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![Page 1: Connecticut Multi Family Market Trends 2010 Connecticut Commercial Real Estate Conference Presented by: Steve Witten.](https://reader036.fdocuments.in/reader036/viewer/2022081516/55172d48550346fe558b5c27/html5/thumbnails/1.jpg)
• Connecticut Multi Family Market Trends •
2010
Connecticut Commercial Real Estate Conference
Presented by: Steve Witten
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Presented In February:
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-800
-400
0
400
800
-8%
-4%
0%
4%
8%
06 07 08 09 10*
Monthly Employment
Note: Technical recession defined as two consecutive quarters of GDP contraction.Sources: Marcus & Millichap Research Services, BLS, Economy.com
Gross Domestic Product
Job
s in
Th
ou
san
ds
Economy Gaining Traction; Risk Levels Remain Elevated
An
nu
aliz
ed G
row
th
Jan-06 Jan-07
2005: 3.1%2006: 2.7%
2007: 2.1%2008: 0.4%
2009: -2.4%
* GDP through 2Q 2010, Employment through September
Jan-08
Jan-10
2010*: 2.7%
Jan-09
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Corporate Investment Stalled Despite Healthy Balance Sheets, Unemployment Rising
0%
1%
2%
3%
4%
5%
6%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
*
10-Yr Treasury Core Inflation Fed Funds Rate
* Through SeptemberSources: Marcus & Millichap Research Services, BLS, Federal Reserve
Rat
e
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-6%
-3%
0%
3%
6%
92 94 96 98 00 02 04 06 08 10*
Metro United States
Total Nonfarm Employment ChangeNew Haven-Fairfield County vs. United States
Sources: Marcus & Millichap Research Services, Economy.com* Forecast
Yea
r-o
ver-
Yea
r C
han
ge
NH-FC: 4,600U.S.: 1,000,000
2010* Job Growth
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-8
-4
0
4
8
01 02 03 04 05 06 07 08 09 10*
Mo
nth
ly C
han
ge
(th
ou
san
ds)
*Through AugustSources: Marcus & Millichap Research Services, BLS, Economy.com
Total EmploymentNew Haven-Fairfield County
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New Haven-Fairfield County Sector EmploymentYear-over-Year Absolute Growth
-20 -15 -10 -5 0 5 10
Construction
Manufacturing
Financial Activities
Information
Government
Professional & Business Services
Natural Resources & Mining
Trade; Transportation; & Utilities
Other Services
Leisure & Hospitality
Education & Health Services
3Q08-3Q09 3Q09-3Q10
Sources: Marcus & Millichap Research Services, BLS, Economy.com
Thousands
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0%
3%
6%
9%
12%
92 94 96 98 00 02 04 06 08 10*
Metro United States
Unemployment RateNew Haven-Fairfield County vs. United States
* Forecast
Sources: Marcus & Millichap Research Services, BLS, Economy.com
Un
emp
loym
ent
Rat
e
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Job Growth is Critical to Renter Household Formation and Apartment Occupancies
2%
4%
6%
8%
10%
12%
2%
4%
6%
8%
10%
12%
Apartment Vacancy Rate Unemployment Rate 20-34 yrsOverall Unemployment Rate
Ap
artm
ent
Vac
ancy
Rat
e
* Preliminary EstimateSources: Marcus & Millichap Research Services, BLS, Reis
Un
emp
loym
ent R
ate
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“Shadow” Market a Significant Factor in Rising Vacancies – More in Select Metros
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
30%
35%
40%
45%
50%
55%
2+ Unit Structure 1-Unit Structure
1-Unit as % of Total
Tota
l Vac
ant
Un
its
(in
000
s) 1-U
nit S
tructu
re as % o
f Total
Sources: Marcus & Millichap Research Services, U.S. Census Bureau
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CAPITAL MARKETS
OVERVIEW and OUTLOOK
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Commercial Mortgage Delinquency Rates by Lender Type
0%
1%
2%
3%
4%
CMBS (30+ days and REO) Life Companies (60+ days)Fannie Mae (60+ days) Freddie Mac (60+ days)Banks & Thrifts (90+ days)
Del
inq
uen
cy R
ates
Delinquency rates at the end of each periodSources: Marcus & Millichap Research Services, Mortgage Bankers Association
CMBS
Banks
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Total Multifamily Mortgage Debt Outstanding: $911.7 billion
Sources: Marcus & Millichap Research Services, MBA
CMBS, CDO, and Other ABS
12%
GSEs and Ginnie Mae
39%
Savings Institutions
7%
Commercial Banks24%
State & Local Gov'ts
8%
Life Insurance
Co.s6%
Other5%By Lender Types ($Bil):
GSEs and Ginnie Mae $359.6
Commercial Banks $216.8
CMBS, CDO, and Other ABS $110.3
State & Local Governments $66.1
Savings Institutions $64.0
Life Insurance Companies $50.4
Other $44.4
