September 6-7, 2012 | Conrad Hotel | Chicago, IL

NCHMA 2012

Annual Meeting Alternative Analysis: Market

Insight from REITs, Developers, and Brokers

Jonathan Bartlett, Reznick Group

Garry Benson, Garrison Partners

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Session Overview:

• What is the current landscape for

market rate, multifamily development?

• How do conventional developers

approach market analysis?

• What analytical approaches can be used

to forecast the potential performance of

a luxury multifamily deal?

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Introductions

• Jonathan Bartlett, Senior Manager

Reznick Group Real Estate

Development Advisory

– Top 20 CPA firm specializing in real estate

– Much more than tax credits

– Merging with NY based J.H. Cohn

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Introductions

• Garry Benson, CEO

Garrison Partners

– 30 years of Real Estate Consulting

– Marketing and Sales

– Full suite of development and management

services through allied companies

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Building Permit Activity

1,798

491 575

299

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Jan-0

0

Jun-0

0

Nov-

00

Apr-

01

Sep-0

1

Feb-0

2

Jul-02

Dec-

02

May

-03

Oct

-03

Mar

-04

Aug-

04

Jan-0

5

Jun-0

5

Nov-

05

Apr-

06

Sep-0

6

Feb-0

7

Jul-07

Dec-

07

May

-08

Oct

-08

Mar

-09

Aug-

09

Jan-1

0

Jun-1

0

Nov-

10

Apr-

11

Sep-1

1

Feb-1

2

Jul-12

Single Family MultifamilySource: Moody’s, Census

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Top 10 Development Markets*

• Washington, DC

• NYC

• San Francisco

• Austin

• San Jose

• Houston

• Seattle

• Boston

• Dallas

• LA

*As reported in Fall 2011 for ULI’s Emerging Trends in Real Estate for 2012.

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Pipeline Concerns? See

Previous Slide!

MSA

Submarket

Units in Pipeline

Houston-Baytown-Sugar Land, TX Montrose/River Oaks 4,055

Seattle-Bellevue-Everett, WA Downtown/Capitol Hill/Queen Anne 3,936

Washington-Arlington-Alexandria,

DC-VA-MD-WV Anacostia/Northeast DC 3,258

Dallas-Plano-Irving, TX Plano/Allen/McKinney 2,958

San Jose-Sunnyvale-Santa Clara, CA Northeast San Jose 2,881

New York-Wayne-White Plains, NY-

NJ Midtown West 2,564

San Francisco-San Mateo-Redwood

City, CA South of Market 2,526

Washington-Arlington-Alexandria,

DC-VA-MD-WV Downtown/Logan Circle 2,337

Baltimore-Towson, MD Central Baltimore City 2,051

Santa Ana-Anaheim-Irvine, CA Irvine 2,021

Source: Axiometrics

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Top Rent Growth Markets

Current

MSA Name

Rent

YTD ERG Growth Occupancy

Rank YTD May

‘12 ‘12

1 San Jose, CA 8.4 % 96.6 %

2 Boulder, CO 6.7 % 96.5 %

3 San Francisco, CA 6.3 % 96 %

4 Seattle, WA 6.1 % 95.5 %

5 Nashville, TN 5.8 % 95.7 %

6 Louisville, KY 5.6 % 96 %

7 Charlotte, NC 5.3 % 94.5 %

8 Hartford, CT 5.2 % 96.4 %

9 Salt Lake City, UT 5.1 % 96.2 %

10 Cape Coral, FL 4.9 % 94.2 %

National 3.3 % 94.3 %

Source: Axiometrics through May 2012

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Bottom Rent Growth Markets

Current

MSA Name

Rent

YTD ERG Growth Occupancy

Rank YTD May

‘12 ‘12

79 Tulsa, OK 1.5 % 91.9 %

80 Winston-Salem, NC 1.1 % 92.7 %

81 Tucson, AZ 1 % 91.4 %

82 Phoenix, AZ 1 % 92.7 %

83 Tacoma, WA 0.9 % 92.8 %

84 Virginia Beach, VA 0.7 % 92.9 %

85 Las Vegas, NV 0.7 % 92 %

86 Albuquerque, NM 0.2 % 93.4 %

87 Detroit, MI 0.1 % 94 %

88 Palm Bay, FL -0.6 % 92.2 %

National 3.3 % 94.3 %

Source: Axiometrics through May 2012

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Top 10 MF Developers

Rank Company 2011 Units Built

1 Wood Partners 3,732

2 Alliance Residential 3,600

3 Wermers Cos. 3,200

4 AvalonBay

Communities 3,071

5 Irvine Company 3,047

6 Clark Builders Group 2,956

7 AMLI Residential 2,777

8 The NRP Group 2,692

9 Mill Creek

Residential Trust 2,662

10 Camden Property

Trust 2,190

Source: MFE

September 6-7, 2012 | Conrad Hotel | Chicago, IL

Where is the Capital?

September 6-7, 2012 | Conrad Hotel | Chicago, IL

State of the Market

• What’s driving demand for new MF?

– The usual suspects:

• Gen Y

• Can’t buy

• Housing near job cores

– Niche opportunities; infill locations

• Higher end finish expectations

September 6-7, 2012 | Conrad Hotel | Chicago, IL

State of the Market

• What’s driving demand for MF market

analysis?

– Equity requirements

– You’re a nice guy, but…

– I don’t want to get burned again

– Pioneering product

– Pioneering submarket

September 6-7, 2012 | Conrad Hotel | Chicago, IL

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