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CAR Commercial Forum Meeting – September 2013 (Chicago Metro) Robert Carrillo September2013.

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Presentation on theme: "CAR Commercial Forum Meeting – September 2013 (Chicago Metro) Robert Carrillo September2013."— Presentation transcript:

1 CAR Commercial Forum Meeting – September 2013 (Chicago Metro) Robert Carrillo September2013

2 Macro Economic Trends and Forecast  Estimate for 2013.Q2 GDP is 1.7 indicating modest but sustained growth QOQ  Quantitative Easing and Tapering is coming  QE4? Fed likely to taper back on asset purchases  Key interest rates expected to leave rates near 0 (until unempl. rate nears 6.5%). Economists split on when Fed will raise but most say 2015. *Reporting and polling by Deepti Govind 1

3 Jobs  Unemployment dropped to 7.3% Nationally  63.2% Participation Rate (lowest since 1978)  Economists Mixed (sustained growth at subpar pace 2

4 Business Sentiment  Business spending shows growing confidence in the first half of the year  The first quarter spending was down 4.6 percent, with a decline driven by a 25.7 percent drop in spending on commercial structures  However, the second quarter posted a much better performance, with an annual growth rate of 4.6 percent  Spending on commercial buildings rose 6.8 percent  In line with growing demand for properties, prices rose 8 percent on a yearly basis, according to RCA’s Commercial Property Price Index. Prices rose the most for apartments (15%) and retail buildings (13%). 3

5 Business Sentiment (cont’d) 4

6 General Market Info 5 Chicago is the 3 rd largest US city by population Employment lagging US and unemployment still high, 10.3 (Chicago) and 9.1 (Illinois), but positive movement being made Multi-family projected increase of over 225%

7 Risks and Opportunities 6 Foreclosure in SFR sector is still a little high Unemployment slow to recover Apartments greatest improvement, due to increased household formations and tight mortgage underwriting Multi-family permits forecasted to increase exponentially, vacancy rates declined sharply and now stabilizing, inventory dropping and rent forecasted to increase. Supply and Demand coming in line.

8 Overall Snapshot Los Angeles = Los Angeles County New York = Manhattan, Brooklyn, Queens and The Bronx Miami = Miami-Dade County Chicago = Illinois component of Chicago MSA Philadelphia = Philadelphia County San Francisco = San Francisco County Population data from US Census Bureau, July 2011 *estimate # Sales Transactions <1mil Total $ Sales Transactions <1mil Average Sales Transactions <1mil Largest Segment by $Population Los Angeles1945$1,054,671,274$541,167Multifamily9,889,056 New York1689$910,934,578$539,334Retail7,774,443 Miami1056$365,182,786$345,817Retail424,662 Chicago1020$376,495,828$368,899Retail9,650,000* Philadelphia609$161,003,457$264,374Retail1,536,471 San Francisco185$112,161,450$606,278Multifamily812,826 7

9 BREF Partner Value  Underserviced Market  Our customer is your customer There are over 27 million small business owners* in the U.S. and they are heavily invested in real estate Ninety-five (95) percent of small business owners own their personal residence per the National Federation of Independent Business, Access to Credit Study in 2008 Twenty-two (22) percent have taken out at least one mortgage on their personal residence to finance business activities Thirty-four (34) percent own the commercial property that houses their small business Forty-one (41) percent own investment real estate, excluding their residence and business The majority, fifty-eight (58) percent of those owning investment property, own more than one such property 8 “In Chicago over the past 12 months 82% of CRE sales transactions were <$1million compared to 53% in LA, 62% in New York and 77% in Miami.”

10 Sources  NAR 2013 CRE Outlook  REIS   Wells Fargo Securities, LLC 9

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