TRENDS 2015 Slides

2015 Economic Outlook Look out the Windshield …

K.C. Conway, MAI, CRE Sr. VP | Economist | Counselor of Real Estate

Houston, TX January 27, 2015

Disclaimer: Upfront and Not in fine print…

Neither Colliers International nor SunTrust Banks, Inc. make any representations or warranties about the accuracy or suitability of any information in this presentation. The aforementioned do not guarantee, warrant, or endorse the advice or services of K.C. Conway, MAI, CRE. This presentation consists of materials prepared exclusively by K.C. Conway, MAI, CRE, and is provided during this Colliers-Houston program solely for informational purposes of attendees. This presentation is not intended to constitute legal, investment or financial advice or the rendering of legal, consulting, or other professional services of any kind.

Page 2

What you don’t know about K.C. Conway 3rd – Generation MAI / Briefed Bernanke / Futurist

“K.C.” Conway is a 3-part Economist / “Futurist”

• 1 Part Clint Eastwood Economist Man has to know his limits! – Know what you don’t know – like when oil will be >$70again • 1 Part David Allen Coe Economist I’ll Hang Around Just as Long as You will let me. • 1 Part Billy Beane (Money Ball/Oakland A’s) Economist Know Your Metrics – 3M approach to CRE management 3M = Measure … Monitor … Manage

3 Page 3

“A” – Port of Houston will remain most Irreplaceable - and America’s GDP port!

“B” – The BLS will incorrectly estimate job growth 12 times again in 2014!

“C” – Colliers will be an MVP relationship & advisor to you again in 2014!

“D” – Debt Capital will never be this good. Don’t delay or “sit on the fence” in 2014!

4

What did K.C. forecast at Houston Trends 2014? If you don’t know somethin’, what good are ya? – 75% Vs 100% in 2013

http://www.google.com/url?url=http://www.wpclipart.com/signs_symbol/checkmarks/checkmark_in_circle/&rct=j&frm=1&q=&esrc=s&sa=U&ei=4tnGVLOZFoGkNqPpgagP&ved=0CCgQ9QEwCTgU&usg=AFQjCNEsGiDhhCACY9vpfqH4okGcPQ28ZA



http://www.google.com/url?url=http://pixshark.com/red-x-symbol.htm&rct=j&frm=1&q=&esrc=s&sa=U&ei=YtrGVILEFoTYggSXjYCwCw&ved=0CDQQ9QEwDzgU&usg=AFQjCNGdDHRMfuq047V2f2pTs9dhsgbkvg

“A” – What is the value of TX Real Estate priced in Bitcoin?

Page 5

Trends K.C. won’t Forecast for 2015 “A man/economist has got to know his limits” - Clint Eastwood

http://bitcoincharts.com/charts/

Bitcoin all-time high $1,126 Nov 30 2013

Bitcoin Q2 2014 rally: $490 in April to $655 June

“B” – Anything about Cannabis Real Estate – Talk about HIGH Volatility CRE

I will not do Green Cannabis & Ham – Dr Seuss” 1. Cannabis is now legal for Medical Use in 23 states. 114th Congress is 1st that can Legislate Under the Influence

2. Cannabis does have R.E. impact. Cannabis smoke permanently penetrates sheetrock (MF?)

3. What happens if other Western states legalize? Will it be like Fireworks Sales – eventually all sell it!

Update: Oregon, Alaska & DC vote Yes … FL misses by a Cannabis Leaf

(57% yes, 60% rqd) 23 States now have

legal medical Marijuana

Pay attn to the FED and 10-Yr Tr. 10-Yr <2% Jan ‘15

… was 3% start of 2014

2014 is behind us. It will go down as a very good Vintage for TX.

2015 is ahead of you. Look through the Windshield.

Page # 6

The Rear-View is our reference point to move forward.

The Rear-View helps you establish by market and property type where you are in the Real Estate Life Cycle.

Once we have our reference point, we can move forward. Pat Duffy has the answers following me

Page # 7

Q. Where is HOU Eco and R.E. in the Market Cycle for 2015?

A. Hint … #1 MSA ranking in job growth is indicative of Expansion or Oversupply?

Visualizing the Reference Points: Where are we starting from?

