Marcus & Millichap, Inc. · NYSE:MMI

Marcus & Millichap — Southern California Investor Symposium 2005

21 slides from Marcus & Millichap's conference presentation, Nov 2, 2005

  1. Slide 1: Southern California Investor Symposium

    SOUTHERN CALIFORNIA INVESTOR SYMPOSIUM The Most Informative Overview of the Real Estate Investment Market November 2, 2005 Beverly Hills Hotel Marcus ¢ Millichap www.MarcusMillichap.com Real Estate Investment Brokerage Company

  2. Slide 2: Southern California Investment and Real Estate Outlook — Will the Beat Go On?

    SOUTHERN CALIFORNIA INVESTOR SYMPOSIUM The Most Informative Overview of the Real Estate Investment Market Southern California Investment and Real Estate Outlook — Will the Beat Go On? Hessam Nadji ATE Managing Director Marcus & Millichap Research Services Real Estate Investment Brokerage Company

  3. Slide 3: Economic Conditions Still Favorable: GDP & Job Growth In-Line with Long-Term Trend

    Economic Conditions Still Favorable: GDP & Job Growth In-Line with Long-Term Trend 8% U.S. GDP 8% U.S. Employment ’04 = 4.2 20-yr Avg. 6% ’05 = 3.6 6% GDP Growth: 3.3% ’06 = 3.5 20-yr Avg. Job Growth: 1.9% 4% 4% 2% 2% 0% 0% -2% -2% 01 02 03 04 05* 06* 01 02 03 04 05* 06* *Forecast Sources: Marcus &

  4. Slide 4: U.S. Employment Well Beyond Recovery

    U.S. Employment Well Beyond Recovery 135 Non-Farm Employment (millions) 130 5/03 – 9/05 2/01 – 5/03 4.2 Million -2.7 Million 125 120 115 5 6 7 8 9 0 1 2 3 4 5 -9 -9 -9 -9 -9 -0 -0 -0 -0 -0 -0 pt pt pt pt pt pt pt pt pt pt pt Se Se Se Se Se Se Se Se Se Se Se Sources: Marcus & Millichap Research Servi

  5. Slide 5: Record Oil Prices a Natural Break (For Now)

    Record Oil Prices a Natural Break (For Now) Inflation Pressures Building Moderately $75 Crude Oil (WTI) Core CPI CPI 12% Crude Oil (price per barrel) Year-Over-Year % Change $50 8% $25 4% $0 0% 95 96 97 98 99 00 01 02 03 04 05* *Through September Sources: Marcus & Millichap Research Services, BLS, E

  6. Slide 6: Short-Term Rate Increases to Continue, Long-Term Rates On Gradual Upswing

    Short-Term Rate Increases to Continue, Long-Term Rates On Gradual Upswing 10% Fed Funds Target Rate 10-Year Treasury 8% Interest Rate 6% 4% 2% 0% 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05* *As of 11/1/05 Sources: Marcus & Millichap Research Services, BLS, Economy.com, Federal Reserve

  7. Slide 7: Increased Capital Flows, Weak Operations Have Compressed Real Estate Cap Rates

    Increased Capital Flows, Weak Operations Have Compressed Real Estate Cap Rates 1990 - 2000 Avg. YTD 2005 10% 9.5% 9.3% 9.3% 8.5% Average Cap Rate 7.7% 7.8% 8% 7.3% 5.9% 6% 4% Apartment Retail Office Industrial Sources: Marcus & Millichap Research Services, National Real Estate Index (NREI)

  8. Slide 8: Southern California Employment Expansion to Continue in 2006

    Southern California Employment Expansion to Continue in 2006 100,000 1994-2003 2004 2005* 2006* 80,000 60,000 Number of Jobs 40,000 20,000 0 (20,000) (40,000) (60,000) Los Angeles Orange County Inland Empire San Diego *Forecast Sources: Marcus & Millichap Research Services, Economy.com

  9. Slide 9: Housing Market Due For Cooling

    Housing Market Due For Cooling Median Existing Home Price 1999-2005 1991-2004 2005* $800,000 % Change 113% 121% $600,000 141% Median Home Price 172% $400,000 47% $200,000 $0 Los Orange Inland San Diego U.S. Angeles County Empire *As of September CAR Sources: Marcus & Millichap Research Services, Cal

  10. Slide 10: Youngest Cohorts Have Experienced the Largest Ownership Increase

    Youngest Cohorts Have Experienced the Largest Ownership Increase 600 Change in Homeownership Rate 2Q1995-2Q2005 (basis points) Current Homeownership Rate 42.8% 400 68.7% 80.3% 200 81.3% 76.3% 0 Under 35 35-44 45-54 55-64 65+ Age Cohort Sources: Marcus & Millichap Research Services, Economy.com

