SAN FRANCISCO M A Y 1 0 , 2 0 1 6 1 MEGATRENDS 1. Commercial - - PowerPoint PPT Presentation

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SAN FRANCISCO M A Y 1 0 , 2 0 1 6 1 MEGATRENDS 1. Commercial - - PowerPoint PPT Presentation

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SAN FRANCISCO M A Y 1 0 , 2 0 1 6 1 MEGATRENDS 1. Commercial real estate moves in cycles, and there is evidence we are approaching the mature phase of the cycle. . . 2. . . .Yet capital continues to flow into commercial real estate 3.

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M A Y 1 0 , 2 0 1 6

SAN FRANCISCO

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1. Commercial real estate moves in cycles, and there is evidence we are approaching the mature phase of the cycle. . . 2. . . .Yet capital continues to flow into commercial real estate 3. There is tension between the preferences of tech talent and

  • ccupancy costs

4. Bay Area economic growth will support continuing CRE expansion, even as headwinds shape our future

MEGATRENDS

Source: NGKF Research; May 2016

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M E G A T R E N D # 1 : A P P R O A C H I N G T H E M A T U R E P H A S E O F T H E C O M M E R C I A L R E A L E S T A T E C Y C L E

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*12 months ending in March 2016 Source: U.S. Bureau of Labor Statistics, NGKF Research; May 2016

C H A N G E I N PAY R O L L J O B S ( T H O U S A N D S )

  • 6000
  • 4000
  • 2000

2000 4000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

MEGATREND #1: MATURE PHASE

Payroll Job Change | United States

Current expansion period: 83 months Average expansion period since 1945: 58 months

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Note: Includes all asset classes Source: NCREIF, NGKF Research; May 2016

T O TA L C A L E N D A R Y E A R R E T U R N

MEGATREND #1: MATURE PHASE

NCREIF Property Index | United States

  • 20%
  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20% 2007 2008 2009 2010 2011 2012 2013 2014 2015

Current expansion period: 26 quarters Average expansion period since 1978: 31 quarters

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Source: U.S. Department of Commerce, NGKF Research; May 2016

C O R P O R AT E P R O F I T S ( B I L L I O N S )

MEGATREND #1: MATURE PHASE

Corporate Profits | United States $1,000 $1,500 $2,000 $2,500 2007 2008 2009 2010 2011 2012 2013 2014 2015

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Source: U.S. Bureau of Labor Statistics, NGKF Research; May 2016

  • 8%
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Percent change from same quarter a year ago P E R C E N TA G E C H A N G E

MEGATREND #1: MATURE PHASE

Non-Farm Business Worker Productivity | United States

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MEGATREND #1: MATURE PHASE

2% Productivity Loss Offsets Cost Savings From Densification

2% PRODUCTIVITY LOSS AS A % OF RENT SAVINGS

0% 50% 100% 150% 200% 250% 300% 350% 2% productivity loss as a percent of rent savings from densification Equilibrium

Note: Ten largest metropolitan areas by employment base in 2015; assumes 10% reduction of rentable space Source: U.S. Bureau of Labor Statistics, NGKF Research; May 2016

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MEGATREND #1: MATURE PHASE

Gains In Productivity Can Offset Cost of Trophy Upgrade

*Expressed as a percentage of annual wage Note: Ten largest metropolitan areas by employment base in 2015; assumes 5% reduction of rentable space Source: U.S. Bureau of Labor Statistics, NGKF Research; May 2016

C O S T O F T R O P H Y U P G R A D E ( P E R E M P L O Y E E )

1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6%

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Additional annual rent per employee Productivity gain*

A N N U A L V A L U E G A I N E D F R O M I N C R E A S E D P R O D U C T I V I T Y ( P E R E M P L O Y E E )

