CBRE | Page 3 Four Forces Shaping Global Economy Austerity Deleveraging Monetary Reflation US Labor Market Weakness
CBRE | Page 4 (Real GDP, Quarter-on-Quarter % Change, Annual Rate) Global Outlook: Still Growing Despite Europe 4 Source: IHS Global Insight, December 2012.
CBRE | Page 5 2013: Diminished Growth Expectations A synchronized deceleration in growth European debt crisis Slowdown in Emerging Markets, no decoupling Debt-ceiling and spending cliff concerns in the U.S..
CBRE | Page 6 2014: A Multi-Speed Global Recovery Source: IHS Global Insight, December 2012. (Real GDP, Annual % Change)
CBRE | Page 13 Real Estate Comparative Returns (Annualized Returns) (1)NAREIT Equity REIT Index (2)Standard & Poors 500 Index (3)NCREIF Property Index (4)Barclays Capital Govt Bond (5)Consumer Price Index (6)90-day T-Bills Source: NCREIF, Q3 2012. Note: Data through September 30, 2012.
CBRE | Page 14 Global Research and Consulting 1 Year Total Returns by Country Note: Annual results based on local currency composite; selected countries shown where data are available. Frequency of country- level and regional indices differ. Source: IPD, CBRE Research as of Q3 2012.
CBRE | Page 15 National Investment Sales Source: Real Capital Analytics, Q3 2012 (Sales Volume, in Billions)
CBRE | Page 16 Cap Rate Forecast by Property Type Source: Real Capital Analytics, Q3 2012
CBRE | Page 18 Property Sector Trajectory 2011.4 2012Q4 Past Cyclic High Natural Rate Year Back to "Natural Rate" Office Vacancy Rate15.4%16.9 / 2010 13 to 15 2013 Industrial Availability Rate12.8%14.5 / 2010 9 to 10 2015 Retail Availability Rate12.8%13.2 / 2011 9 to 10 2016 Multifamily Vacancy Rate5.0%7.44 / 2009 5 to 6 2010 Full Service Hotels Vacancy Rate33.7%*43 / 2009 34 to 38 2010 *Q3 2012 data. Source: CBRE Econometric Advisors, Q4 2012
CBRE | Page 19 Property Fundamentals: Uneven Recovery Apartment market is back in equilibrium Office, industrial, retail sectors affected by overhang of vacant space Over-building has not been an issue for all property sectors this cycle Some speculative construction is coming back for apartments and industrial Job growth will ultimately determine real estate market performance
CBRE | Page 20 2013 US Office Supply & Demand Outlook Remains Tepid 20 Source: CBRE EA, Q3 2012. (SF x Million)(Vacancy Rate, %)
CBRE | Page 21 US Multifamily Housing Supply & Demand Outlook 21 Source: CBRE EA, Q3 2012. (Units x 1000)(Vacancy Rate, %)
CBRE | Page 22 Global Research and Consulting Rental Decline AcceleratingRental Decline SlowingRental Growth AcceleratingRental Growth Slowing Americas Office Market Rent Cycle, Q3 2012 V Vancouver Philadelphia Seattle Buenos Aires Santiago New York Washington D.C. Dallas San Francisco Houston Calgary Montreal Orange County Chicago Northern New Jersey Los Angeles Miami Panama City Austin Atlanta San Diego Boston Denver Lima Toronto Mexico City Source: CBRE Research, Q3 2012. D O Phoenix Sao Paulo R Rio de Janeiro B S S SS H T M M M W C C L L N N P P P A A D B S
CBRE | Page 23 Implication for Investors and Occupiers Highest probability is for the North American economy to continue modest growth. Debt markets remain open Interest rates remain low for now. Global equity markets remain highly volatile. Demand for core assets is strong. Investors searching for yield are beginning to fan out to secondary markets and non-core assets. Investors have begun to focus on development and build-to-core strategies as well. Occupiers should lock in long-term leases while investors want to shorten duration. Rents have begun to rise across certain markets.