ULI Real Estate Consensus Forecast - Archive -...

ULI Real Estate Consensus Forecast A Survey of Leading Real Estate Economists/Analysts

April 2016

Center for Capital Markets and Real Estate

ULI Real Estate Consensus Forecast

Real GDP Growth

3.8%3.3%

2.7%

1.8%

-0.3%

-2.8%

2.5%

1.6% 2.2%

1.5%

2.4%

2.4% 2.2% 2.3%2.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (2.4%)

Sources: 1996-2015, Bureau of Economic Analysis; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 2.8% and 2.7%, respectively, for 2016 and 2017.

2


Unemployment Rate

5.4% 4.9% 4.4%5.0%

7.3%

9.9%9.3%

8.5%7.9%

6.7%5.6%

5.0% 4.8% 4.7% 5.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (6.0%)

Sources: 1996-2015, (seasonally adjusted, as of December), Bureau of Labor Statistics; 2016-2018 (YE), ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 4.9% and 4.8%, respectively, for 2016 and 2017.

3


Employment Growth

Sources: 1996-2015, Bureau of Labor Statistics; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 2.72 and 2.60, respectively, for 2016 and 2017.

2.042.51

2.09

1.15

-3.57

-5.07

1.07 2.092.15 2.31

3.02 2.742.43 2.10

1.59

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mill

ions

of J

obs

20-Year Avg. (1.24)

4


Consumer Price Index Inflation Rate

3.3% 3.4%

2.5%

4.1%

0.1%

2.7%

1.5%

3.0%

1.7%1.5%

0.8% 0.7%

1.5%

2.0% 2.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (2.2%)

Sources: 1996-2015, (12-month change, as of December), Bureau of Labor Statistics; 2016-2018 (YE), ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 2.0% and 2.2%, respectively, for 2016 and 2017.

5


Ten-Year Treasury Rate

4.2%4.4%

4.7%

4.0%

2.3%

3.9%

3.3%

1.9% 1.8%

3.0%

2.2% 2.3% 2.4%2.8%

3.2%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (3.98%)

Sources: 1996-2015 (YE), U.S. Federal Reserve; 2016-2018 (YE), ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 2.8% and 3.3%, respectively, for 2016 and 2017.

6


NCREIF Capitalization Rate

6.8% 6.1%5.7% 5.6%

6.0%

6.9%6.3%

6.0% 5.9% 5.7% 5.5%5.1% 5.1% 5.3% 5.5%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (6.9%)

Sources: 1996-2015, (Q4), National Council of Real Estate Investment Fiduciaries (NCREIF); 2016-2018 (YE), ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 5.3% and 5.7%, respectively, for 2016 and 2017.

7


Commercial Real Estate Transaction Volume

$217

$370$430

$573

$175

$69

$149

$234

$299

$363$432

$534 $525 $500 $475

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Billi

ons o

f Dol

lars

15-Year Avg. ($279)

Sources: 2001-2015, Real Capital Analytics; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September2015) projected $510 and $500, respectively, for 2016 and 2017.

8


Commercial Mortgage-Backed Securities (CMBS) Issuance

Sources: 1996-2015, Commercial Mortgage Alert; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected $130 and $140, respectively, for 2016 and 2017.

9

$93

$167

$198

$229

$12$3

$12$33

$48

$86$94 $101

$85$100 $100

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Billi

ons o

f Dol

lars

20 Year Avg. ($76)


Moody’s/RCA Commercial Property Price Index (annual change)

12.8%

18.4%

6.4%9.5%

-18.8%

-25.9%

9.7%7.6% 8.7%

16.1%16.5%12.7%

5.0% 2.7% 3.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

15-Year Avg. (5.8%)

Sources: 2001-2015, Moody’s and Real Capital Analytics; 2016-2018, ULI Consensus Forecast.Note: The previous ULI Consensus Forecast (released in September, 2015) projected 6.0% and 4.5%, respectively, for 2016 and 2017.

10


Equity REIT Total Annual Returns

31.6%

12.2%

35.1%

-15.7%

-37.7%

28.0% 28.0%

8.3%

18.1%

2.5%

30.1%

3.2% 5.0%7.0% 7.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (12.9%)

Sources: 1996-2015, National Association of Real Estate Investment Trusts; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 6.5% and 5.5% for 2016 and 2017.

11


NCREIF Total Annual Returns

14.5%

20.1%16.6%15.8%

-6.5%

-16.8%

13.1%14.3%

10.5%11.0%11.8%13.3%

8.1% 7.2% 7.1%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (10.2%)

Sources: 1996-2015 National Council of Real Estate Investment Fiduciaries (NCREIF); 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 9.0% and 7.0% for 2016 and 2017.

12


Industrial/Warehouse Availability Rates

11.3%10.1%

9.9% 9.9%

11.8%

14.3%14.2%13.3%

12.6%

11.2%10.2%

9.4% 9.2% 9.3% 9.5%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (10.5%)

Sources: 1996-2015 (Q4), CBRE; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 9.5% and 9.5%, respectively, for 2016 and 2017.

13


Industrial/Warehouse Rental Rate Change

-1.1%

2.8%

4.9%

3.3%

0.3%

-10.2%

-6.7%

-0.6%

1.0%

3.6%4.8% 5.3%

4.5%3.1% 2.7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (1.4%)

Sources: 1996-2015, CBRE; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 4.0% and 3.0%, respectively, for 2016 and 2017.

