THE NATIONAL ECONOMY DISRUPTIVE EPIDEMICS AND THE U.S. ECONOMY U.S. - PowerPoint PPT Presentation

THE NATIONAL ECONOMY

DISRUPTIVE EPIDEMICS AND THE U.S. ECONOMY U.S. Annual GDP Growth and Epidemic Deaths 1910 - 2020 20% Polio (1916) 7,000 deaths Polio (1946-52) London Flu (1972-73) 7,710 deaths 1,072 deaths 15% Swine Flu SARS (2002-03) Asian Flu (1957-58) (2009-10) 0 deaths 116,000 deaths 10% 7,000 deaths Hong Kong Flu (1968-69) 100,000 deaths 5% 0% Ebola (2014-15) 2 deaths -5% COVID-19 (2020-) -10% 220,000+ deaths Spanish Flu (1918-19) 675,000 deaths -15% 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020* *estimated Source: Bureau of Economic Analysis, CDC, University of Groningen, Delta Associates; October 2020.

QUARTERLY GDP PERCENT CHANGE United States 20-Year Average = 2.0% 10% 5% 0% -5% -10% Q2 2020 = -31.4% -15% -20% -25% -30% -35% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note: Seasonally adjusted at annual rates; change in chained 2012 dollars. Source: Bureau of Economic Analysis, Delta Associates; October 2020.

INITIAL UNEMPLOYMENT CLAIMS United States | Four-Week Moving Average in Millions Great Expansion Period COVID-19 Recession Recession 6.0 Millions Peak (Week of 03/28/20) = 5,790,250 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 (Week of 10/10/20) = 866,250 Peak (Week of 3/28/09) = 659,250 0.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note: Data are seasonally adjusted. Source: Federal Reserve Bank of St. Louis, Delta Associates; October 2020.

PAYROLL JOB GROWTH United States | Monthly in Thousands Great Expansion Period COVID-19 Recession Recession 2,600 2,200 1,800 1,400 September 2020 Monthly Avg. 1,000 = 661,000 = 168,000 600 200 -200 Mar. 2020 -600 = -701,000 Apr 2020 Monthly -1,000 = -20,537,000 Avg. = -383,000 -1,400 08 09 10 11 12 13 14 15 16 17 18 19 20 Note: Data is seasonally adjusted. Source: Bureau of Labor Statistics, Delta Associates; October 2020.

THE WASHINGTON ECONOMY

PAYROLL JOB GROWTH Selected Large Metro Areas | 12 Months Ending August 2020 0 -200 NET CHANGE IN EMPLOYMENT -201.4 -400 (THOUSANDS) -600 -800 -1,000 -1,200 -1,400 Denver Phx Atl DFW Hou Was South FL Bos Chi SF Bay LA Basin NY Source: Bureau of Labor Statistics, Delta Associates; October 2020.

UNEMPLOYMENT RATE Selected Large Metro Areas | August 2019 vs. August 2020 National 16% Rate August 2019 August 2020 14% 12% 10% 8.5% 8. 5% 8% 6% 4% 3.8% 3. 8% 2% 0% Phx Atl DFW Was Den Hou S Fla SF Bay Bos Chi NY LA Basis Point +170 +280 +280 +370 +440 +390 +550 +620 +820 +790 +910 +1,070 Change Source: Bureau of Labor Statistics, Delta Associates; October 2020.

PAYROLL JOB GROWTH Washington Metro Area 140 3-Year THOUSANDS OF NEW PAYROLL JOBS 20-Year Annual Average = 37,600/Year 120 Projected Avg 100 = 12,000/Year 80 60 (ANNUAL AVERAGE) 40 20 0 -20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -40 -60 -80 -100 -120 -140 -160 District Sub. MD No. Virginia Source: Bureau of Labor Statistics, George Mason University Center for Regional Analysis, Delta Associates; October 2020.

PAYROLL JOB GROWTH Washington Metro Area | 12 Months Ending August 2020 12,500 Federal Government Wholesale Trade Construction/Mining Manufacturing Information Financial Activities Other Services -213,900 Transportation/Utilities State and Local Government Retail Trade Professional/Business Services Education/Health Leisure/Hospitality -120,000 -100,000 -80,000 -60,000 -40,000 -20,000 0 20,000 JOB CHANGE Source: Bureau of Labor Statistics, Delta Associates; October 2020.

COVID-19 RELATIVE ECONOMIC IMPACT BY SECTOR Washington Metro Area Leisure/Hospitality Education/Health Services Retail Trade High Transportation/Utilities S E V E R I T Y Manufacturing Construction/Mining Other Services Medium State/Local Govt. Information Wholesale Trade Professional/Business Services Low Federal Govt. Financial Activities Medium Long Short D U R A T I O N Note: Primary demand sources for Class A multifamily units, office, and for-sale housing highlighted in orange. Source: Delta Associates; October 2020.