Congratulations 2014! • Fewest Job cuts since 1997 • Most Job creation since 1999 (+2.952 million – BLS Jan 9th) • Maybe 1st year with 3 consecutive quarters of 3.5%+ GDP since 2004 (Q2: 4.6% /

Q3: 5.0% / Q4:?) • TX & Houston #1 in Job Growth in 2014: 450,000 / 125,000 jobs

Page # 8

• Historic High 1950 was +17% in 1950)

• Long-Term annual avg. is +3.25%

• 2014 Trend:

Q1: -2.1% / Q2: +4.6% / Q3: +5%

• Note: In order for 2014 to turn in a +3% overall GDP, Q4 GDP will need to be +4.5%. Won’t know until March. Get 1st GUESS on Friday (3.5% consensus)

• KC’s Forecast: +3% (Q1 weak again)

• Energy CapEx decline coming all 2014 Learn the term “Redetermination”

• West-coast ports impact on Exports to show up in Q4 GDP (Q4 ≠ 4% to 5%)

Gross Domestic Product (GDP)

The 2015 Windshield Economic Forecast

Page # 9

Let’s Look out the Windshield toward 2015 …

• Energy Impact: 30%+ of 2014 Capex was ENERGY How do you think about all “shale” states? Like CO, PA and Ohio • West-coast Ports impact on GDP How do you think about SoCAL and Pacific NW Vs Gulf? • Job Growth choppy: Shed holiday hires in Jan and then

annual Feb “Benchmark” revisions. Focus on ADP, Challenger Job Cuts & Revisions • The sequel to Frozenomics 2014 is Frozenomics 2015 What was Q1 ‘14 GDP with Frozenomics? (-2.1%) • Fundamentals are still good! GDP should remain +2.5% to 3% range (Autos, Housing) Jobs – expect monthly avg of 225k

What to expect in 2015?

Page # 10

Oilpro.com:

2 Global Majors Slash Their US Shale Operations As Prices Fall

• BHP Management Comments On US Shale“In Petroleum, we have moved quickly in response to lower prices and will reduce the number of rigs we operate in our Onshore US business by approximately 40% by the end of 2015 financial year.

• Total Scales Back US Shale Operations On the same day that BHP Billiton announced the scaling back of its US shale operations, French major Total revealed a similar move

• Dallas Fed estimates that Texas will lose 140,000 jobs because of the oil price drop

Energy & GDP Impact The 2015 Windshield Economic Forecast

Page # 11

2 Global Majors Slash Their US Shale Operations As Prices Fall (Jan 21 news from World Economic Summit in Davos)

What does 140k job loss mean from past history? You knew it couldn’t last …

Houston Annual Job Growth in Perspective:

• -38k jobs: CY 1982 • <+5k jobs/yr: CY 1983-1985 • -82k jobs: CY 1986 • -17.5k job loss/yr 1982-1986 Some more Historic Perspective: • CY 1990: +125k • CY 2006: + 82k (pre-Shale) • CY 2009: - 17k (Fin-Crisis) • CY 2010-2014: +80k/yr

Source: Moody’s Vs BLS

Moody’s Vs BLS use different MSA boundary definitions; and BLS revisions cause distortions. For Nov 2013-Nov 2014, BLS has Houston producing 125k jobs. That preliminary estimate will get heavily revised with “Benchmark” revisions in Q1 2015.

Job Growth State & MSA View: TX & HOU #1 in 2014 State & MSA Job Growth ( Nov ‘13 to Nov ‘14)

Top 10 States Job Gr Nov ‘13 – Nov ‘14

Top 10 MSAs & Phoenix Rank MSA Tr-12 Jobs 1 HOU 125,000 2 DFW 111,000 3 NY/NJ/LI 108,000 4 LA 92,000 5 Miami/FL 81,000 6 San Fran 69,000 7 Seattle 60,000 8 Atlanta 59,000 9 Phoenix 55,000 10 Boston 53,000

TX Surpassed CA, but don’t expect a repeat of 450k jobs in 2015. HOU Top MSA for job growth Nov 2013-Nov 2014 – latest BLS data NC Breaks into Top-5. 1 of only 4 states with > 100k job growth.