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Total CMBS Outstanding: $751.7 billion
Sources: Marcus & Millichap Research Services, MBA
Office31.1%
Industrial5.1%
Multi-Family15.2%
Retail29.8%
Hotel9.4%
Self-Storage
1.8%
Healthcare0.6% Other
7.0%By Property Types ($Bil.):Office $233.8 Retail $224.0Multifamily $114.3Hotel $70.7Industrial $38.3 Self-Storage $13.5 Healthcare $4.5Other $52.6
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Estimated Multifamily Debt Maturities by Lender Type
$0
$25
$50
$75
$100
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
CMBS Banks GSE/Other Life Companies
Bill
ion
s $
Sources: Marcus & Millichap Research Services, Foresight Analytics
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Total Multifamily Debt Maturities by Vintage
$0
$25
$50
$75
$100
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Pre-2001 2001-2004 2005-2007 2008
Mat
uri
ng
Bal
ance
(B
illio
ns
$)
Sources: Marcus & Millichap Research Services, Foresight Analytics
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-11%
-6%
-1%
5%
10%
2000-2004 2005-2009 2010-2014*
Ages 20-24 Ages 25-29 Ages 30-34
* ForecastSources: Marcus & Millichap Research Services, U.S. Census Bureau
Ch
ang
e in
Po
pu
lati
on
Renter Demographics New Haven-Fairfield County
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New Housing PermitsNew Haven-Fairfield County
0
500
1,000
1,500
2,000
2,500
3,000
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10*
Single-Family Multifamily
New
Ho
usi
ng
Per
mit
s
* ForecastSources: Marcus & Millichap Research Services, Economy.com
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Supply and DemandApartment
0
250
500
750
1,000
02 04 06 08 10*
3%
4%
5%
6%
Completions Vacancy
0
40
80
120
160
02 04 06 08 10*
2%
4%
6%
8%
10%
Completions Vacancy
United StatesNew Haven-Fairfield County
* ForecastSources: Marcus & Millichap Research Services, Reis
Un
its
(000
s)
Vacan
cy Rate U
nit
s (0
00s)
Vacan
cy Rate
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Apartment Metro Vacancy Ranking2Q 2010
Top 15Markets
2Q 2010 Vacancy
Y-O-Y Bps Change
Denver 6.1% (290)
Austin 9.6% (90)
San Jose 4.2% (80)
Tucson 11.8% (80)
Jacksonville 13.2% (60)
Fort Lauderdale 7.6% (50)
New Haven-Fairfield County 4.3% (50)
Portland 5.8% (40)
Boston 6.2% (30)
Louisville 6.7% (20)
New York 3.0% (20)
Oakland-East Bay 5.5% (20)
Phoenix 11.5% (20)
Sacramento 7.1% (10)
Washington, D.C. 6.3% (10)
U.S. Average 7.8% 10
Bottom 15Markets
2Q 2010 Vacancy
Y-O-Y Bps Change
Detroit 7.9% 30
Minneapolis 5.1% 40
Charlotte 10.5% 40
Cincinnati 7.7% 40
Palm Beach 8.6% 40
Tampa-St. Petersburg 9.8% 40
Dallas-Ft. Worth 8.9% 50
Orlando 11.0% 50
Oklahoma City 10.2% 60
Kansas City 9.4% 80
Houston 12.4% 90
Las Vegas 11.1% 100
Indianapolis 9.6% 110
Salt Lake City 7.1% 120
Columbus 9.7% 170
U.S. Average 7.8% 10
Sources: Marcus & Millichap Research Services, Reis
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Apartment Vacancy by ClassNew Haven-Fairfield County
0%
2%
4%
6%
8%
00 01 02 03 04 05 06 07 08 09 10*
Class A Class B/C
Ave
rag
e V
acan
cy R
ate
* Through 2QSources: Marcus & Millichap Research Services, Reis
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Apartment Vacancy Ranking by Submarket
New Haven-Fairfield County
Submarkets2Q
20092Q
2010Bps
Change
New Haven Harborside 3.2% 3.1% -10
Naugatuck/Waterbury 3.8% 3.6% -20
West Fairfield County 5.0% 4.5% -50
East Fairfield County 6.6% 5.8% -80
North Haven/Wallingford/Meriden 3.3% 2.4% -90
Metro Average 6.1% 6.0% -10
Sources: Marcus & Millichap Research Services, Reis
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Apartment Asking Rent Trends New Haven-Fairfield County
-8%
-4%
0%
4%
8%
Metro United States
2002-2009 2010*
* ForecastSources: Marcus & Millichap Research Services, Reis
Ask
ing
Ren
t A
nn
ual
Ch
ang
e
$1,544$1,036
2% to 3% annual growth
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Apartment Metro Effective Rent Growth Ranking2Q 2010
Top 15Markets
2Q 2010Eff. Rent
Y-O-Y % Change
San Diego $1,256 1.3%
San Antonio $648 0.8%
New Haven-FF County $1,465 0.3%
Fort Lauderdale $995 0.1%
Seattle-Tacoma $909 0.0%
Tucson $596 -0.2%
Washington, D.C. $1,272 -0.2%
Salt Lake City $682 -0.3%
Oklahoma City $514 -0.4%
St. Louis $662 -0.5%
Chicago $964 -0.5%
Atlanta $736 -0.5%
Cleveland $685 -0.6%
Austin $765 -0.6%
Philadelphia $957 -0.8%
U.S. Average $946 -1.4%
Bottom 15Markets
2Q 2010Eff. Rent
Y-O-Y % Change
Palm Beach $993 -2.2%
Dallas-Ft. Worth $690 -2.3%
Phoenix $678 -2.3%
Milwaukee $772 -2.4%
Los Angeles $1,311 -2.5%
San Francisco $1,673 -2.5%
