Welcome Columbus Investor Forum May 12, 2016 Columbus Investor - - PowerPoint PPT Presentation

Welcome Columbus Investor Forum

May 12, 2016

Columbus Investor Forum

Market of Focus: Columbus, Ohio

Presented by:

Doug Wilson

SVN, Managing Director, Columbus

Tim Treasure

SVN, Managing Broker

“Maximum Competition = Maximum Value”

Columbus Investor Forum

Sponsors: Anne Treasure, JD/CPA Tim Norris, Sr. Vice President Jennifer Alvarez, CEO

“Maximum Competition = Maximum Value”

What to expect…

• Commercial Real Estate Market Overview
• What is the “SVN Difference”
• Expansion of Columbus SVN
• Presentation of Forum Sponsors:

– Tim Norris, Columbus First Bank – Ann Treasure, Whalen and Co. CPA’s – Jim Havens, Cardinal Title

Robert M. White Jr., CRE, FRICS

US Commercial Real Estate Capital Markets Update

April 5, 2016

US 2015 – ANOTHER STRONG YEAR

US Quarterly Volume & Pricing

*Moody’s/RCA CPPI, national aggregate, December 2000 = 100

25 50 75 100 125 150 175 200 225 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Billions

Individual Portfolio Entity CRE Prices*

RECENT TRENDS SLOWING

140 150 160 170 180 190 200 210 220

1 '14 2 3 4 5 6 7 8 9 10 11 12 1 '15 2 3 4 5 6 7 8 9 10 11 12 1 '16 2

• 40%
• 20%

0% 20% 40% 60% 80% 100%

1 '14 2 3 4 5 6 7 8 9 10 11 12 1 '15 2 3 4 5 6 7 8 9 10 11 12 1 '16 2

Year-Over-Year Change in Monthly Volume

(excluding portfolios)

Commercial Property Prices

(Moody’s/RCA CPPI National Aggregate)

MORTGAGE RATES RISING

CRE CAPITAL MOUNTING

$167 $171 $180 $148 $167 $156 $186 $199 $252 Dec '07 Dec '08 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 Source: Preqin

Dry Powder in Real Estate Funds

BROAD BASE OF EQUITY CAPITAL

RECORD CROSS-BORDER INFLOWS TO US

US Direct Acquisitions by Foreign Buyers

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Canada Europe Middle East Asia Australia Latin America

billions

SHIFTING SOURCES OF DEBT CAPITAL

DEBT AND EQUITY TRENDS STILL FAVOR MAJOR METROS

HEADWIND: MORE CAPITAL FLOWING TO DEVELOPMENT

Dollars Invested in Construction HOWEVER NEW FED SCRUTINY AND REGS ON CONSTRUCTION LOANS SHOULD KEEP BANKS DISCIPLINED…

HEADWIND: RISING INTEREST RATES?

OFFICE, INDUSTRIAL, RETAIL PROPERTIES

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

10yr UST* Mortgage Rate Cap Rate

WHAT’S NEXT: FROM GREAT TO GOOD

PREA CONCENSUS Moody’s Analytics

MACRO: GDP, Jobs & Money

• US GDP IS 70% CONSUMER DEMAND
• 2015 GDP growth @ 2 - 3%
• 2016 GDP Growth, likely in same range as 2015.
• Political uncertainties = repeat of 2015: budget extensions, high deficits
• Jobs @ 200K/month
• Consumer debt is declining
• Consumers still spending
• Corporate profits: softening
• Investment markets still flooded with capital
• Expect little inflation + only modest interest rate change

Real Estate National Outlook

• $200 billion, annualized in transactions in 2015

– (up 15% over 2014), no decline anticipated – 2016, slight decline in the 1st quarter

• Job growth slowly impacting office absorption
• Apartments: “the new” demographic

– Substantial room for additional construction

• Retail property sales will ease into single digits cap rates and

construction still slow.

• Real estate remain asset class of choice for at least next decade
• Increased institutional investment in secondary & tertiary markets
• Cap rate compression makes asset & property management critical
• Low interest rates the new normal in the near future

APARTMENT OVERVIEW:

• Strong Demand vs. Bubble Market?
• Growth of Households still outpacing new construction
• Fundamentals Still Strengthening:

– Vacancy 4%, Rent Growth 3.5% – Population Growth: 22,000/yr in the Columbus MSA – Millennial Population exceeds Baby Boomer Population – New Construction mostly single bedroom – Only entry level housing boom slows apartments

• Large quantities of affordable capital driving investment market
• Columbus Pricing is VERY attractive compared to US average.
• Columbus apartments are on the radar of National Investors

Columbus Apartments – Number of Sales Transactions

10 20 30 40 50 60 70 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Apartments – Sales Volume

$0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Apartments – Average Price Per Unit

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016

Source: Xceligent

Columbus Apartments Cap Rates

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2012 2013 2014 2015 2016 Apartments - Secondary Apartments - Teritary

