CPN - December 2008 - (Page 11)

Visit www.cpnonline.com/datacenter for additional market data. DATA/ANALYSIS MARKET INTELLIGENCE (percentage of dollar value of sales for 12 months ending Q3 2008) EYE ON INVESTMENT Smaller Pie The commercial real estate industry had an undeniably challenging third quarter. Entering September, $20 billion of office, industrial, retail and apartment sales were under contract, and less than $10 billion worth of transactions were finalized during the entire quarter. The retail sector had a particularly rough go of it, pulling in just $3.4 billion worth of sales transactions in the third quarter—a disappointing 80 percent decline from the same period a year ago—as consumers cut back on their purchases and investors adopted a wait-and-see approach. By the end of the year, in fact, retail will likely have secured the lowest 2008 transaction value among the major property types. CBD Office 20% 16% 13% 28% 11% 4% 8% Suburban Office Industrial Flex Retail Apartment Hotel Source: Real Capital Analytics Inc. • www.rcanalytics.com • 866-732-5328 Data is believed to be accurate but is not guaranteed, is subject to future revision and is based on properties & portfolios $5 million and greater. (national apartment data as of Q3 2008) Absorption (000 SF) 2007 National 81,561 East 27,838 Midwest 11,191 South 25,580 West 16,952 Vacancy 2007 National 5.9% East 5.4% Midwest 6.0% South 7.9% West 5.1% 2008 F 17,742 9,500 1,917 18,106 (11,781) 2008 F 6.9% 5.9% 6.2% 9.5% 6.2% 2009 F (28,325) (1,342) (9,904) (2,487) (14,592) 2009 F 7.9% 6.5% 7.0% 11.2% 7.4% 2010 F 37,948 16,424 2,225 3,862 15,436 2010 F 8.0% 6.5% 7.1% 11.7% 7.3% LEASING OUTLOOK Movin’ Out Job losses of more than 800,000 from January through October have caused household formation to slow dramatically across the United States. Thus, apartment absorption will decrease by almost 80 percent this year as renters double up with roommates or move back in with their parents. These weak demand trends—combined with an influx of competitive supply created by empty homes and condominiums that desperate developers, converters and investor-owners are renting out—are undermining apartment vacancy rates. Vacancy is forecast to end the year a full percentage point higher than a year ago, and it will continue to deteriorate steadily through 2009 as unemployed renters fail to find new jobs. Monthly chart cycles among office, multi-family and industrial. Source: PPR • www.ppr.info • 617-426-4446 DIRECTIONS Stopped Starts IN DEVELOPMENT 120 (change in U.S. construction starts) In this difficult financing environment, construction starts 100 have continued to decline. A lack of financing is the main reason, and many developers—and their lenders—are 80 reassessing how the macroeconomic environment will affect absorption in their projects, both during the construction process and upon completion. Prospective tenants are 60 unwilling to pre-lease or back out of earlier commitments, 40 so developers are likely to continue deferring new starts through 2009, particularly in markets that are facing the 20 most dramatic deterioration in absorption, vacancy and rent trends. As a result, new starts are unlikely to show 0 a sustainable uptick for the next 12 to 18 months. Source: PPR/Reed Construction Data www.ppr.info • 617-426-4446 3 Months Ending Aug-07 3 Months Ending Aug-08 Apartment (000s of Units) Change -41.6% Office (MSF) -4.5% Retail (MSF) -25.4% Industrial (MSF) -56.2% Hotel (MSF) -10.8% www.cpnonline.com • December 2008 • Commercial Property News 11 http://www.cpnonline.com/datacenter http://www.rcanalytics.com http://www.ppr.info http://www.ppr.info http://www.cpnonline.com

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CPN - December 2008 Contents Starting Line Retail Data/Analysis Conferences Boston Market Profile Finance International Property Management

CPN - December 2008

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