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QuarterlyMarketTRENDS

Headline Line HEADLINE

34%

July 2014 FOREWORD

Vacancy Rate Dear CCIM Institute members, Welcome to the second-quarter 2014 edition of CCIM Institute’s Quarterly Market Trends. The report provides timely insight into major commercial real estate indicators for core income-producing properties. It is produced by the National Association of Realtors® in conjunction with and for members of the CCIM Institute, the premier provider of commercial real estate education. The second-quarter 2014 report features commentary from Lawrence Yun, Ph.D., NAR chief economist, and George Ratiu, director of NAR’s quantitative and commercial research. It also includes market analysis and data collected from CCIM members that illustrate regional economic and transactional trends across the U.S. I’d like to thank the CCIM members who participated in the survey and shared insights on their local markets. I hope that the information provided in CCIM’s Quarterly Market Trends report provides both economic and commercial real estate market information that will assist you in your business strategies in 2014 and beyond. Help CCIM make this report even more valuable by participating in the next QMT survey. Watch your email for details.

Sincerely,

Karl Landreneau, CCIM 2014 CCIM Institute President [email protected]

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Table of CONTENTS

Vacancy Rate

CCIM Transaction Survey Highlights. . . . . . . . . . . . . . . . . . . . . . . 4 Commercial Property Sector Analysis . . . . . . . . . . . . . . . . . . . . . . 5 Commercial Real Estate Market Update. . . . . . . . . . . . . . . . . . . . 10 Commercial Real Estate Forecast. . . . . . . . . . . . . . . . . . . . . . . . 13 U.S. Economic Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 U.S. Metropolitan Economic Outlook. . . . . . . . . . . . . . . . . . . . . . 21 Sponsors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

34%

Vacancy Rate

34%

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Quarterly Market Trends

CCIM Transaction Survey HIGHLIGHTS With rising deals and investor confidence, CCIM Institute members provided insights into their markets in a May/June 2014 survey.

INVESTMENT CONDITIONS: MULTIFAMILY RANKS HIGHEST IN 2Q14

GREATEST DEAL FLOW INCREASE: INDUSTRIAL

CREDIT CONDITIONS

AVERAGE RATING SCALE: 1 (LOW) TO 5 (HIGH)

2Q14 YOY % BY SECTOR

2Q14 YOY % BY SECTOR

5

70

70

60

60

50

50

40

40

30

30

20

20

10

10

4 3 2 1

0

0

0 OFFICE

MULTIFAMILY

INDUSTRIAL

RETAIL

HOSPITALITY

INDUSTRIAL

RETAIL

OFFICE

HOTEL

MULTIFAMILY

EXPECT CREDIT CONDITIONS TO IMPROVE

CONSIDER THE CURRENT TIGHTNESS TO BE THE NEW NORMAL

EXPECT CREDIT CONDITIONS TO TIGHTEN FURTHER.

According to CCIM members, the multifamily sector’s investment conditions were the MOST FAVORABLE in 2Q14, followed by industrial, retail, hospitality, and office.

Year-over-year deal flow saw the BIGGEST GAINS in the industrial sector, with 70% of CCIM respondents reporting an increase in transactions in 2Q14.

Current credit conditions are expected to IMPROVE, according to 60% of CCIM respondents, while 35% consider the current tightness to be the new normal.

About 54% OF CCIM MEMBERS INDICATED MORE DEALS IN 2Q14 compared to same period the year before.

respondents said the cap rate gap remained flat.

while 32% said prices are expected to outperform rents.

Rents increased, with 55% OF CCIMs INDICATING HIGHER RENTS YOY; 28% of respondents indicated similar rents YOY.

48% OF CCIM RESPONDENTS EXPECT TREASURY YIELDS TO REMAIN ABOUT THE SAME; 21% of respondents indicated that Treasury yields will rise, but will only minimally impact cap rates due to the current spreads; 10% of CCIMs said Treasury yield increases will push up cap rates.

66% OF RESPONDENTS INDICATED MORE INQUIRIES RELATED TO BUYING, while 10% said they received more inquiries from clients who wanted to sell assets. Property prices continued to firm in 2Q14 with 33% of respondents reporting prices similar to last year, while 49% REPORTED HIGHER PRICES. The CAP RATE GAP BETWEEN BUYERS AND SELLERS NARROWED IN 2Q14, according to 45% of CCIM members. Forty-three percent of

Cap rates compressed slightly during 2Q14, with 54% OF RESPONDENTS INDICATING RATES REMAINED THE SAME AS LAST YEAR; 38% dealt with lower rates. About 46% OF RESPONDENTS EXPECT RENTS AND PRICES TO MOVE TOGETHER in the next few years. Twenty-two percent said rent growth will outpace price growth,

An average of 35% OF RESPONDENTS INDICATED MEANINGFUL IMPROVEMENT IN CREDIT AVAILABILITY compared to last year; 55% reported marginal improvement.

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Commercial Property SECTOR ANALYSIS NATIONAL OFFICE MARKETS Office trends moderated in the second quarter for CCIM members: l l l l l

Deal flow was higher for 50 percent of CCIM members (compared with 55 percent in 2Q13). Property prices were higher for 43 percent of CCIM, while 34 percent found them to be flat. Cap rates were even for 69 percent of CCIMs, and lower for 24 percent of respondents. Rental income was flat for 28 percent of respondents; higher for 59 percent of CCIMs. 54 percent of respondents had more serious buying inquiries (compared with 51 in 2Q13).

FINANCE TRENDS (YoY) / Office Properties %

FINANCE OUTLOOK / Office Properties %

Credit availability is just as tight as last year with no improvement Credit availability has turned for the worse and is even tighter than last year Credit availability has only marginally improved Credit availability has meaningfully improved from last year

The current tight conditions will be the new normal Credit will become even more difficult to access over time Credit will be more readily accessible over time 0

0

10 20 30 40 50 60

Source: CCIM Institute, National Association of Realtors®

20

40

60

80

Source: CCIM Institute, National Association of Realtors®

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Commercial Property SECTOR ANALYSIS NATIONAL INDUSTRIAL MARKETS The industrial landscape recorded improvements during the second quarter: l l l l l

Industrial deal flow was higher year-over-year for 70 percent of respondents (vs. 60 percent in 2Q13). Prices were even for 40 percent of CCIMs, and higher for 52 percent of respondents. Cap rates were flat for 60 percent, while 32 percent reported lower cap rates. 62 percent of CCIM members reported higher rents. CCIM members reported 82 percent more buying inquiries during the quarter.

FINANCE TRENDS (YoY) / Industrial Properties %

FINANCE OUTLOOK / Industrial Properties %

Credit availability is just as tight as last year with no improvement Credit availability has turned for the worse and is even tighter than last year Credit availability has only marginally improved Credit availability has meaningfully improved from last year

The current tight conditions will be the new normal Credit will become even more difficult to access over time Credit will be more readily accessible over time 0

0

10 20 30 40 50

Source: CCIM Institute, National Association of Realtors®

10 20 30 40 50 60

Source: CCIM Institute, National Association of Realtors®

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Commercial Property SECTOR ANALYSIS NATIONAL RETAIL MARKETS The retail sector saw mild improvement in the second quarter: l l l l l

Retail deals increased for 59 percent of CCIMs (compared with 63 percent in 2Q13). Prices were higher for 44 percent of respondents and flat for 40 percent of respondents. Cap rates were the same for 56 percent of CCIMs, and lower for 37 percent. Rental income rose for 53 percent of CCIM members (vs. 67 percent in 2Q13). CCIM members reported 62 percent greater buying inquiries during the quarter.

FINANCE TRENDS (YoY) / Retail %

FINANCE OUTLOOK / Retail Properties %

Credit availability is just as tight as last year with no improvement Credit availability has turned for the worse and is even tighter than last year Credit availability has only marginally improved Credit availability has meaningfully improved from last year

The current tight conditions will be the new normal Credit will become even more difficult to access over time Credit will be more readily accessible over time 0

20

40

Source: CCIM Institute, National Association of Realtors®

60

0

80

20

40

60

80

Source: CCIM Institute, National Association of Realtors®

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Commercial Property SECTOR ANALYSIS NATIONAL APARTMENT MARKETS As more supply entered the market, trends for apartment properties moved sideways: l l l l l

46 percent of CCIM members reported more deals YOY (58 percent in 2Q13). Prices were higher for 69 percent of respondents (vs. 51 percent in 2Q13). Cap rates were flat for 26 percent of members and lower for 63 percent. Rental income rose for 56 percent of CCIMs (vs. 49 percent in 2Q13). 77 percent of respondents said they received more serious buying inquiries.