Rank State Tr-12 Jobs % Gr 1 TX 448,000 +3.9% 2 CA 351,000 +2.3 3 FL 223,000 +2.9 4 NC 105,000 +2.5 5 GA 99,000 +2.4 6 NY 89,000 +1.0 7 AZ 66,900 +2.6% 8 OH 59,000 +1.1 9 MA 60,000 +1.8 10 TN 55,000 +2.0 11 SC, CO, MN 51,000 +2.6 SC

Page 13

Presenter

Presentation Notes

This is the perfect slide to use when wanting to show a detailed image with no title necessary. Please do not cover up the NAIOP logo.

IT Job Growth Driven by Logistics Industry CA not #1 in IT Job Growth any longer? Think TX – then FL & NC!

Page 14

Presenter

Presentation Notes


Texas, Florida, North Carolina lead IT job growth in first half of 2014, study finds http://www.pcworld.com/article/2464280/texas-florida-north-carolina-lead-it-job-growth-in-first-half-of-2014-study-finds.html

PC World – Aug 14, 2014 By: Fred O'Connor , IDG News Service

U.S. technology professionals searching for jobs may want to look in states not normally considered IT hot spots.

The three states with the highest percentage of IT job growth for the first half of 2014 were Texas at 5.99

percent, Florida at 5.64 percent and North Carolina at 3.8 percent, according to a report from IT job site Dice.

State governments realize the value of IT jobs, said Goli, and are attempting to bolster technology employment.

“They are creating incentives and programs to not only attract companies but also create a pipeline of technology

professionals,” he said. For instance, some state universities in Florida have developed technology camps to

train teachers how to teach the subject to students.“Florida [is] investing early by getting sort of coding

camps and other types of training programs into middle school and high school,” said Goli. “They are

thinking ahead.”

Florida added 4,100 IT jobs in the first half of the year, nearly matching the 4,500 IT positions it created in

2013.

IT Job Growth Driven by Logistics Industry CA not #1 in IT Job Growth any longer? Think TX, FL & NC!

21

TX had +6% IT Job Gr in 1H2014

Page 15

IT Job growth a real

opportunity for TX

Presenter

Presentation Notes


ADP: Private Payrolls Vs. BLS: A Government Survey ADP: 241k for Dec

• 211k avg for 2014 • Q4 avg = 233k • 5 mos had <200k

BLS: +252k for Dec 2014 • + 84k for Dec 2013 • +246k avg for 2014 • +194k avg for 2013 Vs. +289k avg for Q4 ’14 • U-3: 5.6% Dec ‘14 (5.8%) • U-6: 11.2% Dec ‘14 Vs 13.0% Dec ’13

• Why might unemployment rise? • Why is Labor Part Rate falling (62.7%)

Job Growth – Macro View The 2015 Windshield Economic Forecast

Page # 16

Opt industry over Gov data!

Challenger-Gray

• Fewest cuts in 2014 since 1997 (483k) • 32,640 cuts in Dec(down 9% from Nov) • Average >50k cuts Q1 ’14 • Average <40k cuts Q4 ‘14

Stratification of Cuts: By State: • California & New York still #1 & 2 • Texas & Colorado energy cuts showing up By Industry: • Computer, Retail, Health Care (Tops in cuts:

#1,2,3) • Construction, Real Estate and Legal (Fewest

cuts <1k in 2014) Labor Cost risk to R.E. constr. in 2015

easing. Why? Oil-field workers can shift to construction industry (and not just in TX).

Job Cuts – A good LEI The 2015 Windshield Economic Forecast

Page # 17

A good Leading Economic Indicator to Monitor…

Housing (Single Family & Multi-Family) Let’s look ahead

for 2015 at Housing…

• Total Units 1.0 to1.1 million • SF: 700k to 750k (not 1.0mm+)

1. Millennials not buyers yet Reverse mortgages trigger Euthanasia 2. 225k.mo jobs = 1.0mm demand

• MF: 350k +/- 25k Why? • Land hard to get and entitle • Urban infill slower & harder to Dev.

