Commercial Real Estate Outlook
IRR-Viewpoint 2010
Industrial
The Best, The Worst and The Local Market
Top Three Markets By Vacancy…
1. Los Angeles, CA – 4.92%
2. Orange County, CA – 6.58%
3. Seattle, WA – 6.70%
Local Market…
50. Charlotte, NC – 14.26% (3Q 2009);14.70% (1Q 2010-NA)
…and the Bottom Three Markets
54. Austin, TX – 18.40%
55. Boston, MA – 24.76%
56. Louisville, KY – 26.01%
Q2 '09
Q4 '08
Q2 '08
Q4 '07
Q2 '07
Q4 '06
Q2 '06
Q4 '05
Q2 '05
Q4 '04
Q2 '04
Q4 '03
Q2 '03
Q4 '02
Q2 '02
Q4 '01
Q2 '01
Q4 '00
Index
Industrial Market Pricing
Moodys/REAL Commercial Property Price Index - Industrial
2.0
1.8
1.5
1.3
1.0
Industrial – Overall Capitalization Rates
Korpacz – Second Quarter 2010 –Investor Survey
Institutional
Noninstitutional
National Flex
7.50 %-12.0%
9.38% - Average
100-400 basis points
250 or 11.88% - Average
National Warehouse
7.00%-12.0%
8.60% - Average
100-300 basis points
225 or 10.85 % -Average
• Realty Rates.com – Second Quarter 2010- Investor Survey
Industrial - 9.59%
Apartment
The Best, The Worst and The Local Market
Top Three Markets By Vacancy…
1. San Francisco, CA – 3.59%
2. Syracuse – 3.94%
3. New York City – 4.80%
Local Market…
49. Charlotte – 11.64% (3Q–2009);13.6% (1Q 2010)
…and the Bottom Three Markets
54. Phoenix – 12.97%
55. Naples/Ft. Myers – 13.37%
56. Providence – 14.11%
Q2 '09
Q4 '08
Q2 '08
Q4 '07
Q2 '07
Q4 '06
Q2 '06
Q4 '05
Q2 '05
Q4 '04
Q2 '04
Q4 '03
Q2 '03
Q4 '02
Q2 '02
Q4 '01
Q2 '01
Q4 '00
Index
Apartment Market Pricing
2.0
Moodys/REAL Commercial Property Price Index - Apartments
1.8
1.5
1.3
1.0
Apartment – Overall Capitalization Rates
Korpacz – Second Quarter 2010 –Investor Survey
Institutional
Noninstitutional
National Apartment
5.00 %-11.00%
7.68% - Average
0-400 basis points
161 or 9.29% - Average
• Realty Rates.com – Second Quarter 2010- Investor Survey
Retail – 9.50% Average
Office Market Cycle
Office – CBD
The Best, The Worst and The Local Market
Top Three Markets By Vacancy…
1. Charlotte, NC – 6.43%
2. Boise, ID – 8.10%
3. Memphis, TN – 8.70%
Local Market…
1. Charlotte, NC – 6.43% (3Q–2009); 12.0% (1Q-2010)
…and the Bottom Three Markets
54. San Jose, CA – 23.90%
55. Detroit, MI – 25.00%
56. Dayton, OH – 26.00%
Office – Suburban
The Best, The Worst and The Local Market
Top Three Markets By Vacancy…
1. Dayton, OH – 10.88%
2. Pittsburgh, PA – 11.09%
3. Los Angeles, CA – 11.30%
Local Market…
41. Charlotte, NC – 19.07% (3Q–2009);19.77% (1Q–2010)
…and the Bottom Three Markets
54. Detroit, MI – 23.89%
55. Phoenix, AZ – 27.41%
56. Hartford, CT – 29.45%
Q2 '09
Q4 '08
Q2 '08
Q4 '07
Q2 '07
Q4 '06
Q2 '06
Q4 '05
Q2 '05
Q4 '04
Q2 '04
Q4 '03
Q2 '03
Q4 '02
Q2 '02
Q4 '01
Q2 '01
Q4 '00
Index
Office Market Pricing
Moodys/REAL Commercial Property Price Index - Office
2.0
1.8
1.5
1.3
1.0
Office – Overall Capitalization Rates
Korpacz – Second Quarter 2010 –Investor Survey
Institutional
Noninstitutional