FINANCE TRENDS (YoY) / Multifamily %

FINANCE OUTLOOK / Multifamily %

Credit availability is just as tight as last year with no improvement Credit availability has turned for the worse and is even tighter than last year Credit availability has only marginally improved Credit availability has meaningfully improved from last year

The current tight conditions will be the new normal Credit will become even more difficult to access over time Credit will be more readily accessible over time 0

20

40

Source: CCIM Institute, National Association of Realtors®

60

0

80

20

40

60

80

Source: CCIM Institute, National Association of Realtors®

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Commercial Property SECTOR ANALYSIS NATIONAL HOTEL MARKETS Activity in the hospitality sector dropped the second quarter: l l l

Sales of hotels were higher for 50 percent of CCIMs (vs. 80 percent in 2Q13). Prices increased for 50 percent of respondents YOY (vs. 40 percent in 2Q13). Cap rates were higher for 50 percent of respondents.

FINANCE TRENDS (YoY) / Hospitality %

FINANCE OUTLOOK / Hospitality %

Credit availability is just as tight as last year with no improvement Credit availability has turned for the worse and is even tighter than last year Credit availability has only marginally improved Credit availability has meaningfully improved from last year

The current tight conditions will be the new normal Credit will become even more difficult to access over time Credit will be more readily accessible over time 0

20

40

Source: CCIM Institute, National Association of Realtors®

60

0

80

30

60

90

120

Source: CCIM Institute, National Association of Realtors®

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Commercial Real Estate Market UPDATE Commercial real estate fundamentals appeared to be favorable, with declining vacancies, space absorption, rent increases, and—to a lesser degree—leasing improvements, according to the 2Q14 CCIM Market Intelligence Survey results and a range of industry data sources.

OFFICE

IN TECHNOLOGY AND ENERGY 34% CENTERS, EMPLOYMENT

On a national basis, net absorption continued on a positive trend, while moderate new construction Vacancy Rate translated into vacancy declines. Office absorption weathered the first quarter well, despite anemic job growth, and vacancy declined nationally by 10 basis points. Net absorption for office buildings rose by 9.8 million square feet, based on data from Reis. The increase was the during 4Q13, Washington, D.C., took highest quarterly gain since the latter back the title of the tightest market, half of 2007. In addition, supply of with a 9.7 percent availability rate.

GAINS LED TO STRONG OFFICE DEMAND AND HIGH RENT GROWTH.

new office space rose by 6.3 million square feet during the quarter. Job growth provided the major differentiator in office performance across markets. In technology and energy centers, employment gains led to strong office demand and high rent growth. The top 10 markets by growth in effective rent included San Jose, Calif., San Francisco, Dallas, Houston, Austin, Texas, Seattle, and Oklahoma City. Washington, D.C., and New York continued their tussle for top spot. After another reversal

Asking rents for office space advanced 0.7 percent in the 1Q14, according to Reis. Effective rents rose by 0.8 percent during the same period, averaging about $24 per square foot. Asking rents are expected to grow by 2.5 percent this year.

INDUSTRIAL In the wake of strong performance figures in the latter part of 2013, industrial fundamentals softened during 1Q14 as the economy dipped.

Availability rates declined 10 basis points from the previous quarter. Net absorption for warehouses was 15.4 million square feet, while absorption of flex space totaled 2.4 million square feet. Flex space demand jumped more than 50 percent from 4Q13, as new supply slowed in tandem with rising demand. Completions of flex space were a scant 150,000 square feet in 1Q14, according to Reis. New warehouse space came online to the tune of 9.4 million square feet. Regionally, distribution centers registered the strongest numbers. Markets such as Houston and San Bernardino/ Riverside, Calif., posted rent growth in excess of 3.0 percent during 1Q14. Atlanta and Kansas City, Mo., also showed upbeat rent growth with identical increases of 2.9 percent. Memphis, Tenn., and Chicago recorded rent gains of 2.7 percent and 2.6 percent respectively. Asking rents are estimated to grow 2.4 percent by year-end as demand for space is expected to remain strong.

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Commercial Real Estate Market UPDATE RETAIL

growth, such as Houston, Atlanta, and Denver also witnessed strong demand. And during a prolonged cold spell, warm tourist destinations saw favorable demand, including Ft. Lauderdale, Fla., Orange County, Calif., and Palm Beach, Fla.

Retail leasing took the brunt of the winter weather in 1Q14. National vacancy rates stayed flat for the quarter, as demand and supply slowed down. Net absorption of retail space totaled 698,000 square feet, according to Reis. The main Retail asking rents increased by driver in the decline seemed to have 0.4 percent in the first quarter, as been the termination of Midwest- effective rents gained 0.5 percent, based grocer Dominick’s operations. based on Reis data. Asking rents are Its closing led to 2.6 million square expected to advance 2.0 percent by feet of empty space. Construction of year-end. new retail space was also impacted Vacancy Rate by the weather—new supply reached MULTIFAMILY just 650,000 square feet in 1Q14.

34%

COASTAL MARKETS— INCLUDING NEW YORK, SAN FRANCISCO, SAN JOSE, AND LOS ANGELES— REMAINED THE TIGHTEST IN TERMS OF RETAIL VACANCY. In line with differing regional economic recoveries, retail fundamentals were split. Coastal markets, including New York, San Francisco, San Jose, and Los Angeles, remained the tightest in terms of retail vacancy. Markets with high employment

Apartments remained well positioned in the 1Q14. Demand for apartments was positive, especially in light of the weather and broader economic trends. Net absorption totaled 41,881 units, according to Reis. Completions of new units slowed down significantly, however, reaching only 25,745 units. The national vacancy rate declined 20 basis points. New Haven, Conn., continued as the tightest apartment market, with a vacancy rate of just 2.3 percent during the 1Q14. Several California markets also registered low vacancies, including San Jose, San Diego, and Riverside/San Bernardino. Apartment asking rents have been slowing down in light of very tight

DEMAND FOR APARTMENTS WAS POSITIVE, ESPECIALLY IN LIGHT OF THE WEATHER AND BROADER ECONOMIC TRENDS. availability. In 1Q14, asking rents advanced by 0.5 percent and effective rents rose 0.6 percent, according to Reis. Landlords may have gotten past the peak of rent growth, especially given the 96 percent occupancy rate coupled with stagnant wages and slow employment outlook. National asking rents were $1,138 per unit in the first quarter. Asking apartment rents are expected to rise 4.0 percent by year-end.

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Commercial Real Estate Market UPDATE COMMERCIAL REAL ESTATE INVESTMENT ACTIVITY Sales of commercial real estate assets at the lower-end of the price scale rose 11 percent YOY and sale prices increased approximately 4 percent, according to National Association of Realtors 1Q14 commercial real estate data. Prices for properties at the higher-end of the price range rose 14.8 percent, according to Real Capital Analytics. In addition, commercial real estate sales prices in the six major markets rose at a faster rate (17.1 percent) than those in secondary and tertiary markets (13.6 percent). Cap rates for properties at the lower end of the price spectrum averaged 8.2 percent in 1Q14, a 50 basis point decrease from the previous quarter, according to NAR data. Apartments recorded the lowest average cap rate for the quarter at 7.7 percent, while office and retail cap rates averaged 8.0 percent and industrial properties posted cap rates of 8.1 percent.