  11. Slide 11: U.S. Real Estate Markets: Top Markets by Vacancy Rate

    U.S. Real Estate Markets Top 10 Markets by Vacancy Rate 2005 Q3 Vacancy Vacancy Retail Vacancy Apartment 3Q05 Office 3Q05 Neighborhood/Community 3Q05 Riverside-San Oakland-East Bay 2.0% Los Angeles 3.4% Bernardino 9.3% Orange County 3.6% Orange County 2.1% NY City – Manhattan 9.5% San Diego 2.6% San

  12. Slide 12: U.S. Real Estate Markets: Bottom Markets by Vacancy Rate

    U.S. Real Estate Markets Bottom 10 Markets by Vacancy Rate 2005 Q3 Vacancy Vacancy Retail Vacancy Apartment 3Q05 Office 3Q05 Neighborhood/Community 3Q05 Cincinnati 8.9% Atlanta 18.2% Charlotte 7.5% Columbus 8.9% Jacksonville 18.3% Denver 7.6% Minneapolis-St. Paul 18.4% Atlanta 7.8% Milwaukee 9.0% De

  13. Slide 13: Overheated Housing Market Tightening

    Overheated Housing Market Tightening Apartment Vacancies 1990-2003 2004 2005* 2006* 8% U.S. Average Vacancy 6% Vacancy Rate 4% 2% 0% Los Angeles Orange County Inland Empire San Diego •- Forecast Source: Marcus & Millichap Research Services, REIS Inc.

  14. Slide 14: Southern California Apartment Rent Growth Accelerating

    Southern California Apartment Rent Growth Accelerating 1997-2003 2004 2005* 2006* $1,500 U.S. Average Rent Avg. Asking Rent $1,200 $900 $600 $300 Los Angeles Orange County Inland Empire San Diego *Forecast Sources: Marcus & Millichap Research Services, Reis

  15. Slide 15: Conversions, Buyer Demand Pressuring Apartment Prices

    Conversions, Buyer Demand Pressuring Apartment Prices - Median Price per Unit 1999-2003 2004 2005* $200 $220,000 – 70% $241,000 – 60% $149,000 – 40% $193,000 – 40% Price Per Unit (Thousands) $150 U.S. Median Price Per Unit $100 $50 $0 Los Angeles Orange County Inland Empire San Diego *3rd Quarter Es

  16. Slide 16: Southern California Shopping Centers Among Tightest Nationally

    Southern California Shopping Centers Among Tightest Nationally 1990-2003 2004 2005* 2006* 12% U.S. Average Vacancy 9% Vacancy Rate 6% 3% 0% Los Angeles Orange County Inland Empire San Diego *Forecast Sources: Marcus & Millichap Research Services, Reis

  17. Slide 17: Shopping Center Rent Growth Reflecting Tightening Vacancies in Most Submarkets

    Shopping Center Rent Growth Reflecting Tightening Vacancies in Most Submarkets 1990-2003 2004 2005* 2006* U.S. Average Rent $3.00 Average Asking Rent per Square Foot $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Los Angeles Orange County Inland Empire San Diego *Forecast Sources: Marcus & Millichap Research S

  18. Slide 18: Retail Property Sales Trends

    Retail Property Sales Trends Multi-Tenant Median Price per Square Foot 1999-2003 2004 2005* $375 $300 $225 U.S. Median Price Per SF $150 $75 $0 Los Angeles Orange County Inland Empire San Diego *3rd Quarter Estimate Source: Marcus & Millichap Research Services, CoStar Comps

  19. Slide 19: Southern California Office Market Tightening Rapidly

    Southern California Office Market Tightening Rapidly 30% 1990-2003 2004 2005* 2006* 25% U.S. Average Vacancy 20% Vacancy Rate 15% 10% 5% 0% Los Angeles Orange County Inland Empire San Diego *Forecast Sources: Marcus & Millichap Research Services, Reis

  20. Slide 20: Office Market Capital Flows Increasing Rapidly, Pushing Up Prices

    Office Market Capital Flows Increasing Rapidly, Pushing Up Prices - Median Price per Square Foot $250 1999-2003 2004 2005* U.S. Median Price Per SF $200 Median Price per Sq. Ft. $150 $100 $50 $0 Los Angeles Orange County Inland Empire San Diego *3rd Quarter Estimate Sources: Marcus & Millichap Resea

  21. Slide 21: Southern California Investor Symposium

    SOUTHERN CALIFORNIA INVESTOR SYMPOSIUM The Most Informative Overview of the Real Estate Investment Market November 2, 2005 Beverly Hills Hotel Marcus ¢ Millichap www.MarcusMillichap.com Real Estate Investment Brokerage Company

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