14


NCREIF Industrial Total Annual Returns

12.1%

20.3%17.0%

14.9%

-5.8%

-17.9%

9.4%

14.6%

10.7%12.3%13.4%

14.9%

9.3% 8.0% 7.1%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. …

Sources: 1996-2015, National Council of Real Estate Investment Fiduciaries (NCREIF); 2015-2017, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 10.1% and 8.4%, respectively, for 2016 and 2017.

15


Retail Availability Rates

8.4%

7.4%8.2%

9.1%

10.9%

12.8%13.1%13.1%12.7%12.0%

11.4%11.2%10.9%10.7%10.7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (9.9%)

Sources: 1996-2015 (Q4), CBRE; 2016-2018, ULI Consensus Forecast.Note: The previous ULI Consensus Forecast (released in September, 2015) projected 10.7% and 10.4%, respectively, for 2016 and 2017.

16


Retail Rental Rate Change

3.3% 3.0%3.4%

4.2%

-2.1%

-4.9% -5.0%

-2.1%

-0.2% -0.2%

0.8% 1.3%2.0% 2.0% 1.7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (1.4%)


17


NCREIF Retail Total Annual Returns

23.0%20.0%

13.4% 13.5%

-4.1%

-10.9%

12.6% 13.8%11.6% 12.9% 13.1%

15.3%

8.0% 7.4% 7.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (10.8%)

Sources: 1996-2015, National Council of Real Estate Investment Fiduciaries (NCREIF); 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 9.6% and 8.0%, respectively, for 2016 and 2017...

18


Office Vacancy Rates

15.3%

13.6%12.5% 12.5%

14.1%

16.5% 16.4%16.0%15.4%14.9%

14.0% 13.1%12.6%12.3%12.3%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (13.5%)

Sources: 1996-2015 (Q4), CBRE; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 12.7% and 12.3%, respectively, for 2016 and 2017.

19


Office Rental Rate Change

-2.0%

5.8%

8.7%10.0%

3.8%

-12.4%

-4.6%

3.1% 3.8%2.5%

4.5% 4.0% 4.0% 3.5% 3.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (2.5%)

Sources: 1996-2015, CBRE; 2016-2018, ULI Consensus Forecast.Note: The previous ULI Consensus Forecast (released in September, 2015) projected 4.0% and 4.0%, respectively, for 2016 and 2017.

20


NCREIF Office Total Annual Returns

12.0%

19.5% 19.2% 20.5%

-7.3%

-19.1%

11.7%13.8%

9.5% 9.9%11.5% 12.5%

9.0% 8.0% 7.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (10.3%)

Sources: 1996-2015, National Council of Real Estate Investment Fiduciaries (NCREIF); 2016-2018, ULI Consensus Forecast.Note: The previous ULI Consensus Forecast (released in September, 2015) projected 10.0% and 8.2%, respectively, for 2016 and 2017.

21


Apartment Vacancy Rates

6.3%

5.0%5.2%

5.7%6.5%

7.1%

5.8%5.5%

5.1% 5.1% 4.7% 4.7% 4.9%5.2% 5.4%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (5.5%)

Sources: 1996-2015 (Q4), CBRE; 2016-2018 (Q4), ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 4.8% and 5.0%, respectively, for 2016 and 2017.

22


Apartment Rental Rate Change

3.4%

5.9%

4.2%

2.4%

-1.3%

-6.5%

5.1% 5.0%3.9%

3.4%

5.3%4.3%

3.6%3.0%

2.4%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (2.8%)


23


NCREIF Apartment Total Annual Returns

13.0%

21.2%

14.6%11.4%

-7.3%

-17.5%

18.2%15.5%

11.2%10.4%10.3%12.0%

8.6%7.0% 7.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (10.2%)

Sources: 1996-2015, National Council of Real Estate Investment Fiduciaries (NCREIF); 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 8.5% and 7.0%, respectively, for 2016 and 2017.

24


Single-Family Housing Starts

1,610,5001,715,800

1,465,400

1,046,000

622,000

445,100471,200430,600535,300617,600647,900

714,600800,000850,000900,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (1,027,610)

Sources: 1996-2016, (Structures w/ 1 Unit, as of December), U.S. Census; 2016-2018, ULI Consensus Forecast.Note: The previous ULI Consensus Forecast (released in September, 2015) projected 843,000 and 900,000, respectively, for 2016 and 2017.

25


Average Home Price Change

10.2% 9.9%

2.5%

-3.2%

-10.3%

-2.0%-3.9%

-1.2%

5.4%7.5%

5.5% 5.7% 5.0% 4.3% 3.9%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (3.7%)

Sources: 1996-2015, (Seasonally Adjusted, as of December), Federal Housing Finance Agency; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 4.3% and 3.9% for 2016 and 2017.

26


Hotel Occupancy Rates

61.3%63.0%63.2%62.8%59.8%

54.6%57.6%60.0%61.4%62.3%64.4%65.6%65.8%65.5%65.2%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (61.6%)

Sources: 1996-2015, (12-month rolling average), Smith Travel Research; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 65.4% and 65.3% for 2016 and 2017.

27


Hotel Revenue per Available Room (RevPAR) Change

7.9% 8.6%7.7%

6.1%

-2.0%

-16.6%

5.4%

8.1%6.6%

5.2%

8.1%6.3%

4.6%3.3% 3.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20-Year Avg. (3.3%)

Sources: 1996-2015, (12-month rolling average), Smith Travel Research; 2016-2018, ULI Consensus Forecast. Note: The previous ULI Consensus Forecast (released in September, 2015) projected 5.9% and 4.2% for 2016 and 2017.

28

ULI Real Estate Consensus Forecast A Survey of Leading Real Estate Economists/Analysts

April 2016

Center for Capital Markets and Real Estate

ULI Real Estate Consensus Forecast - Archive -...

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