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MEGATREND #1: MATURE PHASE

What’s Next? | Discipline is Critical in the Next 12-24 Months

Source: NGKF Research; May 2016

  • Bifurcation between leasing performance and capital

investment will continue

  • Investors should be more disciplined as we approach the

end of the cycle

  • Owners marketing trophy space should emphasize value of

productivity enhancement to tenants

  • Now is a time to own and manage high-quality assets
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M E G A T R E N D # 2 : C A P I T A L C O N T I N U E S T O F L O W I N T O C O M M E R C I A L R E A L E S T A T E

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MEGATREND #2: CAPITAL FLOWING

CRE Outperforms Stocks and Bonds

Source: NCREIF, Bloomberg, NGKF Research; May 2016

0% 2% 4% 6% 8% 10% 12% 14% 1-Year 10-Year 20-Year U.S. REAL ESTATE: NCREIF Property Index STOCKS: S&P 500 Index BONDS: Bloomberg U.S. Government Bond Index A N N U A L I Z E D T O TA L R E T U R N A S O F M A R C H 3 1 , 2 0 1 6

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MEGATREND #2: CAPITAL FLOWING

Institutional Allocations to Commercial Real Estate Have Increased

Source: PREA, NGKF Research; May 2016

4% 5% 6% 7% 8% 9% 1996 2007 2014 C O M M E R C I A L R E A L E S TAT E A S A P E R C E N TA G E O F A S S E T S

Note: Includes only private institutional allocations; 2014 is most recent data available

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MEGATREND #2: CAPITAL FLOWING

U.S. Investment Sales Volume May Have Peaked But Remains Robust

*2016 YTD through February, annualized and seasonally adjusted Source: Real Capital Analytics, NGKF Research; May 2016

B I L L I O N S O F D O L L A R S $0 $100 $200 $300 $400 $500 $600 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Office Industrial Retail Apartment Hotel

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Note: Ranking among U.S. markets Source: AFIRE, NGKF Research; May 2016

MEGATREND #2: CAPITAL FLOWING

Bay Area Has Remained Steadfast on AFIRE Investor Survey

Washington New York San Francisco Boston Los Angeles #1 #1 #2 #2 #3 #3 #4 #4 #5 #5 2010 2010 New York Los Angeles San Francisco Washington Seattle/Boston #1 #1 #2 #2 #3 #3 #4 #4 #5 #5 2016 2016

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MEGATREND #2: CAPITAL FLOWING

Bay Area Investment Sales Volume May Have Peaked But Remains Robust $0 $5 $10 $15 $20 $25 $30 $35 $40 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Office Industrial Retail Apartment Hotel B I L L I O N S O F D O L L A R S

*2016 YTD through February, annualized and seasonally adjusted Source: Real Capital Analytics, NGKF Research; May 2016

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MEGATREND #2: CAPITAL FLOWING

What’s Next? | Bay Area Office and Apartment Sales in Next 12-24 Months

Source: NGKF Research; May 2016

  • Apartment cap rates: Flat or edging up overall
  • Office cap rates: Edging up for commodity product
  • Sales volume: Slightly below 2015 levels
  • Sales prices: Flat or edging down overall
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M E G A T R E N D # 3 : T E N S I O N B E T W E E N P R E F E R E N C E S O F T E C H T A L E N T A N D O P E R A T I N G C O S T S

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MEGATREND #3: TENSION

Residents Commuting Outside Their Home County

Note: Data reflect 2014 commuting patterns for private-sector workers with annual incomes greater than $40,000 Source: Census.gov, NGKF Research; May 2016

San Francisco San Mateo County Silicon Valley East Bay / Oakland 24,705 17,755 32,850 40,150 36,340 23,275 48,085 15,550 27,975 13,910 33,480 62,645

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Source: Computer Science Degree Hub, NGKF Research; May 2016

MEGATREND #3: TENSION

Top 20 Innovative Computer Science and Engineering Programs

826 523 515 462 451 449 405 383 368 331 325 321 304 282 263 225 112 72 71 43

100 200 300 400 500 600 700 800 900 Carnegie Mellon University Georgia Tech Univ of Southern California University of Illinois - Urbana University of Washington U Michigan - Ann Arbor UC - San Diego MIT Columbia University Univ of Pennsylvania Stanford University Cornell University Univ of TX at Austin U Wisconsin - Madison UC Los Angeles UC Berkeley Princeton University Harvard University Yale University Caltech

