THE NATIONAL ECONOMY Source: Delta Associates; October 2018. THE - - PowerPoint PPT Presentation

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THE NATIONAL ECONOMY Source: Delta Associates; October 2018. THE - - PowerPoint PPT Presentation

Jan 11, 2024 24 likes •745 views

THE NATIONAL ECONOMY Source: Delta Associates; October 2018. THE NATIONAL ECONOMY Source: Delta Associates; October 2018. THE NATIONAL ECONOMY Source: Delta Associates; October 2018. THE NATIONAL ECONOMY Source: Delta Associates; October

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THE NATIONAL ECONOMY

Source: Delta Associates; October 2018.

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THE NATIONAL ECONOMY

Source: Delta Associates; October 2018.

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THE NATIONAL ECONOMY

Source: Delta Associates; October 2018.

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THE NATIONAL ECONOMY

Source: Delta Associates; October 2018.

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THE NATIONAL ECONOMY

Source: Delta Associates; October 2018.

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AMAZON HQ2

Will it be Located in the Washington Metro Area?

Source: DMPED, Delta Associates, October 2018.

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PAYROLL JOB GROWTH

Selected Large Metro Areas | 12 Months Ending August 2018

PAY R O L L J O B S ( T H O U S A N D S )

20 40 60 80 100 120 140 160 NY DFW Hou Phx LA Basin Was Bos Atl 64.9

Source: Bureau of Labor Statistics, Delta Associates; October 2018.

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0% 1% 2% 3% 4% 5% 6% SF Bay Den Bos Was DFW Atl S Fla Chi NY Hou Phx LA

August 2017 August 2018

National Rate 4.5% 3.9%

YoY Basis Point ∆

UNEMPLOYMENT RATE *

Selected Large Metro Areas | August 2017 vs. August 2018

*Not seasonally adjusted.

  • 40

+10

  • 80
  • 70
  • 140
  • 70
  • 110
  • 20
  • 30
  • 10

+60

  • 80

Source: Bureau of Labor Statistics, Delta Associates; October 2018.

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PROJECTED JOB GROWTH

Washington Metro Area | 2000 - 2020

PAY R O L L J O B S ( T H O U S A N D S )

  • 60
  • 40
  • 20

20 40 60 80 100 120 140 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 The District Sub MD No VA

20-Year Annual Average = 43,300/Year 3-Year Projected Average = 38,400/Year

Source: Bureau of Labor Statistics, George Mason University Center for Regional Analysis, Delta Associates; October 2018.

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J O B C H A N G E

PAYROLL JOB GROWTH

Washington Metro Area | 12 Months Ending August 2018

  • 5,000

1,000 7,000 13,000 19,000 25,000 Federal Government Information Wholesale Trade Manufacturing Other Services Retail Trade Financial Activities Transportation/Utilities Construction/Mining State and Local Government Leisure/Hospitality Education/Health Professional/Business Services 70,300

  • 5,400

Source: Bureau of Labor Statistics, Delta Associates; October 2018.

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J O B C H A N G E

PAYROLL JOB GROWTH

Washington Metro Area | 12 Months Ending August 2018

  • 5,000

1,000 7,000 13,000 19,000 25,000 Federal Government Information Wholesale Trade Manufacturing Other Services Retail Trade Financial Activities Transportation/Utilities Construction/Mining State and Local Government Leisure/Hospitality Education/Health Professional/Business Services 70,300

  • 5,400

Source: Bureau of Labor Statistics, Delta Associates; October 2018.

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J O B C H A N G E

PAYROLL JOB GROWTH

Washington Metro Area | 12 Months Ending August 2018

  • 5,000

1,000 7,000 13,000 19,000 25,000 Federal Government Information Wholesale Trade Manufacturing Other Services Retail Trade Financial Activities Transportation/Utilities Construction/Mining State and Local Government Leisure/Hospitality Education/Health Professional/Business Services 70,300

  • 5,400

Source: Bureau of Labor Statistics, Delta Associates; October 2018.

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500 1,000 1,500 2,000 2,500 3,000 NY LA Basin Chi SF Bay DFW Hou Wash So FL Bos Atl

565

U N I T S ( T H O U S A N D S )

LARGEST APARTMENT MARKETS

Selected Metro Areas | 2017

Source: U.S. Census Bureau, Delta Associates; October 2018.