National CBD
6.00 %-10.50%
8.15% - Average
N/A
Suburban
6.00%-12.00%
8.60% - Average
25-300 basis points
141 or 10.01 % -Average
• Realty Rates.com – Second Quarter 2010- Investor Survey
Office – 9.48% Average
Retail Market Cycle
Retail
The Best, The Worst and The Local Market
Top Three Markets By Vacancy…
1. San Francisco, CA – 3.08%
2. Los Angeles, CA – 4.87%
3. San Jose, CA – 5.03%
Local Market…
12. Charlotte, NC – 6.77% (3Q–2009); 8.0% (4Q–2009)
…and the Bottom Three Markets
54. Providence, RI – 17.00%
55. Dayton, OH – 17.30%
56. Detroit, MI – 17.35%
Q2 '09
Q4 '08
Q2 '08
Q4 '07
Q2 '07
Q4 '06
Q2 '06
Q4 '05
Q2 '05
Q4 '04
Q2 '04
Q4 '03
Q2 '03
Q4 '02
Q2 '02
Q4 '01
Q2 '01
Q4 '00
Index
Retail Market Pricing
Moodys/REAL Commercial Property Price Index - Retail
2.0
1.8
1.5
1.3
1.0
Retail – Overall Capitalization Rates
Korpacz – Second Quarter 2010 –Investor Survey
Institutional
Noninstitutional
Regional Malls
5.00 %-10.50%
7.93% - Average
25-500 basis points
279 or 10.72% - Average
Power Center
7.50%-10.00%
8.70% - Average
N/A
Strip Center
7.00%-11.40%
8.38% - Average
50-1000 basis points
303 or 11.41%- Average
• Realty Rates.com – Second Quarter 2010- Investor Survey
Retail – 9.50% Average
Recent Development in Capitalization Rates
Korpacz Survey data for investment grade property and our analysis are presented in the following table:
Recent Development in Capitalization Rates
Korpacz Survey data for non-investment grade property and our analysis are presented in the following table:
Real Estate Listing Sources – For Sale & For Lease
• Loopnet
http://www.loopnet.com/
• Edis
http://www.nccommerce.com/en/BusinessServices/LocateYourBusiness/BuildingsAndSites /
(N.C. Department of Commerce Buildings & Sites EDIS)
• Mecklenburg County Real Estate Lookup
http://meckcama.co.mecklenburg.nc.us/relookup/
(Market Analysis Link)
• National & Local Brokerage Firms
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Apartment Realty Advisors http://www.arausa.com/Index.cfm
CB Richard Ellis (CBRE) http://www.cbre.com/EN/Pages/default.aspx
Sperry Van Ness http://www.svn.com/
Lincoln Harris CSG http://www.lincolnharris.com/Home/
The Stump Corporation http://www.stumpnet.com/
Marcus & Millichamp http://www.marcusmillichap.com/
NAIGLOBAL http://www.naiglobal.com/
National Real Estate Surveys
• IRR.com (Viewpoint – Real Estate Value Trends)
• Marcus & Millchap.com
• NAIGLOBAL
• www.pwc.com (Korpacz Real Estate Investor Survey)
• ACLI (American Council of Life Insurers)
• Realty Rates.com (Developer Surveys, Financial Indicators,
Market Surveys, Investor Surveys)
Vacancy and Rental Rate Surveys - SUBSCRIPTION
• Karnes (Office, Retail and Industrial)
• Real Data (Apartments)
• REIS
Real Estate Sales - SUBSCRIPTION
• Costar
• REIS
• Real Capital Analytics
http://www.rcanalytics.com/
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