Annual Graduate Output Pittsburgh’s entry- level base salary for computer science graduates = 22% less than Silicon Valley’s

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Source: NGKF Research; May 2016

AV E R A G E A S K I N G R E N T ( $ / S F / A N N U M , F U L L S E R V I C E )

MEGATREND #3: TENSION

Office Market Rent Variability | Selected Tech-Heavy Submarkets at Q1 2016 $120.60 $73.27 $57.24 $57.12 $44.52 $0 $20 $40 $60 $80 $100 $120 $140 Downtown Palo Alto SOMA Cupertino Sunnyvale Downtown Oakland 63% less than Downtown Palo Alto

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S H A R E O F O F F I C E M A R K E T G R O S S L E A S I N G A C T I V I T Y

MEGATREND #3: TENSION

Share of Office Market Gross Leasing Activity 56.8% 52.8% 22.2% 26.0% 21.1% 21.2% 0% 25% 50% 75% 100% 2014 2015 San Francisco Oakland Silicon Valley

Note: Includes new leases, expansions, consolidations, renewals, and subleases Source: CoStar, NGKF Research; May 2016

+380 basis points in

  • ne year
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MEGATREND #3: TENSION

What’s Next? | Bay Area Still Appeals to Tech Firms/Talent, But Costs Are An Issue

Source: NGKF Research; May 2016

  • Oakland and other alternate options for tenants are

here to stay, and that creates…

  • …a more competitive office environment. . .
  • . . .and also greater utilization of infrastructure
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M E G A T R E N D # 4 : B A Y A R E A E C O N O M I C G R O W T H W I L L S U P P O R T C O N T I N U I N G C R E E X P A N S I O N , E V E N A S H E A D W I N D S S H A P E O U R F U T U R E

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Note: Bay Area includes San Francisco/East Bay and San Jose metro areas Source: U.S. Bureau of Labor Statistics, NGKF Research; May 2016

C H A N G E I N PAY R O L L J O B S ( T H O U S A N D S ) 109.6 50 100 150 200 NY LA/ OC DFW Bay Area Was Chi Atl Phi Phx

  • S. Fla

Bos Hou

MEGATREND #4: GROWTH, HEADWINDS

U.S. Payroll Job Change | 12 Months Ending March 2016

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78,600 84,700 31,000 20,000 40,000 60,000 80,000 100,000 120,000

2016 2015

All other sectors Professional and Business Services 30,900

Source: U.S. Bureau of Labor Statistics, NGKF Research; May 2016

28.3% PAY R O L L J O B C H A N G E

MEGATREND #4: GROWTH, HEADWINDS

Bay Area Payroll Job Change by Type of Job | 12 Months Ending March 2015 vs. March 2016 26.7% 115,600 109,600

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$0 $10 $20 $30 $40

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

MEGATREND #4: GROWTH, HEADWINDS

Venture Capital Invested | Silicon Valley

Source: National Venture Capital Association Yearbook, NGKF Research; May 2016

V E N T U R E C A P I TA L I N V E S T E D ( B I L L I O N S ) 20-year average of $12.4 billion $27.4 (but fundraising slowed during the second half of 2015)

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  • 200
  • 100

100 200

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

San Francisco Oakland / East Bay San Jose

MEGATREND #4: GROWTH, HEADWINDS

Bay Area Job Growth to Continue But Decelerate

Source: Moody’s, U.S. Bureau of Labor Statistics, NGKF Research; May 2016

PAY R O L L J O B C H A N G E ( T H O U S A N D S ) 2011-2015 average

  • f 100,500

Projected average of 62,600 25-year average of 25,100 1995-2000 average

  • f 95,900

2005-2008 average

  • f 34,200
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MEGATREND #4: GROWTH, HEADWINDS