• Metrics to Monitor re Housing • HPA: Forget C-Shiller look at Housing Opportunity Index (HOI) (% of Homes affordable to Median $) AZ MSAs rank well (68%-76%) SF, LA NY, DC, MIA worst (10% <45%)

• Ratio of Jobs to MF permits (8:1 test) • Watch Unit Mix (90%+ vacancy in 1 Bdrm) • Early run-off (<35% leased selling at Full $)

Page 18

Wells Fargo Economics – Jan 20, 2014:

The oil and gas industry has sizable spillover effects in Texas and elsewhere. Some of these are patently obvious, such as refineries and petrochemical plants. Some are more subtle, however, including technology firms and financial services firms that raise capital to fund the industry. As the epicenter of the world’s energy industry, Houston is home to the headquarters or major operations to all of these industries, which has been one of the driving forces behind the building boom there. Engineering services are a big export industry for Houston, as projects around the world are often planned, designed and financed from there. As the industry downsizes and consolidates, even some of the pre-leased office space currently being built may be tougher to fill, causing vacancy rates to march back up. Questions: 1. Where are the features on Colo, OH and PA? 2. Where are the features on Financial Industry

Impact? Who are #1, 2, 3 banks in Energy?

Bipolar Energy Views: The Glass Half Empty The 2015

Windshield Economic Forecast

Page # 19

View from Top 10 US bank who also ranks among top-3 in Energy exposure – Jan 20 (Does the Bi-polar view worry you?)

Wells Fargo Economics – Jan 20, 2014:

We believe Texas has enough momentum in place to weather the recent slide in energy prices. We do not know how much further prices will fall, but expect them to significantly overshoot to the downside over the next few weeks. Real GDP and nonfarm employment growth will likely slow to about half of last year’s pace. Texas will clearly see slower economic growth this year. After averaging roughly 6 percent growth during the past three years, we are looking for Texas real GDP growth to slow to 4.2 percent in 2015 and 2.8 percent in 2016. Nonfarm employment should also remain solidly in positive territory over the next couple of years but will slow to a pace below the nation by the second half of this year Questions: 1. Where the features on Colo, OH and PA? 2. Where the features on Financial Industry

Impact? Who are #1, 2, 3 banks in Energy? Where are they HQ? (CA, NY, NC)

Bipolar Energy Views: The Glass Half Full The 2015

Windshield Economic Forecast

Page # 20

View from Top 10 US bank who also ranks among top-3 in Energy exposure – Jan 20 (Does the Bi-polar view worry you?)

The 2015 Windshield Economic Forecast

Page # 21

Ask yourself the following questions: 1. How are TX Public Homebuilders

doing? Anyone look at Q4 earnings? 2. How is the Houston Port doing? It

handles more than oil! 3. How is Houston medical Center

performing? Hiring less healthcare professionals?

4. How many CA companies are changing plans to move or expand to TX? Toyota reversing move to TX?

Time to get Economic Development folks to create a new Marketing Plan for TX – “Yeah TX has the world’s top energy industry, but TX also has North America’s top homebuilders, port, & healthcare industries. TX is still open!

KC Meds to the rescue: … TX will survive …

TX is still Open; & doing just fine!

America’s 4th Coast

28% of GDP

Who will be East-coast’s

LA & LB?

The Gulf-coast: Houston &

Mobile

70% of Population East of MS

Where is the RR, Intermodal, e-Commerce fulfillment

infrastructure in the West? Why do you think the KeyStone

Pipeline is such a big-deal?

“FREIGHTWAYS” Define the 2015-2020 Outlook They are the CORRIDORS by which our economy grows - via sea-land-air.

Page # 22

Manufacturing, Trade, Jobs, CRE construction will follow the Class 1 RRs & Intermodal Facilities?

The 7- Class I RRs (Note CN (red) & KCS (brown)

“All that happens on the ports, doesn’t stay on the ports.” – Rail, Intermodal!

http://www.intermodal.org/

Mexico wage rate is now competitive with China – a big deal! KCS & CN Railroads – Follow the Containers

Page # 23

http://www.epaducah.com/media/139405/us_rail_map_new.jpg

The 3D Windshield 3D Print Manufacturing will Revolutionize Real Estate!