COVID-19 RELATIVE ECONOMIC IMPACT BY SECTOR Washington Metro Area Leisure/Hospitality Education/Health Services Retail Trade High Transportation/Utilities S E V E R I T Y Manufacturing Construction/Mining Other Services Medium State/Local Govt. Information Wholesale Trade Professional/Business Services Low Federal Govt. Financial Activities Medium Long Short D U R A T I O N Note: Primary demand sources for multifamily units highlighted in blue. Source: Delta Associates; October 2020.

Inland Empire LOW Detroit Las Vegas Sacramento Tampa MEDIUM Los Angeles Portland Avg. = 50.0 Philadelphia Atlanta Charlotte San Francisco Miami/Ft. Laud. Chicago New York Phoenix Orlando HIGH Cincinatti Seattle Denver St. Louis MARKET RESILIENCE INDEX 30 Largest Metropolitan Statistical Areas San Diego Minneapolis Dallas/Fort Worth Baltimore Source: Delta Associates; October 2020. Pittsburgh VERY HIGH Houston Boston San Antonio Washington Austin 100 90 80 70 60 50 40 30 20 10 0

THE WASHINGTON METRO AREA APARTMENT MARKET

LARGET APARTMENT MARKETS Selected Metro Areas | 2018 3,000 2,500 U N I T S ( T H O U S A N D S ) 2,000 1,500 1,000 561 500 0 NY LA Basin Chi SF Bay DFW Hou Wash So FL Bos Atl Source: U.S. Census Bureau, Delta Associates; October 2020.

ANNUAL CLASS A APARTMENT ABSORPTION AND DELIVERIES Washington Metro Area Expansion Period 16,000 Average = 8,001 Expansion Period 14,000 Average = 9,054 12,000 10,000 8,000 6,000 4,000 2,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Absorption Deliveries Average Absorption Average Deliveries Note: Shaded bars represent recession periods. Source: Delta Associates; October 2020.

CLASS A APARTMENT ABSORPTION Top 10 Submarkets in Washington Metro Area | 12 Mo. Ending September 2020 1,200 1,000 800 U N I T S 600 400 200 0 Source: Delta Associates; October 2020.

ABSORPTION PACE Class A Projects in Initial Lease-Up | Washington Metro Area 20 85 Absorption Pace Number of Projects U N I T S P E R P R O J E C T P E R M O N T H 18 75 16 N U M B E R O F P R O J E C T S I N A C T I V E L E A S E U P 65 14 12 55 10 45 8 6 35 4 25 2 0 15 9/13 9/14 9/15 9/16 9/17 9/18 9/19 9/20 Source: Delta Associates; October 2020.

STABILIZED APARTMENT VACANCY RATES Major Apartment Markets | Third Quarter 2020 National Vacancy Rate = 4.9% 6% VA C A N C Y R AT E ( A L L C L A S S E S ) 5% 4.5% 4% 3% 2% 1% 0% LA Phi NY Wash Phx Balt Atl Chi DFW Hou Source: Axiometrics, Delta Associates; October 2020.

ANNUAL EFFECTIVE RENT GROWTH Class A Apartments | Washington Metro Area | 2007 - 2020 10% Long-Term Average Rent Growth = 3.5% 8% 6% 4% 2% 0% -2% -4% -6% -8% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Source: Delta Associates; October 2020. *12 months ending September 2020.

PROJECTS CURRENTLY UNDER CONSTRUCTION District of Columbia In Lease-up Not Yet Leasing Source: Delta Associates; October 2020.

36-MONTH APARTMENT DEVELOPMENT PIPELINE* Washington Metro Area | 2007 - 2020 45,000 40,000 M A R K E T - R AT E U N I T S 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020** Source: Delta Associates; October 2020. *Market-Rate Units Planned and Under Construction After Attrition. **As of Third Quarter.

PROJECTED DELIVERIES Washington Metro Area | 2020 - 2022 6,000 District Sub MD No VA 5,000 M A R K E T - R AT E U N I T S Projected Class A Quarterly 4,000 Absorption = 2,229 C L A S S A 3,000 2,000 1,000 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 2021 2022 Source: Delta Associates; October 2020.

36-MONTH APARTMENT DEVELOPMENT PIPELINE* Top 10 Submarkets in Washington Metro Area | Third Quarter 2020 7,000 6,000 M A R K E T - R AT E U N I T S 5,000 C L A S S A 4,000 3,000 2,000 1,000 0 Source: Delta Associates; October 2020. *Market-Rate Units Planned and Under Construction After Attrition.

DEMAND AND SUPPLY PROJECTIONS Washington Metro Area Class A Apartments | 36 Mo. Ending September 2023 20 DEMAND 18 MARKET-RATE UNITS (THOUSANDS) Net Absorption: 16 8,917/Year = 26,750 14 12 SUPPLY 10 Planned and may 8 deliver by 9/23: 2,681 units 1 6 Under construction: 4 38,961 units 2 2 Total = 41,642 units 0 No VA Sub MD The District 1 Probable supply after projected attrition. 2 Includes unleased units at projects in 3.9% 4.1% 5.5% lease-up . Projected Stabilized Vacancy % at September 2023 4.4% Metro-Wide Source: Delta Associates; October 2020.