Sample of Technology Companies Hiring in the Bay Area | Early 2016

Source: Datafox, TechCrunch, NGKF Research; May 2016

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Source: Datafox, TechCrunch, NGKF Research; May 2016

MEGATREND #4: GROWTH, HEADWINDS

Sample of Technology Companies Reducing Headcount in the Bay Area | Early 2016

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MEGATREND #4: GROWTH, HEADWINDS

What’s Next? | Bay Area’s Tailwinds Position it Well to Endure CRE Cycles

Source: NGKF Research; May 2016

1. Workforce is among the most educated in the country, with the talent to fill available jobs 2. Household incomes are among the highest in the country, boosting spending 3. New technology is creating local economic opportunity, including in robotics, virtual reality, and autonomous driving

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T H E B A Y A R E A O F F I C E M A R K E T

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  • 8
  • 6
  • 4
  • 2

2 4 6 8 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 San Francisco Oakland Silicon Valley Balance of Bay Area 2006 - 2015 Average = 900,000 SF

THE BAY AREA OFFICE MARKET

Net Absorption

Source: NGKF Research; May 2016

M I L L I O N S O F S Q U A R E F E E T 2010 - 2015 Average = 3.3 million SF 6.3

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1 2 3 4 5 6 7

San Francisco Oakland Silicon Valley

Net Absorption: 3.4 MSF/Year = 6.8 MSF Demand Deliveries Planned and may deliver by 3/18: 0.5 MSF Under construction: 10.5 MSF Total = 11.0 MSF Projected at March 2018: 4.5%

THE BAY AREA OFFICE MARKET

Projected Demand and Deliveries | Major Jurisdictions 2 Years Ending March 2018

Source: CoStar, NGKF Research; May 2016

March 2016 vacancy rate: M I L L I O N S O F S Q U A R E F E E T 7.1% 7.4% 6.0% 6.3% 10.0%

Note: Vacancy rates reflect physically vacant space

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  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 40% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 San Francisco Oakland Silicon Valley

THE BAY AREA OFFICE MARKET

Historical Asking Rent Change | Major Jurisdictions

Source: NGKF Research; May 2016

F U L L S E R V I C E A S K I N G R E N T C H A N G E 2007 - 2015 Average = 5.1%

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  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 40% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 San Francisco Oakland Silicon Valley

Source: NGKF Research; May 2016

2-Year Projected Average = 3.5% F U L L S E R V I C E A S K I N G R E N T C H A N G E

THE BAY AREA OFFICE MARKET

Projected Asking Rent Change | Major Jurisdictions 2007 - 2015 Average = 5.1%

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Source: NGKF Research; May 2016

THE BAY AREA OFFICE MARKET

What is Driving Demand? What is Curtailing Demand?

1. Densification, telecommuting, and open floor plans changing tenant needs and attitudes 2. Flexibility of office-sharing environments creating options 3. Cost of space prohibitive for some start-ups 4. Sublease space increasing 1. Office-using jobs being created 2. Pushback against densification gaining momentum 3. Highly-skilled workforce will continue to attract employers Demand Reducers Demand Drivers

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  • Develop with tenant flexibility in mind to compete

effectively in the sharing economy

  • Enhance performance with select amenities and upgrades
  • Market to tenants looking to move or consolidate
  • Refinance with long-term fixed-rate debt

Source: NGKF Research; May 2016

THE BAY AREA OFFICE MARKET

What’s Next? | Opportunities in the Bay Area Office Market

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T H E B A Y A R E A A P A R T M E N T M A R K E T

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Note: Seasonally adjusted Source: U.S. Census Bureau, NGKF Research; May 2016

THE BAY AREA APARTMENT MARKET

Homeownership Rate | United States H O M E O W N E R S H I P R AT E 60% 62% 64% 66% 68% 70% 1980 1985 1990 1995 2000 2005 2010 2015

