Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Investor Day (May 2006)
90 slides from Cbre's investor day presentation, May 17, 2006
Slide 1: Manhattan Market Outlook
Business Review Day Manhattan Market Outlook May 17, 2006 John Powers Co-Chairman, New York Tri-State Region Exhibit 99.5
Slide 2: Reconsidering Price Constraints
Reconsidering Price Constraints Downhill Speed
Slide 3: Downhill Speed
Downhill Speed Reconsidering Price Constraints
Slide 4: National Economy
National Economy GDP Growth Strong
Slide 5: U.S. Economy
U.S. Economy Overview: U.S. GDP (2002 – 2006 YTD) First Quarter 2006 Real GDP up 4.8% 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Q1 '02 Q1 '03 Q1 '04 Q1 '05 Q1 '0
Slide 6: Economic Performance
4.9% 1.5% 4Q ’05 4.7% 1.5% 1Q ‘06 5.1% Unemployment Rate 1.6% Job Growth 3Q ’05 Economic Performance Source: Federal Reserve Bank
Slide 7: Economic Performance
3.8% -0.3% 9.4% 4Q ’05 7.6% 7.9% Personal Consumption 3.2% 6.7% 1Q ‘06 4.2% Productivity 2.6% Personal Income 3Q ’05 Economic Performance Source: Federal Reserve Bank
Slide 8: Consumer Confidence
109.6 107.5 102.7 Consumer Confidence 87.4 N/A N/A N/A April 88.9 1.9% 7.9% 4.2% March 86.7 Consumer Sentiment 2.5% New Housing Starts (1) 6.7% Retail Sales (1) 0.4% Durable Goods (1) February (1) Year over year Economic Performance Source: Federal Reserve Bank
Slide 9: Corporate Profits
Corporate Profits % Change Qtr. Over Qtr. Corporate Profits Fixed Investment Source: Bureau of Labor Statistics -15% -10% -5% 0% 5% 10% 15% 20% 25% Q3, 2001 Q3, 2002 Q3, 2003 Q3, 2004 Q3, 2005
Slide 10: Wall Street Performance
Wall Street Performance 2004 2005 YTD 2006 NASDAQ 9% 1% 2% S&P 500 11% 3% 3% Dow Jones 3% 1% 6%
Slide 11: U.S. Economy
U.S. Economy USD is Again Weakening Versus EURO Euros to 1 USD Source: US Treasury
Slide 12: Imports / Exports
Imports / Exports 13.0% 12.1% 1Q 2006 12.1% 5.1% 4Q 2005 2.4% 2.5% 3Q 2005 Imports Exports Source: Bureau of Labor Statistics
Slide 13: Economic Performance
4.2% 3.3% 2004 -2.5% 4.3% 1Q ’06 5.4% Producer Price Index 3.4% Consumer Price Index 2005 Economic Performance Source: Federal Reserve Bank Gold at $680 per ounce!
Slide 14: National Economy Has Momentum …
National Economy Has Momentum … But how long will it continue
Slide 15: How Long Will It Last … Higher Interest
How Long Will It Last … HIGHER INTEREST
Slide 16: Interest Rates
Interest Rates 0% 1% 2% 3% 4% 5% 6% 7% 2000 2001 2002 2003 2004 2005 2006 10-Year and 3-Month Constant Maturity Rates 10-Year Treasury 3-Month Treasury Variance Source: US Treasury
Slide 17: How Long Will It Last … Housing Has Peaked
How Long Will It Last … HOUSING HAS PEAKED
Slide 18: Toward A Buyer’s Market
Toward A Buyer’s Market Average 6.9 months on the market Average 5.5 months on the market CONDOS AND CO-OPS NEW SINGLE-FAMILY HOMES ’03 ’04 ’05 ‘06 ’03 ’04 ’05 ‘06 Source: New York Times
Slide 19: How Long Will It Last … Oil Prices
How Long Will It Last … OIL PRICES
Slide 20: Increasing Oil Prices
U.S. Economy Increasing Oil Prices May-05 Sept-05 Jan-06 May-06 Source: WTRG Economics
Slide 21: Increasing Gasoline Prices
U.S. Economy Increasing Gasoline Prices Source: WTRG Economics
Slide 22: Average Daily Oil Imports
U.S. Economy Average Daily Oil Imports (Millions of Barrels) 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 1995 2005 United States China India Source: US Energy Information Administration
Slide 23: How Long Will It Last … Growing Deficit
How Long Will It Last … GROWING DEFICIT$
Slide 24: Growing Current Account Deficit
Growing Current Account Deficit Income and Services Little Offset Source: US Treasury
Slide 25: Largest Foreign Holders of US Debt
Amount By Country Largest Foreign Holders of US Debt $485 Billion China $283 Billion UK $2,536 Billion $814 Billion Others Japan Total Held Over $4.1 Trillion – 48% Source: US Treasury Dept. 6/2005 32%
Slide 26: Growing Federal Deficit
Growing Federal Deficit Federal Deficit at $8.4 Trillion and Growing
Slide 27: How Long Will It Last … Ongoing Toll
How Long Will It Last … ONGOING TOLL
Slide 28: Economic Forecast
Economic Forecast 2007 2006 2005 2.3 4.7 4.8 1Q 3.4 5.1 3.2 FY 2.4 2.4 Inflation (CPI) 4.8 2.3 3.0 FY 4.8 2.9 3.5 FY Unemployment Bottom 10% GDP / Consensus Source: Blue Chip Economic Indicators Actual / Consensus
Slide 29: New York City Economy
New York City Economy On a Roll
Slide 30: GCP
GCP -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 2000 2001 2002 2003 2004 2005