NATIONAL AVERAGE CAP RATES (%) 0.0

2.0

4.0

6.0

8.0

10.0

Apt/Multifamily Office CBD Office Suburban Industrial Warehouse Industrial Flex Retail Hotel/Lodging Development Land Source: CCIM Institute, National Association of Realtors®

CAP RATES BY REGION

CANADA & MEXICO

EAST

MIDWEST

OTHER

SOUTH

WEST

Apartment Cap Rate 5.5% 6.5% 7.1% 9.3% 6.9% 5.7% Office CBD Cap Rate 7.6 7.9 8.8 7.2 7.5 6.9 Office Suburban Cap Rate 10.0 8.5 8.8 7.7 8.4 7.5 Warehouse Cap Rate 6.2 7.9 8.3 7.2 8.1 6.9 Flex Cap Rate 6.3 8.3 8.6 7.9 8.4 7.2 Retail Cap Rate 5.8 7.4 8.1 7.7 7.7 7.1 Hotel Cap Rate . 7.9 8.1 7.9 7.9 7.6 Development Cap Rate . 11.9 8.0 7.3 9.9 9.7 Land Cap Rate . 12.2 7.5 9.5 8.1 8.8 © 2014 The CCIM Institute, National Association of Realtors®

INVESTMENT VALUE VS. PRICE RATIO

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Vacancy Rate

Office 3.0 Multifamily 3.0 Industrial 3.2 Retail 3.0 Hospitality 3.0

0.0

1.0

2.0

3.0

4.0

5.0

© 2014 The CCIM Institute, National Association of Realtors® Based on May/June 2014 CCIM transaction survey.

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Commercial Real Estate FORECAST Due to a number of factors, the U.S. economy is expected to perform at a quicker pace during the remainder of 2014. However, the pace of growth remains muted, tempering expectations for commercial real estate. Absorption is projected to continue growing, leading to declining vacancies across most property types. The forecast below projects conditions for the commercial sector through 2015.

Commercial Real Estate / FORECAST THROUGH 2015

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2014 2015

OFFICE Vacancy Rate 15.80% 15.60% 15.70% 15.70% 15.60% 15.50% 15.60% 16.00% 15.60% Net Absorption 9,803 10,980 9,020 11,369 12,663 13,358 12,452 39,676 49,841 (‘000 sq. ft.) Completions (‘000 sq. ft.) 6,745 5,504 5,652 10,153 11,653 10,606 10,455 23,537 42,866 Inventory (‘000,000 sq. ft.) 4,121 4,126 4,132 4,142 4,154 4,164 4,175 4,132 4,175 Rent Growth 0.60% 0.60% 0.60% 0.70% 0.80% 0.90% 0.80% 2.50% 3.20% INDUSTRIAL Vacancy Rate 9.00% 8.90% 8.80% 8.70% 8.70% 8.60% 8.50% 8.90% 8.60% Net Absorption 26,962 32,355 29,119 19,283 26,782 32,138 28,924 107,849 107,127 (‘000 sq. ft.) Completions (‘000 sq. ft.) 23,733 22,202 14,546 14,309 21,122 19,760 12,946 76,558 68,137 Inventory (‘000,000 sq. ft.) 8,473 8,496 8,510 8,525 8,546 8,565 8,578 8,510 8,578 Rent Growth 0.60% 0.60% 0.70% 0.60% 0.70% 0.70% 0.60% 2.40% 2.60% RETAIL Vacancy Rate 10.00% 9.90% 9.80% 9.90% 9.80% 9.80% 9.70% 10.00% 9.80% Net Absorption 3,353 3,095 4,255 5,373 4,553 3,533 6,157 11,543 19,616 (‘000 sq. ft.) Completions (‘000 sq. ft.) 1,842 2,110 2,342 3,398 2,935 3,299 3,368 8,404 13,001 Inventory (‘000,000 sq. ft.) 2,038 2,040 2,042 2,046 2,049 2,052 2,056 2,042 2,056 Rent Growth 0.50% 0.50% 0.60% 0.50% 0.60% 0.60% 0.60% 2.00% 2.30% MULTIFAMILY Vacancy Rate 4.00% 4.00% 4.10% 4.10% 4.10% 4.20% 4.20% 4.00% 4.00% Net Absorption (Units) 57,612 55,397 66,476 44,087 40,930 39,233 48,804 221,366 173,055 Completions (Units) 47,450 46,161 49,495 30,032 38,146 34,834 36,965 178,655 139,976 Inventory 10.1 10.2 10.2 10.3 10.3 10.3 10.4 10.2 10.4 (Units in millions) Rent Growth 1.00% 1.00% 0.90% 0.90% 1.00% 1.00% 1.10% 4.00% 4.00% Sources: National Association of Realtors® / Reis, Inc. Copyright © 2014 NATIONAL ASSOCIATION OF REALTORS®. Reproduction, reprinting or retransmission in any form is prohibited without written permission. For questions regarding this matter please e-mail [email protected].

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U.S. Economic OVERVIEW Employment and job growth appear to be the most important drivers of the need for commercial real estate. To a significant degree, the country’s gross domestic product and jobs vary together. The overall performance of the economy has been mediocre in recent years following the Great Recession—growth has been positive but somewhat less than what would normally be expected. However, economic growth is expected to pick up over the next several years, which should have a favorable impact on the demand for commercial space.

GDP GROWTH RATE THROUGH 1Q14 10.0 % 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 -8.0 -10.0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1

Source: Bureau of Economic Analysis

MAKING PROGRESS AT MIDYEAR The economy produced some disappointing results during 1Q14. Real GDP growth was around -2.9 percent, and unemployment was in the neighborhood of 6.7 percent, declining to 6.3 percent in May. The harsh winter weather appears to have been a major cause of the decline in GDP, but the economy had already been performing at a sluggish rate—essentially since the end of the Great Recession. Most economists expect the economy to pick up in the forthcoming months, and preliminary indications suggest a growth rate in the neighborhood of 3 percent by the end of the year. However, on a yearly basis the overall GDP growth projection for 2014 is 1.9 percent, along with

unemployment at 6.3 percent and continued low inflation and interest rates. In short, recent economic performance could be termed as mediocre with the economy now expected to be on an uptrend. However, a number of economic uncertainties, such as energy problems from the Middle East, a potential decline in the stock market that shakes consumer confidence, and a lack of enthusiasm and confidence about economic conditions, may pose problems that cause economic growth to be less than would normally occur. Real GDP growth for 2014 is projected at 1.9 percent, below the normal 3 percent growth rate.

However, exports will probably pick up as foreign economies continue to expand and business inventories appear likely to increase. Therefore, economic growth is projected to resume for the rest of the year in the neighborhood of 2.7 to 3 percent.

U.S. ECONOMY: A DETAILED ANALYSIS Economists analyze the economy in terms of consumption, investment, government expenditures, and net exports when making projections of economic activity. A focus on the factors that could cause the four categories to vary can show potential upward or downward shifts in the economy.

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U.S. Economic OVERVIEW Consumers account for approximately 70 percent of GDP economic activity. The Consumer Confidence Index is an indicator measures the degree of optimism on the state of the economy that consumers are expressing through their activities of saving and spending. The index is issued by The Conference Board, based on a monthly survey of 5,000 households. Opinions on current conditions make up 40 percent of the index, with expectations of future conditions comprising the remaining 60 percent. The index has recovered from its depth of 25.3 in February of 2009 during the Great Recession but still continues to be somewhat lower than would be expected in a normally expanding economy. One would expect an increase in consumption to occur with an increase in consumer confidence, part of which appears to be currently driven by emotional reactions to news reports. Assuming continued economic recovery, the uncertainties are probably more towards the upside. Recent fluctuations in household wealth coupled with continued job market problems have probably contributed to the currently muted level of consumer confidence. Changes in consumer confidence can occur relatively quickly, so the current Consumer Confidence Index level and direction suggests that good economic news could impact

CONSUMER CONFIDENCE INDEX 160 140 120 100 80 60 40 20 0 MO YR

06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 12 06 77 78 80 81 83 84 86 87 89 90 92 93 95 96 98 99 01 02 04 05 07 08 10 11 13

Source: The Conference Board

THE CCI HAS RECOVERED FROM ITS DEPTH DURING THE GREAT RECESSION, BUT CONTINUES TO BE LOWER THAN EXPECTED IN A NORMALLY EXPANDING ECONOMY. the index, thereby setting the stage for additional economic expansion in terms of personal consumption expenditures. Nevertheless, income and wealth issues are relevant in examining the overall level of personal consumption expenditures.