Global Influencers “3D printing will be bigger than the internet.” - Chris Anderson, Former Managing Editor, WIRED Magazine Page # 24

Source: DaVinci Institute http://www.thefiscaltimes.com/Articles/2014/02/17/These-Shoes-Were-Made-3-D-Printing#sthash.7rJwHKQQ.dpuf

3D Printers: Small enough to be a kitchen appliance

3D Shoe Printer 3D Organ Printer Generic 3D Printer

Page # 25

3D Food Printers

Will Dominos & PaPa Johns even exist in 10 years when we can 3D-Print a pizza at home?

Page # 26

3D Printing is not Science-Fiction. It has evolved from trinkets to cosmetics – and more…

For those of you that have heard me speak in 1H2014, you know my thoughts and prognostications on 3-D printing. It is not a fad and it will revolutionize how we manufacture, warehouse and shop in ways that we could never have imagined. When we start to absorb all the ways 3-D printing technology is being applied today by real-world businesses, we start to realize this technology is very real and applicable to every industry sector and far beyond plastic trinkets sold in a Dollar-Discount store. Feetz – a company in southern California – is making custom orthotics using 3-D printing technology. Another California company is manufacturing AK-47 automatic weapons using graphite. Leading medical research university after university is developing the technology further to synthetically manufacture medicines and pharmacy items and human tissue ranging from skin grafts to even organs. But this may be the “disbeliever’s” breakthrough – MINK. MINK is the genius of a Harvard Business School graduate that has figure out how to 3-D print any shade of lipstick a woman could desire from home at a cost of $300. Imagine a 3-D Lipstick printer as a bathroom accessory for about the cost of the 3-D color printer in your office. It is reality by the end of this year! 3-D printing is going to turn upside down how we manufacture, warehouse and retail. It is another accelerant to the e-commerce revolution already underway in retail. How does a drug-store look without a cosmetics section because it all can be 3-D printed from home?

Skin &

Micro-Skin Sensors

Lipstick & Cosmetics

too!

Page # 27

3D Printing – It is so much more! Think about 3D and new Home Construction.

Affordable housing & rebuilding post natural disasters?

Page # 28

3D Printing – From trinkets to Aviation … Who will get these 3D Mfg Plants?

Page # 29

What will Texas’s next chess move be?

Page # 30

Don’t let the media tell you otherwise. TX still has lots of GAS to propel its economy!

Q&A

Confidential – Colliers International 2014

JOBS


2012 – Dr. Ray Perryman, the Perryman Group: “For every oilfield job created – two jobs are created in Houston”

-100,000

-50,000

0

50,000

100,000

150,000

2009 2010 2011 2012 2013 2014

Houston-Sugar Land-Baytown Annual Job Growth

JOBS


JOBS


$50

SHALE PLAY BREAKEVEN

Presenter

Presentation Notes

Context Slide - @ $80 per barrel many of the shale plays still pro-forma out but everyone gets nervous


OPEC “BREAK EVEN”


Average Class A

Vacancy:

9.5%

HOUSTON OFFICE Class A Submarket Vacancy


Average Class B

Vacancy:

13.4%

HOUSTON OFFICE Class B Submarket Vacancy


MARKET INDICATORS YE 2013 YE 2014

CITYWIDE NET ABSORPTION (SF) 2.9M 6.8M

CITYWIDE AVERAGE VACANCY 12.0% 11.5%

CITYWIDE AVERAGE RENTAL RATE $25.97 $26.79

CLASS A RENTAL RATE

CBD $38.16 $42.01

SUBURBAN $30.80 $31.61

CLASS A VACANCY

CBD 10.7% 8.6%

SUBURBAN 9.2% 9.8%

At the close of Q4, 17.0M SF of new office development was under construction, more than any other U.S. metro.

Market Metro U/C

Houston, TX 17,134,157

San Jose - Silicon Valley 8,086,492

Dallas, TX 6,873,662

Washington DC 6,168,610

Seattle/Puget Sound, WA 5,983,892

San Francisco, CA 5,161,899

Toronto, ON 5,088,689

Calgary, AB 4,950,500

Boston, MA 4,558,156 New York, NY - Midtown South Manhattan 4,170,000

HOUSTON OFFICE – 212.9M SF


10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

$16.00

$18.00

$20.00

$22.00

$24.00

$26.00

$28.00

Houston Average Rent Houston Average Vacancy



Average Cap Rate (Yield) Average Price ($) Per SF

Sales by Total $ (mil)

0

1,000

2,000

3,000

4,000

5,000

6,000

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14

Rolling 12-mo. Total Quarterly Vol.

