CPN - February 2009 - (Page 10)

MARKET INTELLIGENCE DATA/ANALYSIS Visit www.cpnonline.com/datacenter for additional market data. EYE ON INVESTMENT $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Q4 2007 (U.S. pricing per square foot) Garden Apartment Mid-/High-Rise Apartment Warehouse CBD Office Suburban Office Strip Shopping Center The Real Costs Low transaction volume makes determining prices difficult, as one or two deals amid a low number of data points can skew market averages. The high prices that are slanting reality reflect trades of expensive properties in a flight to quality among those buyers that are active, rather than the value-add opportunities that were popular before the credit crunch. Additionally, more deals have closed in primary markets, while deal flow in secondary and tertiary markets has slid. Increases in transactions that involve assumable debt and seller financing, which typically feature mortgage terms that are more favorable than market rates, also confuse average pricing. Q1 2008 Q2 2008 Q3 2008 Q4 2008 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. (U.S. industrial data as of Q3 2008*) Absorption (000 SF) 2007 National 117,300 East 15,939 Midwest 23,089 South 46,077 West 32,195 Vacancy 2007 National 8.8% East 10.8% Midwest 9.5% South 10.3% West 5.7% 2008 F 22,291 366 9,382 18,671 (6,128) 2008 F 10.7% 12.1% 11.0% 12.7% 7.8% 2009 F (1,689) (4,188) (213) 11,742 (9,029) 2009 F 11.6% 13.0% 11.9% 13.1% 9.1% 2010 F 87,991 13,261 22,346 25,818 26,565 2010 F 10.8% 12.3% 11.0% 12.4% 8.3% LEASING OUTLOOK Countdown to 2010 Industrial production contracted at a 14.5 percent annualized rate during the third quarter, the steepest decline since 1981, and vacancies in the top U.S. warehouse markets worsened. Expect net absorption to go negative in 2009, though demand is forecast to be positive by 2010. Two remarkable trends run counter to those of the past five years. The optimal number of warehouses for a national distribution operation may be increasing. If third-party logistics firms and other shippers seek to cut fuel/transportation costs, long-haul-truck shipping becomes less attractive, and regional distribution centers with good rail and seaport access—such as Houston, Baltimore and Jacksonville— could fare better. On the supply side, construction costs are decreasing, owing to lower land costs and declining steel prices. In contrast, the capital available for speculative construction is severely restricted. As a result, construction costs are falling rapidly in tandem with supply. *monthly chart cycles among office, multi-family and industrial Source: PPR • www.ppr.info • 617-426-4446 DIRECTIONS Lag Time IN DEVELOPMENT 90 80 70 60 50 40 30 20 10 0 (change in U.S. construction starts) The effects of the government stimulus are gone, home prices are still falling, the stock market is touching levels last seen a decade ago, inflation is elevated and unemployment is still rising. Accordingly, even as financing for commercial real estate projects slowly surfaces, prospective tenants are unwilling to commit to pre-leasing. Developers are wise to continue deferring new starts through 2009, particularly in markets facing the most dramatic deterioration in absorption, vacancy and rent trends. Expect new starts within most property types to remain depressed for the next 12 to 18 months. 3 Months Ending Oct-07 3 Months Ending Oct-08 Sources: PPR • www.ppr.info • 617-426-4446; PPR/Reed ConstructionTrak Apartment (000s of Units) Change -24.8% Office (MSF) -25.2% Retail (MSF) -11.8% Industrial (MSF) -55.3% Hotel (MSF) 2.3% 10 Commercial Property News • February 2009 • www.cpnonline.com http://www.cpnonline.com/datacenter http://www.rcanalytics.com http://www.ppr.info http://www.ppr.info http://www.cpnonline.com

Table of Contents Feed for the Digital Edition of CPN - February 2009

CPN - February 2009 Contents Starting Line Buzzworthy Office Data/Analysis Washington, D.C., Market Profile Ranking: Mortgage Banks & Brokerage Firms Top Deals of 2008 Mortgage Banking Mexico Brokerage Sustainability CPN-Nielsen Claritas Special Report Resource Guide

CPN - February 2009

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