Another factor affecting consumer confidence appears to have been declining median family income and a lack of growth in worker earnings. Stated in constant dollars, families do not appear to have benefitted from the economic recovery. These factors tend to limit consumer spending from what it would otherwise have been in addition to creating rancorous press coverage which also appears to negatively impact confidence. On a longer term basis, there are numerous reports in the press concerning the concentration of wealth and income in upper-bracket individuals as the economy changes. In contrast, about one-third of American households are reported as living hand-tomouth, meaning that they spend all their paychecks.

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U.S. Economic OVERVIEW EMPLOYMENT’S EFFECTS Employment trends and job availability have been difficult for many consumers. The unemployment rate continues to fall, based on people actively seeking work. However, unemployment continues to be high relative to normal expectations. Most of the recent drop in unemployment appears to have occurred as a result been out of work for six months of potential workers leaving the job or longer. The longer people are market—and therefore not actively out of work, the more their skills seeking employment. In addition, erode. If former workers are permaRateout of the job market, the percentage of people actually in Vacancy nently frozen the work force has declined signifi- economic growth is negatively cantly from a few years ago. impacted. In addition, the number As measured in terms of “Establish- of people working part-time due to ment Employment” the number of economic reasons is substantial, and people actually working has recov- workers entering the job markets are ered from the depths of the Great reported as having difficulty finding Recession, but we appear to have lost jobs with upscale growth potential.

34%

four years of employment growth as a result of the Great Recession. In order to meet the expanding job needs of the U.S. economy due to population growth, the economy needs to add approximately 150,000 new jobs every month just to stay even. Any jobs added above 150,000 can help to reduce the number of unemployed and underemployed potential workers. Employment has accelerated modestly in recent months, which should help to continue the downward pressure on the unemployment rate. However, a significant number of people have

In the coming year, growth of personal consumption expenditure should at least equal what has been experienced over the past year since both job and GDP growth are positive. Considering all of the factors mentioned, on balance we could even see some upscale potential beyond that which is projected. However, for the longer run, in order for personal consumption expenditures to achieve significantly greater growth it may be necessary for lower income earners to leave part-time employment and to participate to a greater degree in the growth of the economy.

INVESTMENT Both residential and business investments continue to recover from the depths of the Great Recession. Total investment is approximately 16 percent of the GDP and has been rising. The change in private inventories—which makes up approximately 4 percent of total investment—is, however, quite volatile and through a multiplier effect can have some impact on GDP. For the next few quarters any changes in investment impacts on the economy are likely to be positive. Looking at quarterly changes in investment, it is clear that inventory investment is relatively small but is also subject to fairly wide swings in magnitude. During 1Q14, there was a significant decline in business inventory investment, reportedly due to weather. Companies were reported as sharply cutting back on their restocking of goods—partly due to weather, partly due to demand. This should reverse for the rest of the year: The economy is on an upswing

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U.S. Economic OVERVIEW

INVESTMENT TRENDS RESIDENTIAL

INVENTORY CHANGE

NON-RESIDENTIAL

3000 2500 2000 1500 1000 500 0 -500

00 Q1

00 Q4

01 Q3

02 Q2

03 Q1

03 Q4

04 Q3

05 Q2

06 Q1

06 Q4

07 Q3

08 Q2

09 Q1

09 Q4

10 Q3

11 Q2

12 Q1

12 Q4

13 Q3

Source: National Association of Realtors®

and weather impacts are unlikely. There do not appear to be any major changes in investment likely over the next year which would impact the economic projections.

GOVERNMENT EXPENDITURES Federal, state, and local government expenditures account for approximately 19 percent of the GDP. Measured on a constant dollar basis, government expenditures have declined slightly in recent years. Looking to the future, one would

expect government expenditures to stabilize and probably rise. Some of the areas prominently mentioned include medical, infrastructure, education, and social services. However, major changes in government expenditures are unlikely this year and will probably not affect current economic projections in this paper.

NET EXPORTS Net exports declined slightly during the first quarter of 2014, accounting for a portion of the negative 2.9 percent

decline: Exports declined and imports increased. Foreign economies on balance now seem to be on an expansionary track, suggesting a pickup in exports in following quarters.

ADDITIONAL FACTORS In addition to looking at the components of GDP, it is appropriate to consider trends in monetary policy, inflation, housing, and general risks in making an economic forecast. Overall, the trends in these areas seem to be favorable, further

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U.S. Economic OVERVIEW substantiating that there may be some upscale potential to the forecast and continued evidence that the expansion will continue.

MONETARY POLICY In the case of monetary policy, the good news is that interest rates are projected to remain relatively low by historical standards. Credit standards have been unreasonably tight in recent years, largely as part of the fallout from the Great Recession. In recent months there has been some easing in terms of credit availability, and hopefully this will continue. The Federal Reserve is expected to continue decreasing quantitative easing, and an interest rate hike seems likely at some point in late 2014 or 2015. However, none of the possible changes that seem likely in monetary policy are seen as having a significantly negative impact on the economic forecast.

INFLATION Inflation has been relatively modest in recent years. The Federal Reserve has indicated that an inflation rate of 2 percent would provide the appropriate stimulation to the economy. A major component of the inflation rate is the cost of housing, which factors very heavily into the CPI and is based to a significant degree on

INFLATION: PERCENT CHANGE YOY ALL ITEMS 6 5 4 3 2 1 0 -1 -2 -3

1998

2000

2002

ALL ITEMS EXCL. FOOD & ENERGY

2004

2006

2008

2010

2012

Source: Federal Reserve Board

imputed homeowner costs based on apartment rents. In the past year, apartment rents have been increasing, and the impact will be an increase in the reported inflation rate. In addition, declining unemployment should eventually put upward pressure on prices. However, the inflation outlook does not appear to have a significant impact on the current economic forecast.

MANUFACTURERS’ SHIPMENTS Manufacturers’ shipments declined in January—presumably due to weather--but subsequently resumed their upward trend. Shipments are an indicator of the strength of the economy and substantiate the current economic forecast.

HOUSING Housing is a major economic driver. The sale of an existing home adds approximately $30,000 to the GDP, and the sale of a new single family home adds over $250,000 to the GDP. Home sales for new and existing homes have been climbing out of the valley created by the Great Recession. However, several factors have been holding sales back. Although interest rates have been and continue to be low by historic standards, credit availability has been excessively restrictive. In the case of new construction, small builders, who have typically accounted for approximately one half of new construction, have been unable to obtain adequate access to credit or

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U.S. Economic OVERVIEW

U.S. ECONOMIC OUTLOOK / Actual and Forecasted

2013 2013 2013 2013 2014 2014 2014 2015 2015 ANNUAL Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q1 Q2 2012 2013 2014 2015

HISTORY FORECAST* HISTORY FORECAST* GDP g.r. (%) 1.1 2.5 4.1 2.4 Non-farm Payroll Employment, g.r. (%) 1.9 1.7 1.6 1.8 Consumer Prices, g.r. (%) 1.2 0.4 2.2 1.1 Unemployment Rate (%) 7.7 7.5 7.2 7.0 30-Year Government 3.0 3.1 3.7 3.7 Bond Yield (%) 30-Year Fixed 3.5 3.7 4.4 4.3 Mortgage Rate (%) Consumer Confidence 63 75 81 74 (1985=100)

2.8 3.0 3.0 2.9 2.9

2.8 1.9 2.4 2.9

1.7 2.8 6.3 3.4

1.9 3.5 6.0 4.6

1.7 1.7 1.6 1.8 2.1 1.4 2.5 3.5 8.1 7.4 6.4 6.0 2.9 3.4 3.7 4.7

4.3 4.5 4.8 5.1 5.4

3.7 4.0 4.5 5.5

83 84 84 85 87

67 73 83 87

1.5 3.0 6.2 3.6

1.6 1.8 3.0 3.4 6.2 6.1 3.9 4.3

*Forecast as of March 2014 Source: National Association of Realtors

©

were eliminated by the Great Recession. In any case, this has had a major negative impact on housing permits for single family and multifamily units, which have been in the neighborhood of a million units per year or less instead of the expected 1.5 million units yearly. In addition, the Millennials are the next generation for home ownership, but so far that has not occurred. Family formation for Millennials has been slower than expected, possibly due to a combination of factors such as the slow economy, changing social customs, debt levels, and expectations as a result of the Great Recession. Between 2007 and 2014, median incomes for the generation segment aged 25 to 34 (the typical age for a first-time home

purchase) have decreased at a rate of 9 percent. For the short run, none of the negative factors impacting housing appear likely to get worse in the next year; in fact, there appears to be a modest increase in lending as well as job growth, so any risk to the economic forecast is upwards rather than downwards.