Indianapolis $613 -2.5%
Houston $688 -2.7%
Oakland-East Bay $1,190 -3.0%
Sacramento $828 -3.0%
Orange County $1,401 -3.3%
Tampa-St. Petersburg $751 -3.5%
San Jose $1,317 -3.8%
Orlando $767 -4.1%
Las Vegas $755 -4.4%
U.S. Average $946 -1.4%
Sources: Marcus & Millichap Research Services, Reis
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Investment TrendsApartment
$0
$25
$50
$75
$100
02 04 06 08 10*
4%
6%
8%
10%
12%
Median Price Cap Rate
$0
$25
$50
$75
$100
02 04 06 08 10*
5%
6%
7%
8%
9%
Median Price Cap Rate
United StatesNew Haven-Fairfield County
Med
ian
Pri
ce p
er U
nit
(00
0s)
Averag
e Cap
Rate
Med
ian
Pri
ce p
er U
nit
(00
0s)
Averag
e Cap
Rate
* Through 1H 2010Sales $500,000 and greaterSources: Marcus & Millichap Research Services, Reis
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0
75
150
225
300
375
02 03 04 05 06 07 08 09 1H09
1H10
$1M-$9.99M $10M-$19.99M $20M+
Tota
l Tra
nsa
ctio
ns
(000
s)
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics
$0
$1
$2
$3
$4
02 03 04 05 06 07 08 09 1H09
1H10
$1M-$9.99M $10M-$19.99M $20M+
Tota
l Do
llar
Vo
lum
e (B
il.)
Total Dollar VolumeTotal Transactions
Apartment Sales TrendsNew Haven-Fairfield County
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U.S. Apartment Buyer Composition
13%5%
2%
1%3%
10%
4%
9%
3%
2%
65%
84%
0%
25%
50%
75%
100%
2008 2009*
Private
User/Other
Equity Fund
Public
Foreign
Institutional
Sales $5 Million and greaterSources: Marcus & Millichap Research Services, Real Capital Analytics
* YTD through September
Per
cen
t o
f S
ales
Vo
lum
e
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$0
$25
$50
$75
$100
$125
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
5%
6%
7%
8%
9%
10%
Average Price Cap Rates
* EstimateIncludes sales $1Million and GreaterSources: Marcus & Millichap Research Services, Costar Group, Inc.
National Apartment Price and Cap Rates
Ave
rag
e P
rice
per
Un
it (
000s
)A
verage C
ap R
ate
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24 – Month Cap Rate Adjustment Matrix *
Primary
Secondary
Tertiary
Class “A” Class “B” Class “C”
1.00 1.25 1.75
1.25 1.75 2.25
2.25 2.752.00
* Change in cap rates last 24 months
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24 – Month Pricing Adjustment Matrix
Primary
Secondary
Tertiary
Class “A” Class “B” Class “C”
-20% -23% -32%
-24% -30% -36%
-33% -35% -41%
* Change in property value last 24 months
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Why the Long-Term Outlook for U.S. Apartments is Extremely Favorable
U.S. will experience a fundamental change in housing dynamics favoring the density, efficiency, flexibility and affordability of apartment living:
1. Population growth2. Changing demographics3. Environmental concerns4. Budget / expense factors5. Sharp decrease in new supply6. Affordability7. Rent vs. own
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Population Dynamics
250
270
290
310
330
350
370
390
2000 2030
U.S. population is expected to increase 33% by 2030 to 376 million.
To accommodate this growth, the nation needs 60 million new housing units.
Mill
ions
94 Million
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Demographic Dynamics
Married couples with children are projected to decline to under 1 in 5 households by 2025
Singles and un-related individuals living together will comprise 1 in 3 households by 2020
78 million echo boomers are getting ready to enter their prime renting years
10 million legal immigrants will enter the country in next ten years
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7.4 Million Net New Households
3.2 MillionNew Renter Households
4.1 MillionNew Owner Households
* ForecastSources: Marcus & Millichap Research Services, Economy.com, Harvard University
U.S. Household Growth Projection2010 - 2015*
56%
44%
Own Rent
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Budget / Fiscal Dynamics
Urban / suburban sprawl is expensive Compact development reduces infrastructure
costs and saves money The U.S. can save over $100 billion in
infrastructure costs over 25 years by growing compactly
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State of Connecticut Apartment Sales 2000 - 2010
2010 (as of 10/1): 1,131 units traded for $94,399,0002009: 2,251 units traded for $188,532,8802008: 5,532 units traded for $758,785,0002007: 6,247 units traded for $891,958,998
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2010
Connecticut Commercial Real Estate Conference
Steve Witten, Senior Director265 Church Street, Suite 210
New Haven, CT 06510203.672.3320