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2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 05 06 07 08 09 10 11 12 13 14 15 16 17 18* 19 20 21 M A R K E T - R AT E U N I T S

*12 months ending September 2018.

Long-Term Average = 7,222 Average Since 2008 = 8,138

Source: Delta Associates; October 2018.

CLASS A APARTMENT ABSORPTION

Washington Metro Area | 2005 - 2018

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2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 05 06 07 08 09 10 11 12 13 14 15 16 17 18* 19 20 21 M A R K E T - R AT E U N I T S

*12 months ending September 2018.

Long-Term Average = 7,222 Average Since 2008 = 8,138

Source: Delta Associates; October 2018.

CLASS A APARTMENT ABSORPTION

Washington Metro Area | 2005 - 2021

Annual Average ~ 9,000

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ABSORPTION PACE

Class A Projects in Initial Lease-Up | Washington Metro Area

15 25 35 45 55 65 75 85 2 4 6 8 10 12 14 16 18 20 9/11 9/12 9/13 9/14 9/15 9/16 9/17 9/18 Absorption Pace Number of Projects

Source: Delta Associates; October 2018.

U N I T S P E R P R O J E C T P E R M O N T H

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ABSORPTION PACE

Class A Projects in Initial Lease-Up | Washington Metro Area

15 25 35 45 55 65 75 85 2 4 6 8 10 12 14 16 18 20 9/11 9/12 9/13 9/14 9/15 9/16 9/17 9/18 Absorption Pace Number of Projects 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

Source: Delta Associates; October 2018.

U N I T S P E R P R O J E C T P E R M O N T H

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3.6% 0% 1% 2% 3% 4% 5% 6% 7%

LA Wash Phi Atl Chi Phx NY DFW Balt Bos Hou

VA C A N C Y R AT E ( A L L C L A S S E S )

STABILIZED APARTMENT VACANCY RATES

Major Apartment Markets | Second Quarter 2018

National Vacancy Rate = 4.8%

Source: REIS, Delta Associates; October 2018.

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  • 4%
  • 2%

0% 2% 4% 6% 8% 10%

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

Long-Term Average Rent Growth = 3.9%

*12 months ending September 2018.

ANNUAL EFFECTIVE RENT GROWTH

Class A Apartments | Washington Metro Area | 2005 - 2018 1.4%

Source: Delta Associates; October 2018.

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PROJECTS CURRENTLY UNDER CONSTRUCTION

District of Columbia

In Lease-up Not Yet Leasing

Source: Delta Associates; October 2018.

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APARTMENT DELIVERIES

Washington Metro Area | 2015 - 2018

1,000 2,000 3,000 4,000 5,000 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 The District Sub MD No VA

Class A Quarterly Absorption = 2,724

C L A S S A M A R K E T - R AT E U N I T S 2016 2017 2018 2015

Source: Delta Associates; October 2018.

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  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% Mt Vern Tri 14th St NoMa H Street Cap Riv Submarket District

CLASS A APARTMENT RENT GROWTH

Selected Submarkets in the District | 2012 - 2018

Source: Delta Associates; October 2018.

Q1’12 – Q1’15 Q1’13 – Q1’16 Q1’13 – Q1’16 Q1’15 – Q1’18 Q2’15 – Q2’18

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5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 M A R K E T - R AT E U N I T S

*Market-Rate Units Planned and Under Construction After Attrition **As of Third Quarter. Source: Delta Associates; October 2018.

36-MONTH APARTMENT DEVELOPMENT PIPELINE*

Washington Metro Area | 2005 - 2018

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500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 The District Sub MD No VA C L A S S A M A R K E T - R AT E U N I T S

Class A Projected Quarterly Absorption = 2,225

2018 2019 2020

Source: Delta Associates; October 2018.

PROJECTED DELIVERIES

Washington Metro Area | 2018 - 2020

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

Source: Delta Associates; October 2018.

36-MONTH APARTMENT DEVELOPMENT PIPELINE*

Top 10 Submarkets in Washington Metro Area | Third Quarter 2018

The District No VA Sub MD C L A S S A M A R K E T - R AT E U N I T S

*Market-Rate Units Planned and Under Construction After Attrition.