RISKS: UNCERTAINTIES AND PROBLEMS In the short term, the major risks to the economy are a dip in consumer confidence or higher energy prices. Consumer confidence has continued its fragile recovery, but a major pullback in the possibly overheated stock market would again have

potentially major impacts on household balance sheets. This could work its way through the economic system, resulting in declining consumption and falling GDP. The international outlook is also a risk, particularly in terms of a potential energy problem and accompanying higher gasoline prices. Middle East turmoil could become a threat to the economy, particularly if curtailed shipments from Iraq caused oil prices to increase. Decreased consumer demand due to spending on energy might limit economic growth. Iraq accounts for approximately 1.7 percent of global crude consumption. An interruption of Iraqi oil would raise prices and create heightened uncertainty in financial markets, possibly depressing the

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U.S. Economic OVERVIEW values of various assets. The short term impact could be substantial, probably wiping out GDP growth. Longer term, energy markets could adapt to the loss of product. Longer term, the major risks appear to be associated with household formation and job creation. Household formation has been relatively slow in recent years. The major drivers of residential and commercial real estate demand in the long run are household formation and job creation. Both have been slower than expected. Explanations for slow household formation include the state of the economy, changing social mores, a slow job market, and rising levels of consumer debt. Explanations for slow job creation include the impacts of the Great Recession as well as technological change and major realignments in the economy. Both household formation and job creation appear likely to be picking up in the foreseeable future.

34%

Vacancy Rate

ECONOMIC CLIMATE BY REGION

The regional economic climate is booming The regional economic climate is level The regional economic climate is moderately positive The regional economic climate is stagnant The regional economic climate is weak

CANADA & MEXICO

–

EAST

MIDWEST

2.9%

3.6%

OTHER

SOUTH

WEST

20.8%

32.9%

25.4%

–

11.8

21.4

8.3

8.2

5.1

40.0

70.6

60.7

58.3

56.5

50.8

–

2.9

3.6

–

1.2

–

–

11.8

10.7

12.5

1.2

18.6

© 2014 The CCIM Institute, National Association of Realtors® Based on May/June 2014 CCIM transaction survey.

ECONOMIC RATE 0.0

1.0

2.0

3.0

4.0

5.0

REGIONAL Average 3.8 NATIONAL Average 3.2 © 2014 The CCIM Institute, National Association of Realtors® Based on May/June 2014 CCIM transaction survey.

ECONOMIC OUTLOOK For the next year, the economy appears to be in a slow growth mode—an economy expanding at slower than expected rates. The economic outlook is favorable for supporting at least the current level of commercial sales and rentals; in addition, based on cutbacks during the Great Recession there appears to be a level of pent-up demand, so on balance the outlook for commercial real estate is positive. The positive factors associated with the economic outlook include rising home prices, easing credit terms,

reasonable energy prices, recovery from global economic slowdowns, recovering consumer balance sheets, and the potential for additional household formation. Uncertainties with the international situation (energy, recessions, and political instability) coupled with lingering consumer confidence issues are the negatives. On balance, the economic forecast is positive and, to the degree there is uncertainty and risk, the outcomes are probably more towards the upside than the downside. In short, the economic environment is moderately favorable for commercial real estate.

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U.S. Metropolitan ECONOMIC OUTLOOK The leading market index uses an array of factors to assess the relative health of an individual market. The factors include job creation, unemployment claims, bankruptcy filings, and permits for construction. The first two factors provide an indication of potential business expansion/contraction as well as of labor market health and a leading

indicator of multifamily rental growth. Bankruptcy filings allude to the health of the business environment, while the permits data point to business plans and have an indirect impact on inventories. The leading indicator is weighted based on both the current measure

as well as its recent trend or lagged measures. These weighted measures are then added to create a score. This score is then ranked relative to a fixed scale where a measure of 85 or better indicates a robust market, 75 to 85 a strong market, 65 to 75 an average market, and a score below 65 coincides with a weak market.

LEADING INDICATOR INDEX CITY STATE SCORE LEADING BANKRUPTCY UNEMPLOYMENT UNEMPLOYMENT EMPLOYMENT INDICATOR FILINGS CLAIMS RATE as of 2014 (APR 2014 vs. (2014 vs. 2013)* (2014 vs. 2013)** APR 2013)**

TOTAL PERMITS (2014 vs. 2013)**

Phoenix

AZ B 78.13 -15% -3%

6.2% 2.2% 16%

Tucson

AZ D 62.50 -15% -3%

6.4% 0.7% -5%

Los Angeles

CA

C

68.75

-27%

4%

7.8%

2.1%

0%

San Bernardino/Riverside

CA

B

75.00

-27%

4%

9.2%

2.4%

57%

Sacramento

CA C 71.88 -27% 4%

7.6% 2.7% 49%

San Diego

CA

C

71.88

-27%

4%

6.7%

2.2%

29%

San Francisco

CA

B

75.00

-27%

4%

5.7%

2.2%

-3%

San Jose

CA

B

78.13

-27%

4%

5.9%

4.0%

18%

Colorado Springs

CO

B

84.38

-15%

-7%

7.4%

1.3%

7%

Denver

CO A 87.50 -15% -7%

5.8% 2.8% 15%

Hartford Washington

CT C 71.88 -8% -8% DC C 71.88 -1% 6%

7.1% 0.7% -15% 4.8% 0.2% 7%

Jacksonville

FL D 62.50 -6% -6%

6.1% 3.3% -6%

Miami

FL

6.4%

Orlando

FL B 75.00 -6% -6%

5.9% 4.5% 3%

Tampa-St. Petersburg

FL

6.5%

B D

75.00 62.50

-6% -6%

-6% -6%

3.2% 2.6%

29% -10%

Atlanta

GA C 65.63 -9% -11%

6.9% 2.0% 44%

Chicago Indianapolis

IL C 68.75 -7% -7% IN B 78.13 -7% -15%

7.7% 0.7% 43% 5.3% 2.0% 44%

Lexington

KY C 68.75 -6% -10%

6.6% 0.2% 38%

Louisville

KY C 71.88 -6% -10%

7.1% 0.8% 17%

New Orleans

LA

Boston

MA B 84.38 -22% -12%

B

75.00

-1%

-22%

4.7%

1.3%

-1%

5.5% 1.2% 34%

*April 2013 through March 2014 vs. April 2012 through March 2013 **May 2013 through April 2014 vs May 2012 through April 2013

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U.S. Metropolitan ECONOMIC OUTLOOK

LEADING INDICATOR INDEX CITY STATE SCORE LEADING BANKRUPTCY UNEMPLOYMENT UNEMPLOYMENT EMPLOYMENT INDICATOR FILINGS CLAIMS RATE as of 2014 (APR 2014 vs. (2014 vs. 2013)* (2014 vs. 2013)** APR 2013)**