0

50

100

150

200

250

300

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14

Houston United States

4%5%6%7%8%9%

10%11%12%

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14


Data Source:


http://www.rcanalytics.com/


Average Industrial Vacancy:

4.9%

HOUSTON INDUSTRIAL Submarket Vacancy


HOUSTON INDUSTRIAL MARKET INDICATORS

YE 2013 YE 2014


CITYWIDE AVERAGE VACANCY (%) 5.3% 4.8%

CITYWIDE AVERAGE RENTAL RATE ($) $5.96 $6.20

NEW SUPPLY DELIVERED (SF) 8.0M 8.7M

4Q UNDER CONSTRUCTION (SF) 4.4M 8.0M

8.7M SF of

new inventory

delivered in

2014, 6.2M SF

was spec

construction!

HOUSTON INDUSTRIAL – 496.1M SF


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

$5.00

$5.20

$5.40

$5.60

$5.80

$6.00

$6.20

$6.40

$6.60Houston Average Rent Houston Average Vacancy




Data Source:

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14



$0$10$20$30$40$50$60$70$80

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14


2%

4%

6%

8%

10%

12%

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14





HOUSTON RETAIL MARKET INDICATORS

YE 2013 YE 2014



CITYWIDE AVERAGE RENTAL RATE ($) Statistically Irrelevant

NEW SUPPLY DELIVERED (SF) 1.9M 1.9M

4Q UNDER CONSTRUCTION (SF) 1.0M 2.2M

Houston’s Strong

Economy Helps

Push Retail

Vacancy Rate to

Historic Low

HOUSTON RETAIL – 269.9M SF


0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Houston Average Vacancy




0200400600800

1,0001,2001,4001,6001,800

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14



0

50

100

150

200

250

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14


4%5%6%7%8%9%

10%11%12%

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14


Data Source:




Current Multi-Family Projects Under Construction


HOUSTON MULTI-FAMILY MARKET INDICATORS

YE 2013 YE 2014

UNITS ABSORBED 16,248 16,432


CITYWIDE AVERAGE RENTAL RATE ($) $857 $923

UNITS DELIVERED 12,186 18,305

4Q UNDER CONSTRUCTION 20,479 27,787

The average

monthly rent

increased 8.1% in

2014.

HOUSTON MULTI-FAMILY – 588.8K Units


6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

$600

$700

$800

$900

$1,000

Houston Average Rent Houston Average Vacancy



Data Source:

Average Cap Rate (Yield) Average Price ($) Per Unit


0

1,000

2,000

3,000

4,000

5,000

6,000

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14


020,00040,00060,00080,000

100,000120,000140,000

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14


4%5%6%7%8%9%

10%11%12%

Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14





• Starts up 9.4% over 2013 (29,905)

• Closings (New) 27,647

• Months Supply – 7.3% Near historic lows.

• “Lot supply constraints are stopping builders from ramping up more quickly”

Source: Metrostudy / Hanley Wood

Median Home Prices

SINGLE FAMILY


• Consultants continue to struggle to keep up with demand. The duration of design and construction documentation on projects has not improved.

• Work under contract/construction by General Contractors continues to drive a demand for skilled personnel. However a number of new projects HAVE been put on hold we see real concern on backlog.

• The Subcontractor community has little or no excess capacity to accommodate present workloads causing construction schedules to lengthen.

• Labor and material costs continue to escalate but there are some signs of leveling off of price increases.

• Long lead delivery times for critical path material and equipment continues to drive completion dates.

CONSTRUCTION COMMENTS


Office

Retail

Hotel

Industrial

Apartment

Phase I Recovery

Phase II Expansion

Phase IV Recession

Phase III Oversupply

Rent Increasing

Rents Decreasing

Above Long-Term Avg. Occupancy

Below Long-Term Avg. Occupancy

Houston Q4 2014 SELL

HOLD

BUY

U.S. Commercial Real Estate Market Cycle

Thank you, have a great 2015.

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