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2 4 6 8 10 12 14 16 No VA Sub MD The District Net Absorption: 9,000/Year = 27,000

DEMAND SUPPLY

Planned and may deliver by 9/21: 7,049 units

1

Under construction: 30,091 units

2

Total = 37,140 units

4.0% 4.5% 4.8% Projected Stabilized Vacancy % at September 2021 4.3% Metro-Wide

MARKET-RATE UNITS (THOUSANDS)

DEMAND AND SUPPLY PROJECTIONS

Washington Metro Area Class A Apartments | 36 Months Ending September 2021

Source: Delta Associates; October 2018.

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  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019 2020 2021

ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTH

Washington Metro Area | 2005 - 2018

Long-Term Average = 3.9%

* Annual rent growth at Third Quarter 2018 is 1.4%. Source: Delta Associates; October 2018.

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  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019 2020 2021

ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTH

Washington Metro Area | 2005 - 2021

Long-Term Average = 3.9%

* Annual rent growth at Third Quarter 2018 is 1.4%. Source: Delta Associates; October 2018.

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3,586 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019 - 2021

M A R K E T - R AT E U N I T S

*12 months ending September 2018.

10-Year Average = 1,998 Annual Average ~ 2,333

CLASS A APARTMENT ABSORPTION

Baltimore Metro Area | 2009 - 2018

Source: Delta Associates; October 2018.

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3,586 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019 - 2021

M A R K E T - R AT E U N I T S

*12 months ending September 2018.

10-Year Average = 1,998 Annual Average ~ 2,333

CLASS A APARTMENT ABSORPTION

Baltimore Metro Area | 2009 - 2021

Source: Delta Associates; October 2018.

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EFFECTIVE RENT AND VACANCY RATE

Class A Apartments | Baltimore Metro Area | 2000 - 2018

$800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 0% 1% 2% 3% 4% 5% 6% 7% Average Effective Base Rent Stabilized Vacancy

S TA B I L I Z E D V A C A N C Y R AT E A V E R A G E E F F E C T I V E B A S E R E N T

3 . 8 % / Y E A R L O N G - T E R M R E N T G R O W T H

* As of Third Quarter. Source: Delta Associates; October 2018.

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**As of Third Quarter

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

36-MONTH APARTMENT DEVELOPMENT PIPELINE*

Baltimore Metro Area | 2005 - 2018

M A R K E T - R AT E U N I T S

*Market-Rate Units Planned and Under Construction After Attrition. Source: Delta Associates; October 2018.

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

DEMAND AND SUPPLY PROJECTIONS

Baltimore Metro Area Class A Apartments | 36 Months Ending September 2021

Net Absorption: 2,333/Year = 7,000

D E M A N D S U P P LY

Planned and may deliver by 9/21: 1,234 units

1

Under construction: 6,719 units

2

Total = 7,953 units

Baltimore Metro Area

M A R K E T - R AT E U N I T S

Projected Stabilized Vacancy Rate at Sept. 2021: 4.0% Metro-Wide

Source: Delta Associates; October 2018.

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  • 2%
  • 1%

0% 1% 2% 3% 4% 5% 6% Long-Term Average = 3.8%

* Annual rent growth at Third Quarter 2018 is 1.5%.

ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTH

Baltimore Metro Area | 2005 - 2018

Source: Delta Associates; October 2018.

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  • 2%
  • 1%

0% 1% 2% 3% 4% 5% 6% Long-Term Average = 3.8%

* Annual rent growth at Third Quarter 2018 is 1.5%.

ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTH

Baltimore Metro Area | 2005 - 2021

Source: Delta Associates; October 2018.

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$0 $2 $4 $6 $8 $10 $12 $14 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* LA DFW Chi Was Bal

B I L L I O N S

APARTMENT INVESTMENT SALES

Selected Metro Areas | 2009 - 2018

*Sales through September annualized. Source: Real Capital Analytics, Delta Associates; October 2018.

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0% 2% 4% 6% 8% 10% 12% 14% Phx Atl Den Bos Hou Aus DFW Was Chi

5.0%

NCREIF RETURN INDEX FOR INVESTMENT-GRADE APARTMENTS

Selected Metro Areas | 12 Months Ending June 2018

Source: NCREIF, Delta Associates; October 2018.

National Average = 6.5%

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Source: Delta Associates Market Maker Survey; October 2018.

