLY PROJECTIONSWashington Metro Area Condominiums | 36 Months Ending September 2020

B y W i l l i a m R i c h , C R E P r e s i d e n t

R E A L E S T A T E M A R K E T O V E R V I E W