Source: Xceligent

Completed Projects Under Construction Planned/Proposed Columbus Submarkets

1 University/Downtown 2 Bexley 3 Sharon/Worthington 4 Dublin/Powell 5 Hilliard 6 Grove City 7 Whitehall/Gahanna/Reynoldsburg 8 Northeast/Minerva Park 9 Westerville 10 Southeast 11 Groveport/Canal Winchester 12 Upper Arlington/North Columbus

RETAIL OVERVIEW:

• Construction Levels Slowly Improving – Still Strong By Local

Standards

• Selective Big Box and Existing Renovations Show most Strength.
• Vacancy Improving, in all Sub Markets
• Cap Rates Falling: Dearth of New Construction combined with

Job Growth

• Local Market is Strong Fundamentally.

Columbus Retail Number of Sales Transactions

20 40 60 80 100 120 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Retail Sales Volume

$0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 $160,000,000 $180,000,000 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Retail Cap Rates

7.00% 7.50% 8.00% 8.50% 9.00% 9.50% 10.00% 2012 2013 2014 2015 2016 Source: Xceligent

OFFICE OVERVIEW:

• Fundamentals Improving, Finally
• Vacancy Beginning to Wane, especially CBD
• Transactions Increasing, Especially CBD:

– Mixed Use, 250 S. High St.

• Cap Rates and Prices Locally Very Intriguing
• Institutional Buyers Active in Columbus “hyper markets” Now

– Grandview Yard – Easton – Polaris

Columbus Office Number of Sales Transactions

10 20 30 40 50 60 70 80 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Office Sales Volume

$0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 $160,000,000 $180,000,000 $200,000,000 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Office Cap Rates

8.00% 8.50% 9.00% 9.50% 10.00% 10.50% 11.00% 2012 2013 2014 2015 2016 Source: Xceligent

INDUSTRIAL OVERVIEW:

• Locally Diminished Speculative Development Aiding

Absorption

• Developers Have Looked at Improvements as an Opportunity

to Expand

• Growth Sluggish and Expansion in Manufacturing, Nationally
• Columbus Warehouse Space Leading Improvement
• Vacancy Improving Locally
• CAP Rate reflects compression pricing from low vacancy and

slow construction

Columbus Industrial Number of Sales Transactions

10 20 30 40 50 60 70 80 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Industrial Sales Volume

$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2012 2013 2014 2015 2016 Source: Xceligent

Columbus Industrial Cap Rates

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2012 2013 2014 2015 2016 Source: Xceligent

So What?. . . 2016 and you…

• Cap Rate Compression:

− Less with Multifamily, but more compression otherwise − But with high BPS spreads vs. T-Bills…

• Affordable capital still available…
• Record number of investors…
• Low capital gain rate unchanged for <$450k Income, 15%
• Vacancy % moving in right direction…
• Supply and demand always in play…
• Lack of alternative asset investments…

The bottom line…

• Buy product you understand
• Buy in a market you understand
• Tolerate RISK on your terms
• Don’t buy and sell the same way
• Sell to outside “capital”
• Do not try to “finitely” time the market
• Diversify

2016 Business Trends

How we usespace. How we build space. How we re-use space. How we move products between spaces.

Employee experience Offices designedfor:

Concentration Collaboration Socialization Education

Less about the desk.

How to Make Old Buildings Attractive

• Neighborhood/Community Retail in

building or nearby

• Urbanization of the location Multiple

commonareas

• Lots of glass/interactive walls
• Collaborativespaces
• Open space along windows

The future of housing? Co- l iving

common

K R ' A S H

commonspace

2 2 2 1 S. Clark Street

Crystal City

,

f

See what you put in storage.

View your catalog of stuff and account activity, add photos and descriptions, and more.

• A p p Store

• Furniture with multiple uses
• Recycling furniture program
• 3D printing spare parts
• Flat packaging

Upload your 3D Design in the simple .STL format Choose a Print Location and see real- time prices

Pick up

your Product

• r getitshipped

Summing it All Up

Millennials are questioning the default option -affecting how we work and live.

New users of space Different reuse of space New services for people in those spaces

Open, Collaborative & Transparent is now the preferred work and lifestyle option.

Offices Companies Housing

Wilson Commercial Group

Doug Wilson, Managing Director Tim Treasure, Managing Broker Kristen Asman, Senior Advisor Steven Heiser, Senior Advisor Jack Turner, Senior Advisor Chris Salomone, Senior Advisor Nail Dawaher, Senior Advisor Mike Bockbrader, Advisor Rick Bergman, Advisor Beth Long, Advisor Toyia Devine, Advisor Michele Reynolds, Advisor Joe Smiley, Advisor Ann Lhota, Advisor

240 Offices Nationally, 1500 Advisors “Local Listings with World Class Marketing” GROWING TO MEET THE NEEDS OF CLIENTS AND THE COMMUNITY

4200 Regent Drive, Suite 200, Columbus, Ohio, 43219, 614-206-3881