CLASS A HIGH-RISE APARTMENT CAP RATES

Washington Metro Area | 2007 - 2017

5.62% 6.44% 6.61% 5.29% 4.94% 5.06% 5.11% 4.92% 4.75% 4.80% 4.88% 0% 1% 2% 3% 4% 5% 6% 7% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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YEARS OF SUPPLY

Low-Rise Class A Submarkets | Washington Metro Area

1.0 – 1.9 Less than 1.0

Source: Delta Associates; October 2018.

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1.0 – 1.9 Less than 1.0 2.0 – 2.9 3.0 – 3.9

Source: Delta Associates; October 2018.

YEARS OF SUPPLY

High-Rise Class A Submarkets | Washington Metro Area

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1.0 – 1.9 Less than 1.0 2.0 – 2.9

Source: Delta Associates; October 2018.

YEARS OF SUPPLY

Class A Submarkets | Baltimore Metro Area

3.0 – 3.9

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TAKEAWAYS

Washington/Baltimore Area Apartment Market

Source: Delta Associates; October 2018.

  • ABOVE-AVERAGE

ABSORPTION TO CONTINUE, BUT DECREASE IN VELOCITY

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TAKEAWAYS

Washington/Baltimore Area Apartment Market

Source: Delta Associates; October 2018.

  • ABOVE-AVERAGE

ABSORPTION TO CONTINUE, BUT DECREASE IN VELOCITY

  • DEVELOPMENT

PIPELINE REMAINS ELEVATED, ALTHOUGH MOST NEW SUPPLY IN FEW SUBMARKETS

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TAKEAWAYS

Washington/Baltimore Area Apartment Market

Source: Delta Associates; October 2018.

  • ABOVE-AVERAGE

ABSORPTION TO CONTINUE, BUT DECREASE IN VELOCITY

  • RENTS WILL INCREASE

BELOW THE LONG- TERM AVERAGE

  • DEVELOPMENT

PIPELINE REMAINS ELEVATED, ALTHOUGH MOST NEW SUPPLY IN FEW SUBMARKETS

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RECOMMENDED DEVELOPMENT TIMING

Washington/Baltimore Area Apartment Market

= Site Assembly = Construction = Delivery

2021 2020 2019 2018

A PA R T M E N T S

2022

Source: Delta Associates; October 2018.

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100 200 300 400 500 600 700 NY Chi So FL LA Basin Bos Wash SF Bay Sea Tampa Bay Den

127

U N I T S ( T H O U S A N D S )

LARGEST CONDOMINIUM MARKETS

Selected Metro Areas | 2017

Source: U.S. Census Bureau, Delta Associates; October 2018.

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CONDOMINIUM SALES ACTIVITY

Washington Metro Area | 12 Months Ending September 2018 Compared to Prior Year

Source: Delta Associates; October 2018.

Down 26% - 50% Down more than 50% Down 1% - 25% Up 0% - 25% Up 26% - 50% Up more than 50%

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*12 months ending August 2018.

8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000

U N I T S

Average From 2003 - 2007 = 17,890

Source: MRIS, Delta Associates; October 2018.

ANNUAL CONDOMINIUM RESALES

Washington Metro Area | 2003 - 2018

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*12 months ending August 2018.

8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000

U N I T S

Average From 2008 - 2012 = 11,280

Source: MRIS, Delta Associates; October 2018.

ANNUAL CONDOMINIUM RESALES

Washington Metro Area | 2003 - 2018

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*12 months ending August 2018.

8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000

U N I T S

Average Since 2013 = 15,259

Source: MRIS, Delta Associates; October 2018.

ANNUAL CONDOMINIUM RESALES

Washington Metro Area | 2003 - 2018

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  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019

1.5% 1.1%

Source: Delta Associates; October 2018. *12 months ending September 2018.

EFFECTIVE NEW CONDOMINIUM SALES PRICE CHANGE

Washington Metro Area | 2005 - 2018

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  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019

1.5% 1.1%

Source: Delta Associates; October 2018. *12 months ending September 2018.

EFFECTIVE NEW CONDOMINIUM SALES PRICE CHANGE

Washington Metro Area | 2005 - 2019

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$1,300 $1,014 $847 $672 $587 $559 $502 $227 $208 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Upper NW DC Central DC Arl/Alex Cap East DC Ffx/FC Mont Mideast DC

  • Pr. George's

Lou/PrWm

Source: Delta Associates; October 2018.