TOTAL PERMITS (2014 vs. 2013)**

Baltimore

MD B 75.00 -3% -10%

5.9% 1.8% 2%

Detroit

MI C 65.63 -14% -8%

8.1% -0.3% 19%

Minneapolis

MN B 78.13 -14% -6%

4.5% 1.6% 1%

St. Louis

MO

C

71.88

-16%

-1%

7.3%

0.7%

0%

Kansas City

MO

C

65.63

-16%

-1%

6.3%

0.6%

4%

Greensboro/Winston-Salem NC B 78.13 -13% -45%

6.7% 0.3% 31%

Raleigh-Durham

NC B 84.38 -13% -45%

5.1%

Charlotte

NC B 78.13 -13% -45%

6.3% 2.0% 8%

Omaha Albuquerque

NE B 81.25 -11% -13% NM D 62.50 -9% -13%

4.1% 1.7% -2% 7.2% -1.2% 9%

Las Vegas

NV

8.5%

B

84.38

-20%

-16%

4.1% -12%

3.0%

13%

Buffalo

NY B 75.00 -10% -11%

6.3% 0.7% 52%

New York

NY

7.0%

C

71.88

-10%

-11%

1.1%

53%

Cleveland

OH C 68.75 -4% -16%

7.0% 0.6% 18%

Columbus

OH B 78.13 -4% -16%

4.8% 0.9% -2%

Cincinnati

OH B 84.38 -4% -16%

5.5% 1.7% 24%

Oklahoma City

OK

4.7%

B

75.00

-10%

-14%

2.8%

12%

Tulsa

OK B 75.00 -10% -14%

5.0% 1.7% -2%

Portland

OR C 71.88 -7% -11%

6.3% 2.8% 3%

Pittsburgh

PA C 71.88 -6% -7%

5.6% 0.5% 21%

Philadelphia

PA C 71.88 -6% -7%

6.3% 0.5% 24%

Providence

RI B 81.25 -11% -11%

8.5% 1.0% 14%

Charleston

SC B 81.25 -3% -13%

4.7% 1.4% 7%

Columbia

SC B 81.25 -3% -13%

5.0% 1.7% -1%

Greenville

SC B 78.13 -3% -13%

4.5% 2.6% 41%

Knoxville

TN C 71.88 -5% -11%

5.4% 2.0% 19%

Nashville

TN B 75.00 -5% -11%

5.0% 3.1% 48%

Chattanooga

TN D 62.50 -5% -11%

6.3% 0.8% 50%

Memphis

TN D 56.25 -5% -11%

7.8% 0.2% -2%

Austin

TX A 87.50 -13% -4%

4.3% 3.5% -4%

Dallas

TX A 87.50 -13% -4%

5.3% 3.8% 20%

Houston

TX A 90.63 -13% -4%

5.2% 3.1% 12%

San Antonio

TX

5.0%

A

96.88

-13%

-4%

2.2%

9%

*April 2013 through March 2014 vs. April 2012 through March 2013 **May 2013 through April 2014 vs May 2012 through April 2013

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U.S. Metropolitan ECONOMIC OUTLOOK

LEADING INDICATOR INDEX CITY STATE SCORE LEADING BANKRUPTCY UNEMPLOYMENT UNEMPLOYMENT EMPLOYMENT INDICATOR FILINGS CLAIMS RATE as of 2014 (APR 2014 vs. (2014 vs. 2013)* (2014 vs. 2013)** APR 2013)**

TOTAL PERMITS (2014 vs. 2013)**

Salt Lake City

UT

44%

Richmond

VA B 81.25 -8% -11%

B

84.38

-8%

-11%

3.8%

1.4%

5.4% 1.7% 1%

Seattle

WA A 87.50 -12% -7%

5.0% 2.9% 10%

Milwaukee

WI B 75.00 -9% -12%

6.3% 1.5% 24%

Birmingham

AL C 68.75 -5% -12%

6.1% 1.0% 15%

Little Rock

AR

C

65.63

-5%

-10%

6.1%

0.7%

-23%

New Haven

CT

B

75.00

-8%

-8%

7.3%

1.3%

11%

Wichita

KS B 78.13 -5% -9%

5.8% 0.6% 11%

Rochester

NY B 75.00 -10% -11%

6.1% 0.3% -8%

Syracuse

NY C 65.63 -10% -11%

6.4% -0.3% -1%

Dayton

OH C 68.75 -4% -16%

5.8%

0.3% -22%

Ventura County

CA

7.0%

2.0%

Westchester

NY B 75.00 -10% -11%

4.6% -0.3% -17%

Norfolk/Hampton Roads

VA

5.5%

B B

78.13 75.00

-27% -8%

4% -11%

-0.3%

8% 2%

Tacoma

WA C 71.88 -12% -7%

6.9% 0.3% 10%

Orange County

CA

5.0%

C

65.63

-27%

4%

-0.3%

67%

Palm Beach

FL

C

71.88

-6%

-6%

6.4%

2.8%

5%

Fairfield County

CT

B

78.13

-8%

-8%

6.0%

0.7%

17%

Fort Lauderdale

FL

B

78.13

-6%

-6%

5.5%

3.3%

29%

Fort Worth

TX

A

87.50

-13%

-4%

5.2%

2.9%

20%

Long Island

NY

B

78.13

-10%

-11%

5.2%

0.8%

53%

Northern New Jersey

NJ

C

71.88

-4%

-18%

6.9%

0.5%

37%

Oakland-East Bay

CA

C

71.88

-27%

4%

6.5%

1.6%

-3%

Suburban Maryland

MD

B

78.13

-3%

-10%

4.4%

0.3%

7%

Suburban Virginia

VA

B

84.38

-8%

-11%

3.6%

0.1%

7%

Durham

NC A 93.75 -13% -45%

5.0% 1.5% 23%

Raleigh-Cary

NC B 84.38 -13% -45%

5.1%

4.1% -12%

Central New Jersey

NJ

5.8%

0.5%

B

78.13

-4%

-18%

33%

*April 2013 through March 2014 vs. April 2012 through March 2013 **May 2013 through April 2014 vs May 2012 through April 2013

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SPONSORS CCIM INSTITUTE Since 1969, the Chicago-based CCIM Institute has conferred the Certified Commercial Investment Member (CCIM) designation to commercial real estate and allied professionals through an extensive curriculum of 160 classroom hours and professional experiential requirements. Currently, there are 9,000 CCIMs in 1,000 markets in the U.S. and 31 countries worldwide. Another 3,000 practitioners are pursuing the designation, making the Institute one of the largest commercial real estate networks in the world. An affiliate of the National Association of REALTORS®, the CCIM Institute’s recognized curriculum, networking programs, and the powerful technology tool, Site To Do Business (site analysis and demographics resource), positively impact and influence the commercial real estate industry. Visit www.ccim.com for more information.

CCIM INSTITUTE 2014 EXECUTIVE LEADERSHIP B.K. Allen, CCIM Interim Executive Vice President/CEO [email protected]

Karl Landreneau, CCIM President

Steven W. Moreira, CCIM First Vice President

Mark Macek, CCIM President-Elect

Craig Blorstad, CCIM Treasurer

CCIM Institute 430 North Michigan Ave., Suite 800 Chicago, IL 60611 312-321-4460 www.ccim.com

NATIONAL ASSOCIATION OF REALTORS® The Mission of the National Association of REALTORS® Research Division is to collect and disseminate timely, accurate and comprehensive real estate data and to conduct economic analysis in order to inform and engage members, consumers, and policy makers and the media in a professional and accessible manner. The Research Division monitors and analyzes economic indicators, including gross domestic product, retail sales, industrial production, producer price index, and employment data that impact commercial markets over time. Additionally, NAR Research examines how changes in the economy affect the commercial real estate business, and evaluates regulatory and legislative policy proposals for their impact on REALTORS,® their clients and America’s property owners. The Research Division provides several products covering commercial real estate including: l l

Commercial Real Estate Outlook Commercial Real Estate Lending Survey

l l

Commercial Real Estate Quarterly Market Survey Commercial Member Profile

To find out about other products from NAR’s Research Division, visit www.realtor.org/research-and-statistics.

NATIONAL ASSOCIATION OF REALTORS® RESEARCH DIVISION Lawrence Yun, PhD Sr. Vice President, Chief Economist [email protected]

George Ratiu Director, Quantitative & Commercial Research [email protected]

Ken Fears Director, Regional Economics & Housing Finance Policy [email protected]

National Association of REALTORS® 500 New Jersey Ave. N.W. Washington, D.C. 20001 800-874-6500 www.realtors.org

©2014 The CCIM Institute and National Association of REALTORS.® All rights reserved.

