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Real Estate Industry Practice Group Joe Fobert, Real Estate Practice Leader 2013 Economic Outlook for the Real Estate Industry Keynote Speaker: Ken McCarthy.

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Presentation on theme: "Real Estate Industry Practice Group Joe Fobert, Real Estate Practice Leader 2013 Economic Outlook for the Real Estate Industry Keynote Speaker: Ken McCarthy."— Presentation transcript:

1 Real Estate Industry Practice Group Joe Fobert, Real Estate Practice Leader 2013 Economic Outlook for the Real Estate Industry Keynote Speaker: Ken McCarthy Chief Economist Research

2 Real Estate Industry Practice Group - REAL Industry Expertise You Can Trust

3 Real Estate Industry Practice Group Highlights Write all lines of business: Property, Casualty, Environmental, Excess, D&O and E&O Over 11,000 clients and 13,000 policies Largest writer of real estate business by GWP in the U.S paid approx. $266 million in real estate claims

4 Real Estate Industry Practice Group An integrated service platform that provides seamless access to the industrys foremost real estate insurance products and services. AIG has written insurance for the real estate industry for over 40 years, with substantial market penetration and long-term dedication to many classes. Multi-line, high-limit product offerings Industry-focused claims expertise, loss control capabilities & risk management services Transactional insurance products & expertise Synergies with the Construction Solutions industry practice - for the needs of large construction and development projects REITs, Asset, Investment and Fund Managers Residential & Non-Residential Property Owners, Operators & Managers Land Developers & Sub-dividers Office Buildings, Apartments, Retail Centers and Industrial Parks Multinational Coverage – operations in over 90 countries – CMP, Passport, Local policies & services

5 Real Estate Industry Practice Group Industry Expertise! 2012 Conducted 3 CE Seminars, 3 Webinars, over 300 client meetings CE Seminars, 4 Industry White Papers Partnership with GlobeSt.com as Industry Thought Leader 2013 Economic Outlook for the Real Estate Industry

6 JANUARY 17, 2013 US AND MANHATTAN OFFICE MARKET Economic & Market Overview

7 CUSHMAN & WAKEFIELD 7 Cushman & Wakefield Research Global Slowdown Growth in 2013 will be slower in most countries as Europe, US weigh on Asia. Uncertainty Reigns in US Healthy Fundamentals Technology, Energy, Profits, Pent-Up Demand Issues to resolve US Fiscal Challenges European Challenges Real Estate Impact Most markets flat-near term Exceptions depend on industrial structure Fundamentals still positive Long Term Forecasts-lower vacancy higher rent OVERVIEW

8 CUSHMAN & WAKEFIELD 8 Cushman & Wakefield Research US GDP GROWTH IN RECOVERIES AFTER 13 QUARTERS Source: US Bureau of Economic Analysis

9 CUSHMAN & WAKEFIELD 9 Cushman & Wakefield Research US PRIVATE SECTOR EMPLOYMENT GROWTH MONTHLY AVERAGE PER QUARTER

10 CUSHMAN & WAKEFIELD 10 Cushman & Wakefield Research HOUSEHOLD DEBT BURDEN Source: Board of Governors Federal Reserve

11 CUSHMAN & WAKEFIELD 11 Cushman & Wakefield Research US MOTOR VEHICLE SALES Source: US Bureau of Economic Analysis

12 CUSHMAN & WAKEFIELD 12 Cushman & Wakefield Research US CORPORATE PROFITS Source: US Bureau of Economic Analysis

13 CUSHMAN & WAKEFIELD 13 Cushman & Wakefield Research US WEEKLY UNEMPLOYMENT CLAIMS

14 CUSHMAN & WAKEFIELD 14 Cushman & Wakefield Research EMPLOYMENT CHANGE SINCE FEBRUARY 2010 BY INDUSTRY SECTOR Total Increase: +4.8 mil. Private Sector: +5.3 mil. December 2012

15 CUSHMAN & WAKEFIELD 15 Cushman & Wakefield Research JOBS RECOVERED SINCE TROUGH AS A PERCENT OF JOBS LOST

16 CUSHMAN & WAKEFIELD 16 Cushman & Wakefield Research OFFICE-USING JOBS RECOVERED SINCE TROUGH AS A PERCENT OF JOBS LOST