NEW CONDOMINIUM AVERAGE PRICE PER SF

Washington Metro Area | Third Quarter 2018

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$2,804 $1,300 $1,223 $1,135 $1,127 $1,086 $1,014 $747 $707 $672 $502 $438 $0 $300 $600 $900 $1,200 $1,500 $1,800 $2,100 $2,400 $2,700 $3,000

Manhattan Upper NW DC San Francisco Queens Seattle Brooklyn Central DC L.A. San Diego Capitol East DC Mideast DC Baltimore City

*Third Quarter 2018 except for cities outside of the Washington/Baltimore region which are as of Second Quarter 2018. Source: The Mark Company, Miller Samuel Inc., Delta Associates, October 2018.

NEW CONDOMINIUM AVERAGE PRICE PER SF

Selected Downtown Areas in the U.S. | Third Quarter 2018*

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3.1%

  • 10%
  • 5%

0% 5% 10% 15% 20% 25% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

* 12 months ending August 2018. Source: MRIS, Delta Associates; October 2018.

RESALE CONDOMINIUM SALES PRICE CHANGE

Washington Metro Area | 2005 - 2018

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4,000 8,000 12,000 16,000 20,000 24,000

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

M A R K E T - R AT E U N I T S

2,665

Note: Number of units are for September of each year.

UNSOLD NEW CONDOMINIUM UNITS ACTIVELY MARKETING OR UNDER CONSTRUCTION

Washington Metro Area | 2005 - 2018

Source: Delta Associates; October 2018.

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13.1 10 20 30 40 50 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019

Source: Delta Associates; October 2018.

MONTHS OF NEW CONDOMINIUM SUPPLY

Washington Metro Area | 2005 - 2018

*as of Third Quarter 2018.

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13.1 10 20 30 40 50 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019

Source: Delta Associates; October 2018.

MONTHS OF NEW CONDOMINIUM SUPPLY

Washington Metro Area | 2005 - 2019

*as of Third Quarter 2018.

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Source: Delta Associates; October 2018.

MONTHS OF NEW CONDOMINIUM SUPPLY BY SUBMARKET

Washington Metro Area | Third Quarter 2018

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500 1,000 1,500 2,000 2,500 3,000

The District No VA Sub MD

Net Sales: 1,975/Year = 5,925 units

D E M A N D

Planned and May Begin Marketing by 9/21: 2,629 units

1

Under Construction and/or Marketing: 2,665 units

2

Total = 5,294 units M A R K E T - R AT E U N I T S

Source: Delta Associates; October 2018.

DEMAND AND SUPPLY PROJECTIONS

Washington Metro Area Condominiums | 36 Months Ending September 2021

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TAKEAWAYS

Washington Area Condominium Market

Source: Delta Associates; October 2018.

  • S U P P P LY - C O N S T R A I N E D

M A R K E T C O N D I T I O N S P E RS I S T

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TAKEAWAYS

Washington Area Condominium Market

Source: Delta Associates; October 2018.

  • N E W C O N D O S A L E S W I L L

N OT I N C R E A S E M U C H U N T I L M O R E N E W D E V E LO P M E N T O C C U RS I N T H E M E T R O A R E A

  • S U P P P LY - C O N S T R A I N E D

M A R K E T C O N D I T I O N S P E RS I S T

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TAKEAWAYS

Washington Area Condominium Market

Source: Delta Associates; October 2018.

  • N E W C O N D O S A L E S W I L L

N OT I N C R E A S E M U C H U N T I L M O R E N E W D E V E LO P M E N T O C C U RS I N T H E M E T R O A R E A

  • P R I C E G R OW T H M I N I M A L

D E S P I T E M A R K E T S H O R TA G E F O R N E W P R O D U C T A N D R E S A L E S

  • S U P P LY - C O N S T R A I N E D

M A R K E T C O N D I T I O N S P E RS I S T

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RECOMMENDED DEVELOPMENT TIMING

Washington Metro Area Condominium Market

= Site Assembly = Construction = Delivery

2021 2020 2019 2018

C O N D O M I N I U M S

2022

Source: Delta Associates; October 2018.