Commercial Real Estate in 2014: What To Expect

COMMERCIAL REAL ESTATE IN 2014: WHAT WE EXPECT The State of CREP by MONETAREX IMPACT FROM RISING RATES THE ECONOMY WILL ACCELERATE AT MODERATE PACE ECONOMY ACCORDING TO DONALD TRUMP 2015 GDP: INFLATION 2.9% 8.2% NOT 2.4% 2.15% 2014 GDP: a real Unemployment number 1.9% 2.6% 2013 2014 2015 Unemployment RATE 2014 10-YEAR TREASURY 6.8% 2015 4.0% it is close to 15-16% 2014 3.4% YEAR 2015 Employment 2013 3.0% 2,600,000 jobs CAP RATES DOWNGRADE AT $21-22 TRILLION DEBT IS Substantial increases are not expected 2014: 6.3% 6.0% 2014: 2.4 million jobs INEVITABLE 2015: 2013: 2.2 million jobs * rate as of 2012 AND SOME OTHER PREDICTIONS... BIG MONEY WILL PRIVATE EQUITY FUNDS GETTING BUSY THE RESHORING TREND IS CONTINUE TO RULE REAL Institutions are significantly Make money through "old school" asset management, One-third of US businesses will under-invested in real estate move goods and services work (Cornell & Hodes Weill) not financial structuring (Ernst & Young) back home in the next 12 mo (Grant Thornton) DEMAND IS YET TO INCREASE SINGLE FAMILY WILL MORE OPPORTUNITIES IN SALE-LEASEBACK & NET LEASE ENOUGH TO DRIVE DEVELOPMENT ACTIVITY TO HIGHEST LEVELS SINCE 2007 Higher costs, lending envi- ronment, increasing interest Except for hotels and MF - watch out for oversupply Transition from refinancing to first-time homebuyer market (Freddie Mac) rate contribute (Deloitte) (Transwestern) 2014 PERFORMANCE BY REAL ESTATE TYPE CAPITAL MARKETS ULI/EY Real Estate Consensus Forecast estimates that commercial real estate transaction volume appears set for consistent but slower growth. Issuance source of financing for commercial real estate, continues its rebound from the bottom in 2009. i commercial mortgage-backed securities (CMBS), a key RETAIL Modest increase in optimism despite store closings & consolidations OFFICE Recovery poised to accelerate HOTELS High Expectations CRE TRANSACTION VOLUME CMBS ISSUANCE 14.3% 11.8% $300B $75B vacancy rate vacancy rate IN 2013 IN 2013 个 5.2 % 162.6% V11.3% vacancy rate occupancy rate industrial 个 0.2 % vacancy rate CRE TRANSACTION VOLUME CMBS ISSUANCE 13.0% rental rate in 2013 first time after 5yrs of decreases $330B $88B office rent 63.2% 2.6% 个 3.5 % IN 2014 IN 2014 More than pre-recession rent growth peak in 2006 warehouse 100% rental rates 个 2.0 % increase High-Tech rules CRE TRANSACTION VOLUME over 3 years! rental rate in CMBS ISSUANCE 2014 and 2015 $350B $100B MULTIFAMILY 16.6% INDUSTRIAL Outlook continues to brighten RevPAR IN 2015 IN 2015 Consistent but slowing down growth Sources: created by: http://urbanland.uli.org/news/uli-forecast-sees-cmbs-issuance-rising-to-100-billion-in-2015/ http://www.costar.com/News/Article/14-Predictions-We-Like-for-2014/155801 http://www.moneynews.com/Outbrain/Trump-Aftershock-American-Economy/2012/11/06/id462985 ZMONET AREX Monetarex is a deal-management platform that connects commercial real estate sponsors/local operators and private equity investors. Sign up for a free account at www.monetarex.com