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CONTRIBUTORS David Ellermann Ellermann Brokerage Chicago IL

John McLaughlin McLaughlin Investments, Inc. Boston MA

Michel Hibbert Charles Dunn Company Los Angeles CA

David Aikens KW Commercial Louisville KY

Grant Ackerly R.P. Hubbell and Company, Inc. Poughkeepsie NY

Jason Bantel Lee & Associates Central Florida, LLC Orlando FL

Mike Stuhlmiller Stuhlmiller Realty Hayden ID

Tyler Smith PRG Investments Louisville KY

Jennifer Gray Jennifer Gray Commercial Realty Southlake TX

Lucio Cantu RE/MAX Commercial San Antonio TX

Gary Tang Hannah Investment, Inc. Albany CA

David Luebke Hendricks Commercial Properties Beloit WI

Mike Carroll Sealy Realty Co., Inc. Tuscaloosa AL

Jim Purgerson Citizens Bank & Trust Baton Rouge LA

Sheng-Hong Eric Wang Yuanta Asset Mgt. Taipei

Shannon Mar Guarantee Real Estate Fresno CA

Frank Leatherman, MAI Leatherman Real Estate Services Raleigh NC

John Lutz Lutz Commercial Realty Union NJ

Linda Sorkin Aukamp Brokerage & Consulting Matthews NC

Steven Caravelli Coldwell Banker Commercial San Francisco CA

Cyril Crocker Keller Williams Washington DC

Brian Sorrentino ROI Commercial Real Estate, Inc Las Vegas NV

Steve Johnson Red Sky Partners LLC Brookfield WI

Anthony Strauss Colliers Minneapolis MN

Joe Milkes Milkes Realty Valuation Plano TX

Ian Levin Nathan Levin Co. Salem OR

Jeff Sage Realty Development Aspen CO

Sammie Kessner US National Commercial Real Esate Services Las Vegas NV

Tom Davies Norris & Stevens Portland OR

J.R. Fulton J.R. Fulton & Associates Oklahoma City OK

James Gerdts SquareHat Real Estate Raleigh NC

Brian Resendez Sperry Van Ness Portland OR

Ryan Haedrich Haedrich & Co., Inc. Redding CA

Steve Caton Caton Commercial Real Estate Group Plainfield IL

Simeon Spirrison Adelphia Properties Oak Brook IL

Dolf deVos IPMG, Inc. Corvallis OR

William Shopoff The Shopoff Group Irvine CA

Dan Naylor Mericle Commercial Real Estate Wilkes-Barre PA

John Schutzius Industrial Commercial Realty and Investment Corp Aurora IL

Diane Baer Yecko Capital Realty Group Pittsburgh PA Gary Hunter Westlake Associates, Inc. Seattle WA Maire Herron CIC Jackson WY Lydia Bennett CRE West Coast LLC Bellingham WA Nancy Fish Park Place Real Estate Kalamazoo MI Stephen Jacquemin S.J. Financial Group St Louis MO Terry Phillips The Phillips Group, Inc. Vancouver WA

Lloyd Miller Morris Realty Group Memphis TN Robert Resneder US Trust Dallas TX Lee Ehlers Investors Realty, Inc. Omaha NE Jody Elder Cushman & Wakefield Cornerstone Nashville TN Gary Best KW Commercial Division Tucson AZ Lauren Nasser Arthur Kowitz Realty Daytona Beach FL James J. Katon Integra Realty Resources Charlotte NC

Gina Dingman Annette Xollier Able Real Estate Philadelphia PA Alan Doak Colliers International Ottawa OH Jim Kasten Kasten Long Commercial Group Phoenix AZ Garry Adams Capital Realty, Inc. Sherman Oaks CA Reuben Trinidad Hoff & Leigh - Colorado Springs Colorado Springs CO Rob Burlingame CBRE San Antonio TX

Peter A. Frandano Southport Realty Southport NC Trent Grothues Pollan Hausman Real Estate Services, LLC Houston TX

Trent Frankum Tan, Frankum & Associates Manila

Todd Balsiger JLL Minneapolis MN

James Milner James R. Milner III Boone NC

Anthony Ricco Sperry Van Ness/ Bluestone & Hockley Portland OR

Dan Mincher The Vollman Company, Inc. Sacramento CA

John Levinsohn Levi Investment Realty, inc. Indianapolis IN

Rick Padelford Realty Executives Commercial Tempe AZ

Ira Korn Coldwell Banker Commercial Meridian Rochester NY

Jeff Eales Birtcher Anderson Realty San Juan Capistrano CA Eugene Heathman Garland Realty R , LLC Ruidoso NM

Edward T. Herbert HCR Associates Realtors Nashville TN

Brad Welborn Colonial Square Realty, Inc. Fort Myers FL

Eric Duxstad Frost Bank San Antonio TX

Bruce Johnson Block Real Estate Services, LLC Kansas City MO

Rick Colon Cassidy Turley Tampa FL

Cal Northam Prudential Floberg Realtors Billings MT

Gary Lee Jones Lang LaSalle Atlanta GA

Nicole Willoughby Associated Bank Milwaukee WI

Alan Stamm century 21 consolidated Las Vegas NV

Paul Mader MTC Commercial RE Castro Valley CA

Marguerite Haverly CBRE Albuquerque NM

David Staruch CCIM GRI Century 21 Jim White & Associates Treasure Island FL

Arch Jeffery De Rito Partners, Inc. Phoenix AZ

Shahid K. Abdulla PlainsCapital Bank San Antonio TX

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Laurens Nicholson Lee & Associates Greenville SC John Capes KW Commercial Realty Augusta GA Mike Milovick Royal LePage Grand Valley Realty Kitchener Robert Powell Powell Realty Advisors, LLC Dallas TX David Schnitzer Venture Commercial Dallas TX Karen Johnson NAI MLG Commercial Milwaukee WI Kenneth Kujawa Century 21 Signature Realty Saginaw MI Beverly Keith Trinity Partners Raleigh NC Rocket Glass Inland Pacific Commercial Properties San Diego CA

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Quarterly Market Trends

CONTRIBUTORS Tom Baker KW Commercial Eagan MN

Brad Alton NAI Commercial Edmonton

Mike Eurchuk Realty Executives Meridian Edmonton

Chad Heer RE/MAX Results Commercial Saint Paul MN

Jeffrey Stanton MC Management Bellaire TX

Joe R. Romero Cauwels & Stuve Realty and Development Advisors LLC Albuquerque NM

Peter Kravaritis IHDA Chicago IL

Thomas Knaub Colliers International Phoenix AZ

Reagan Schwarzlose JP Morgan Chase Dallas TX

Arielle Dorman Kidder Mathews Bellevue WA

John Cohoat Browning Investments Indianapolis IN

Jeff Wilke Graham & Company Huntsville AL

Brian Spring NAI Spring Canton OH

Todd Gannet Equitable Metropolitan West Orange NJ

Edward Miller Colliers International Tampa FL

Todd Mitchell Columbia Property Trust Atlanta GA

Rick Ikeler SRS Real Estate Partners Dallas TX

Rick Gonzalez Crosby + Associates, Inc. Tavares FL

Roger Cobb Selwyn Property Group Charlotte NC

Andrew Joyner The Simpson Company Gainesville GA

John John REMAX Boone Realty Columbia MO

Jerry Fiume NAI Cummins Real Estate Akron OH

David Auel Avison Young Pittsburgh PA

Michael Merker NAI Park Capital Guelph

D. Robb Encon Commercial Santa Fe Springs CA

Don Sebastian Coldwell Banker Commercial McMahan Co. Lexington KY

Asok Agarwal Re/Max Commercial Glendale CA

Katy Welsh Hunter Real Estate West Palm Beach FL

Matt Boehlke Regus Maple Grove MN

John Floyd Crye-Leike Commercial Property Management Brentwood TN

Bruce Bauer Bauer Appraisal Group, Inc. Albany NY

Michael McNally Pacific Commercial Management San Diego CA

Bill Crawford Crawford Associates Greenville SC

Lyman Whitlatch The Whitlatch Group Visalia CA

Matt Carter Joyner Commercial, The Commercial Division of Berkshire Hathaway C

Nick Miner ORION Investment Real Estate Scottsdale AZ

Peter Aburrow Encore Real Estate Dallas TX Rhonda Reap-Curiel Coldwell Banker Reap Realty Alexandria LA Lizby Eustis Keller Williams Realty Mandeville LA Patrick Bell Dunes Properties Charleston SC Vikki Keyser Keller Williams Commercial Sarasota FL Gary Maitha Upland Group, Inc. Tempe AZ James Kaiser Heartland Properties, Inc Council Bluffs IA