17 CUSHMAN & WAKEFIELD 17 Cushman & Wakefield Research VACANCY RATE BY MAJOR METRO

18 CUSHMAN & WAKEFIELD 18 Cushman & Wakefield Research VACANCY RATE BY MAJOR METRO Change From a Year Ago

19 CUSHMAN & WAKEFIELD 19 Cushman & Wakefield Research PAYROLL EMPLOYMENT US COMPARED WITH NYC Source: US Bureau of Labor Statistics NYC Job Change 4/08-11/ ,800 11/09-11/ ,100

20 CUSHMAN & WAKEFIELD 20 Cushman & Wakefield Research NYC EMPLOYMENT: BUSINESS SERVICES AND FINANCIAL SERVICES Source: US Bureau of Labor Statistics

21 CUSHMAN & WAKEFIELD 21 Cushman & Wakefield Research HIGH TECH EMPLOYMENT: NEW YORK METRO AREA Source: Moodys Analytics

22 CUSHMAN & WAKEFIELD 22 Cushman & Wakefield Research VENTURE CAPITAL FUNDING CHANGE: Source: PricewaterhouseCoopers Money Tree Report

23 CUSHMAN & WAKEFIELD 23 Cushman & Wakefield Research MANHATTAN OFFICE USING EMPLOYMENT VS. VACANCY Source: US Bureau of Labor Statistics

24 CUSHMAN & WAKEFIELD 24 Cushman & Wakefield Research MANHATTAN NEW LEASING

25 CUSHMAN & WAKEFIELD 25 Cushman & Wakefield Research MANHATTAN QUARTERLY NEW LEASING

26 CUSHMAN & WAKEFIELD 26 Cushman & Wakefield Research MANHATTAN OFFICE MARKET: VACANCY RATE All Classes

27 CUSHMAN & WAKEFIELD 27 Cushman & Wakefield Research MANHATTAN OFFICE MARKET: VACANCY RATE Class A

28 CUSHMAN & WAKEFIELD 28 Cushman & Wakefield Research Overall Rental Rates MANHATTAN OFFICE MARKET $/sf

29 CUSHMAN & WAKEFIELD 29 Cushman & Wakefield Research Class A Rental Rates MANHATTAN OFFICE MARKET $/sf

30 CUSHMAN & WAKEFIELD 30 Cushman & Wakefield Research Midtown Class A Rents Net Effective Change 1Q08 - 1Q % 1Q10 - 3Q % RENTAL RATES: Asking versus Net Effectives

31 CUSHMAN & WAKEFIELD 31 Cushman & Wakefield Research MIDTOWN CLASS A RENTS $/sf % % %

32 CUSHMAN & WAKEFIELD 32 Cushman & Wakefield Research NYC MONTHLY EMPLOYMENT Thousands

33 CUSHMAN & WAKEFIELD 33 Cushman & Wakefield Research NYC OFFICE-USING EMPLOYMENT FORECAST Source: US Bureau of Labor Statistics, Moodys Analytics Projected NYC Job Growth

34 CUSHMAN & WAKEFIELD 34 Cushman & Wakefield Research MANHATTAN INVENTORY OVER TIME Expected Additions: 2013: 55 West 46 th (292,500 sf) 330 Hudson Street (395,000 sf) 51 Astor Place (307,839 sf) One World Trade Center (3.0 msf) Four World Trade Center (2.0msf) 2014: 250 West 55 th (1.0 msf) 7 Bryant Park (434,000 sf) 2015: Hudson Yards (1.7 msf) 2016: Three World Trade Center (2.5 msf) 2018: Manhattan West (2.5 msf)

35 CUSHMAN & WAKEFIELD 35 Cushman & Wakefield Research MIDTOWN CLASS A ASKING RENT AND VACANCY FORECAST

36 CUSHMAN & WAKEFIELD 36 Cushman & Wakefield Research MIDTOWN CLASS A RENTAL RATES: Asking versus Net Effectives Change Vacancy: - 6.5pp Asking Rents +36.5% Net effective Rents +46.5%

37 Avenue of the Americas New York, NY (212)

38 American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange. AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. Products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Not all products and services are available in every jurisdiction, and insurance coverage is governed by actual policy language. Certain products and services may be provided by independent third parties. Insurance products may be distributed through affiliated or unaffiliated entities. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. The data contained in this presentation is for general informational purposes only. The advice of a professional insurance broker and counsel should always be obtained before purchasing any insurance product or service. The information contained herein has been compiled from sources believed to be reliable. No warranty, guarantee, or representation, either expressed or implied, is made as to the correctness or sufficiency of any representation contained herein. © 2012 American International Group, Inc. All rights reserved.


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