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  • 4,000

4,000 8,000 12,000 16,000 20,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 San Francisco Metro Oakland Metro San Jose Metro 2006 - 2015 Average = 6,719

THE BAY AREA APARTMENT MARKET

Net Absorption

Source: Axiometrics, NGKF Research; May 2016

A PA R T M E N T U N I T S A B S O R B E D 4,537

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2 4 6 8 10 12 14 16

San Francisco Metro Oakland Metro San Jose Metro

Net Absorption: 11,219/Year = 33,657 units Demand Deliveries Planned and may deliver by 12/18: 9,142 units Under construction: 23,607 units Total = 32,749 units Projected at December 2018: M A R K E T R AT E U N I T S ( T H O U S A N D S ) 4.1% 4.0% 4.5%

Source: Axiometrics, NGKF Research; May 2016

March 2016 vacancy rate: 4.5% 3.1% 4.3%

THE BAY AREA APARTMENT MARKET

Projected Demand and Deliveries | 3 Years Ending December 2018

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  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20% 25% 30% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 San Francisco Metro Oakland Metro San Jose Metro E F F E C T I V E R E N T C H A N G E

THE BAY AREA APARTMENT MARKET

Historical Effective Rent Change 2006 - 2015 Bay Area Average = 6.2%

Source: Axiometrics, NGKF Research; May 2016

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  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20% 25% 30% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 San Francisco Metro Oakland Metro San Jose Metro E F F E C T I V E R E N T C H A N G E

THE BAY AREA APARTMENT MARKET

Projected Effective Rent Change 2006 - 2015 Bay Area Average = 6.2%

Source: Axiometrics, NGKF Research; May 2016

3-Year Projected Bay Area Average = 4.3%

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  • Focus development around transit nodes
  • Cater to work-at-home tenants
  • Renovate well-located Class B assets to target price-

sensitive market – but only where projects will pencil

Source: NGKF Research; May 2016

THE BAY AREA APARTMENT MARKET

What’s Next? | Opportunities in the Bay Area Apartment Market

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T H E B A Y A R E A I N D U S T R I A L M A R K E T

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  • 3
  • 2
  • 1

1 2 3 2010 2011 2012 2013 2014 2015 Q1 2016 R&D Warehouse Balance of Industrial 2010 - 2015 Average = 128,000 SF

THE BAY AREA INDUSTRIAL MARKET

Net Absorption – All Industrial Space

Note: Industrial absorption data includes North Peninsula, South Peninsula, Oakland, Hayward, and Silicon Valley Source: NGKF Research; May 2016

M I L L I O N S O F S Q U A R E F E E T 2013 - 2015 Average = 1.9 million SF

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0.0 0.2 0.4 0.6 0.8 1.0 Net Absorption: 1.0 MSF Demand Deliveries Planned and may deliver by 3/17: 0.0 MSF Under construction: 1.2 MSF Total = 1.2 MSF

Source: CoStar, NGKF Research; May 2016

M I L L I O N S O F S Q U A R E F E E T Projected at March 2017: 2.1% 0.2% March 2016 vacancy rate: 9.9% 0.7% 6.4% 10.1%

  • S. Peninsula
  • N. Peninsula Silicon Valley

THE BAY AREA INDUSTRIAL MARKET

Projected Demand and Deliveries for R&D Space | Major Jurisdictions 1 Year Ending March 2017

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  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 40% 2010 2011 2012 2013 2014 2015 2016 South Peninsula North Peninsula Silicon Valley

Source: NGKF Research; May 2016

T R I P L E - N E T A S K I N G R E N T C H A N G E 2010 - 2015 Bay Area Average = 9.4% 1-Year Projected Bay Area Average = 3.8%

THE BAY AREA INDUSTRIAL MARKET

Asking Rent Change for R&D Space | Major Jurisdictions

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0.0 0.5 1.0 1.5 2.0 2.5

Oakland Hayward Silicon Valley

Net Absorption: 2.5 MSF Demand Deliveries Planned and may deliver by 3/17: 0.4 MSF Under construction: 3.6 MSF Total = 4.0 MSF Projected at March 2017: 2.7% 2.0% March 2016 vacancy rate: M I L L I O N S O F S Q U A R E F E E T 2.4% 4.0% 2.6% 3.2%