Dan Joyner REALTORS Greenville SC

Eric Higgins Colliers International Birmingham AL

Michael Shaffer Skogman Commercial Cedar Rapids IA

Todd Hamilton Cutler Commercial Scottsdale AZ

Marc Veras RE Commercial LLC Appleton WI

Lisa Campbell Coldwell Banker Morris Bend OR

Scot E Hall Wolf Realty Inc. Glendale AZ

Helen Jobes Kennedy Wilson Austin TX

David Kearney Remax Sabre Realy Port Coquitlam

Lyle Gilbertson Cassidy Turley St. Louis MO

George Spirrison Adelphia Properties Oak Brook IL

April Thompson Healthcare REIT Jupiter FL

Dave Winder Cushman & Wakefield Commerce Boise ID

Julie Teague Hull Storey Gibson Augusta GA

Jay Verro NAI Platform Albany NY

Eric Rehn Kennedy Wilson Brokerage Group Walnut Creek CA

Kenneth Crimmins Blau and Berg Short Hills NJ

David R Dunn Sperry Van Ness/ Dunn Commercial Arlington TX

Todd Clarke NM Apartment Advisors Albuquerque NM Allen Gump Colliers International Dallas TX Paul Lynn Paul A. Lynn & Associates, LLC Houston TX Shannon Mar Guarantee Real Estate Fresno CA Hal Alpert Alpert Commercial Real Estate Vacaville CA Timothy L Skinner Keaty Real Estate Lafayette LA John Orr Colliers International Charleston SC

Michael Armanious KW Commercial Tacoma WA Samuel Ivey GHI Ventures, LLC Marietta GA Brian Wolford Paradigm Tax Group Houston TX Baltazar Cantu Colliers International Monterrey TX Olga Hallstedt Results! Commercial Real Estate Grand Rapids MI Wayne Shulman Newmark Grubb Knight Frank Chicago IL Corey Schneider Passaic NJ

George Barnett Century 21 Foote-Ryan Plattsburgh NY

David Wieder CPI San Antonio TX

Tom Corbett First Venture Properties, LLC Wilson NC

James Mangas Best Corpoarate Real Estate Upper Arlngton OH

Soozi Jones Walker Commercial Executives Las Vegas NV

Craig Evans Cassidy Turley New York NY

John Capes KW Commercial VIP Group, LLC Augusta GA

David Victorio Coldwell Banker Commercial NRT Manfield TX

T.J. Woosley Hal Woosley Properties, Inc. Bellevue WA

Ted Taylor Grandbridge Real Estate Capita Miami FL

Tim Mills CBRE San Diego CA

Chris Jacobson CBRE Minneapolis MN

Lily Seymour Gershman Commercial Real Estate St. Louis MO

Mike Wells Wells Asset Management Inc Dallas TX

Joanne Birtz Lifro Ltd Medicine Hat

Travis Newton Florida Blue (BCBS) Jacksonville FL

Paul Kenny Paul Kenny & Matt Bogue Commercial Real Estate Sun Valley ID

Todd Hamilton Cutler Commercial Scottsdale AZ

Dalerie Wu STC Management Whittier CA Lee Farris Farrmont Realty Group, Inc. Phoenix AZ

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Rick Egitto Inverness Properties Englewood CO Nancy Fish Park Place Real Estate Kalamazoo MI

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2Q • 14

Quarterly Market Trends

CONTRIBUTORS Mark Thiessen RE/MAX Professionals Winnipeg ND

Thomas Pollom Cassidy Turley Indianapolis IN

Bruce Johnson Block Real Estate Services Kansas City MO

Dewey Struble Dewey Struble CCIM Reno NV

Brent McLean Eugene Industrial Real Estate, LLC Eugene OR

Eric Rehn Kennedy Wilson Brokerage Group Walnut Creek CA

Rich Musgrove Hotel Asset Value Enhancement Walnut Creek CA Giancarlo Da Prato IDI- Industrial Developments International El Paso TX Todd Younghans Coldwell Banker Commercial Georgetown Ken Krawczyk K.S.K. Services Inc Pewaukee WI

Erik Schwetje EWS Advisors Winter Park FL Doug Prickett Lionstone Investments Houston TX C.J.Webb Grandbridge Real Estate Capital Charlotte NC Sean KL Jackson Keller Williams Tri-Valley Realty Livermore CA

Scot E Hall Wolf Realty Inc. Glendale AZ

Benjamin Bach Cushman & Wakefield Waterloo Region Kitchener-Waterloo, Ontario, Canada

Linda Larabee TriStone Realty Management, LLC Houston TX

H. Winston Hines HWH Properties Chesnee SC

Douglas Page SVN high Desert Commercial Idaho Falls ID

Forrest Gibson PRG Developments Inc Jacksonville FL

Lon Lundberg Mark Bottles Real Estate Services Eagle ID

Max Finkle ReMax Renaissance Realtors Chattanooga TN

Gregg Waller Long and Foster Vienna VA

Salvatore Vitale RE Commercial Appleton WI

Peter Rasmusson Lee & Associates Elmwood Park NJ

Keith Thomas RE/MAX Parkside Olympia WA

Brandon Saylor Colliers International Albuquerque NM

Karen Higgins WestMark Realtors Lubbock TX

Bill Whitlatch The Whitlatch Group Visalia CA

Patty Burns Fickling & Company Macon GA

Kelly Keesee RE/MAX Lubbock Lubbock TX

Steve Massell Lee and Associates Atlanta GA

Todd LaPlante Five Points Commercial Real Estate, Inc. Huntington Beach CA

Scott Babcock CBSHOME Commercial Omaha NE

Dale DeBoer DeBoer Commercial Real Estate Modesto CA

Tim Miller Close~Converse Inc. Baxter MN

Gerard R.C. Pastrano Sperry Van Ness/ The Pastrano Grp San Antonio TX Michael Johsz AT&T Tustin CA Bill Ginder Caldwell Companies Houston TX Kane Morris-Webster Colliers International Orlando FL Bob White Adams Commercial Real Estate Decatur GA Colin Khan Commercial Property Realty Ann Arbor MI Simon Asef DMC Real Estate North Hollywood CA Dan Dowd Cole Taylor Bank Chicago IL Daphne Zollinger Daphne Real Estate Denton TX

Hunter Swearingen Ciminelli Real Estate Services Tampa FL Michael Manning Main Place Liberty Group Buffalo NY Russell Hur BBG Austin TX Stephanie Chang NAI Maestas & Ward Albuqeurque NM Greg J. Hrabcak HER Commercial Columbus OH Philip Corriher The Chambers Group Charlotte NC Wes Schollenberg Avison Young Winnipeg Ethan Horn Ryan, LLC Denver CO Bill Puddephatt First Service Bank Little Rock AR

Peter Kordonowy Summerhill Commercial Real Estate, LLC Chanhassen MN Mike Mausteller Harvey Lindssay Commercial Real Estate Newport News VA Joel Miller Sperry Van Ness Geneva IL Jack Williams Colliers International Southfield MI Palmer Bayless Emerge Real Estate Services Roswell GA Jack Strollo Broadway Brokerage, LLC Lakeland FL Kara Rafferty Jones Lang LaSalle Dallas TX Danny Morales Hartman Income REIT Houston TX Brian D. Harris REOC San Antonio San Antonio TX

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2Q • 14

QuarterlyMarketTRENDS

Headline Line HEADLINE

34%

ancy Rate

Help the CCIM Institute make its QuarterlyMarketTRENDS data more valuable: Provide your market and transaction information by responding to future quarterly CCIM Market Intelligence Surveys. Visit www.ccim.com/resources to learn more about CCIM’s Quarterly Market Trends report.

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