THE BAY AREA INDUSTRIAL MARKET

Projected Demand and Deliveries for Warehouse Space | Major Jurisdictions 1 Year Ending March 2017

Source: CoStar, NGKF Research; May 2016

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  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 2015 2016 Oakland Hayward Silicon Valley

Source: NGKF Research; May 2016

T R I P L E - N E T A S K I N G R E N T C H A N G E 2010 - 2015 Bay Area Average = 10.6% 1-Year Projected Bay Area Average = 10.8%

THE BAY AREA INDUSTRIAL MARKET

Asking Rent Change for Warehouse Space | Major Jurisdictions

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  • Build fully operational and functional warehouses

with 36’ clear height and ideal columns for intense racking

  • Focus on proximity to end-user
  • Target distribution center development toward the

needs of large users (FedEx, Amazon, UPS)

  • Consider the possible needs of next-generation

manufacturing when designing new projects (robotics, 3-D printing)

Source: NGKF Research; May 2016

THE BAY AREA INDUSTRIAL MARKET

What’s Next? | Opportunities in the Bay Area Industrial Market

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T H E B A Y A R E A R E T A I L M A R K E T

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  • 4
  • 2

2 4 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 San Francisco Oakland Silicon Valley 2007 - 2015 Average = 1.6 million SF

Source: CoStar, NGKF Research; May 2016

M I L L I O N S O F S Q U A R E F E E T

THE BAY AREA RETAIL MARKET

Net Absorption

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0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

San Francisco Oakland San Jose

Net Absorption: 1.3 MSF/Year = 2.6 MSF Demand Deliveries Planned and may deliver by 3/18: 850,000 SF Under construction: 1.9 MSF Total = 2.7 MSF Projected at March 2018: 2.2% 3.6% 4.7%

Source: CoStar, NGKF Research; May 2016

March 2016 vacancy rate: 2.3% 3.7% 4.5% M I L L I O N S O F S Q U A R E F E E T

THE BAY AREA RETAIL MARKET

Projected Demand and Deliveries | Major Jurisdictions 2 Years Ending March 2018

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  • 20%
  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 San Francisco Oakland San Jose 2008 – 2015 Bay Area Average = -0.2% 2016 – 2017 Projected Bay Area Average = 4.1%

Source: CoStar, NGKF Research; May 2016

2013 - 2015 Average = 5.4% F U L L S E R V I C E A S K I N G R E N T C H A N G E

THE BAY AREA RETAIL MARKET

Asking Rent Change | Major Jurisdictions

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  • Develop grocery-anchored centers and others that are most likely

to perform well as the cycle winds down

  • Focus on place-making via mixed-use developments – housing

shortage is leading to greater popularity of mixed-use, especially at transit-oriented locations

  • Target retailers who have successfully integrated their online and

bricks-and-mortar sales experiences

  • Future retail development will be challenging due to lack of anchor

expansion and competition for retail sites by residential developers

  • Work with department stores as they seek to monetize their

real estate

Source: NGKF Research; May 2016

THE BAY AREA RETAIL MARKET

What’s Next? | Opportunities in the Bay Area Retail Market

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O U T L O O K

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OUTLOOK

Implications for the Bay Area’s CRE Market | Next 12-24 Months

Source: NGKF Research; May 2016

1. Real estate moves in cycles – deceleration expected 2. We are likely in mature phase of cycle – pricing will flatten 3. Phenomenal assets – especially human capital – position Bay Area well for continued success 4. Bay Area’s status as “Center of Innovation” has created tremendous growth, but we can do even better

  • More regional cooperation
  • Transportation improvements
  • Additional affordable and workforce housing stock
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M A Y 1 0 , 2 0 1 6

SAN FRANCISCO