Slide 31: Economic Indicators – New York City
Economic Indicators – New York City 5.8% Unemployment 3.9% Inflation 1.4% Job Growth 3.4% GCP Growth 2005 vs. 2004 * NYC ranked 9 th in terms of job growth when compared to the 19 largest metropolitan areas. Source: New York City Comptroller
Slide 32: Metropolitan NY Residential Sales
New York City Economy Metropolitan NY Residential Sales Transaction Volume (000s) Single Family Home Price Index (YR 2000 =100) Source: New York City Dept. of Finance 1990 1992 1994 1996 1998 2000 2002 2004 0% 50% 100% 150% 200%
Slide 33: Manhattan Residential Condo Market
New York City Economy Manhattan Residential Condo Market (Avg. Sale Prices) Source: New York City Dept. of Finance $0 $150 $300 $450 $600 $750 $900 $1,050 $1,200 $1,350 $1,500 $1,650 2001 2002 2003 2004 2005 2 Bedroom 1 Bedroom Studio ($000’s)
Slide 34: New York Visitors
2000 2001 2002 2003 2004 2005 2006 New York City Economy International Domestic 36.2 35.2 35.3 37.8 40.0 41.5 43.4 New York Visitors Source: NYC & Company
Slide 35: Hotel Occupancy Rates
50% 60% 70% 80% 90% 100% 1999 2000 2001 2002 2003 2004 2005 $150 $180 $210 $240 $270 $300 New York City Economy Hotel Occupancy Room Rate Hotel Occupancy Rates Source: PKF Consulting
Slide 36: Office-Based Employees
New York City Economy 1,000 1,100 1,200 1,300 1,400 1,500 2003 2004 2005 2006 2007 Source: Torto Wheaton Research Office-Based Employees 1.5% 1.5%
Slide 37: Investment Sales
INVESTMENT SALES Where is the top?
Slide 38: Investment Sales Dollar Transaction Volume
$1.0 $3.0 $5.0 $7.0 $9.0 $11.0 2001 2002 2003 2004 2005 $ Billions Investment Sales Dollar Transaction Volume $1.0 $3.0 $5.0 $7.0 $9.0 $11.0 2001 2002 2003 2004 2005 $ Billions Class “A” Class “B”
Slide 39: Investment Sales Average Price Per Square Foot
$0 $100 $200 $300 $400 $500 $600 2001 2002 2003 2004 2005 Investment Sales Average Price Per Square Foot, Class A and B $0 $100 $200 $300 $400 $500 $600 2001 2002 2003 2004 2005 Class “A” Class “B”
Slide 40: Investment Sales by Buyer
Investment Sales 2005 Volume (Percentage by Buyer) * Local (individuals & companies) National (public/private companies) Foreign REIT Fund Non Profit 33% 15% 1% 4% 19% 28% * Includes sales $30 mm and greater
Slide 41: Investment Sales by Property Type
25% Investment Sales 2005 Volume (Percentage by Property Type) Office Multi-Family Land Hotel Retail Other 46% 18% 1% 5% 5% 25% Source: CoStar Realty Information, Inc.
Slide 42: Office Leasing
OFFICE LEASING Measured Improvement
Slide 43: NYC Office Market Vacancy Rates
NYC Office Market Manhattan Vacancy Rates – Last 12 Months 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% Mar- Apr-05 May- Jun-05 Jul-05 Aug- Sep- Oct-05 Nov- Dec- Jan-06 Feb- Mar- Apr-06
Slide 44: NYC Office Market Asking Rents
NYC Office Market Manhattan Average Asking Rents – Last 12 Months $40.00 $41.00 $42.00 $43.00 $44.00 $45.00 $46.00 $47.00 Mar- Apr-05 May- Jun-05 Jul-05 Aug- Sep- Oct-05 Nov- Dec- Jan-06 Feb- Mar- Apr-06
Slide 45: Annual Leasing Activity
Annual Leasing Activity RSF (mm) Midtown Midtown South 1998 2000 2002 2004 YTD 1998 2000 2002 2004 YTD
Slide 46: Availability Rates – Market Inflection Points
Office Market 8 Years 3 Years Availability Rates – Market Inflection Points 3+ ? Midtown Midtown South 0% 5% 10% 15% 20% 1990 2000 2006 YTD
Slide 47: Midtown Asking Rents
Office Market Midtown Asking Rents Direct Sublet $0 $10 $20 $30 $40 $50 $60 $70 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD
Slide 48: How will the office market react?
New York City How will the office market react ?
Slide 49: 100."
100."
Slide 50: Financial Services: Record Profits
Financial Services RECORD PROFITS
Slide 51: Financial services firms
BEAR STEARNS citibank i) xe UBS | ~~ JPMorganChase LEHMAN BROTHERS OS Merrill Lynch Morgan Stanley
Slide 52: Increasing Wall Street Profits to Increase Hiring
Financial Services Increasing Wall Street Profits to Increase Hiring 1998 1999 2000 2001 2002 2003 2004 2005 $8 $10 $12 $14 $16 $18 $20 $22 $24 Employment (000's) Bonus Pool ($ Billions) Source: NY Department of Finance
Slide 53: Financial Services Office Leasing Transactions
Financial Services Office Leasing Transactions All Manhattan 0.0 2.0 4.0 6.0 8.0 10.0 12.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 RSF # of Deals ?
Slide 54: Manhattan Office Market – Annual Snapshot
Manhattan Office Market – Annual Snapshot Sublet Blocks Direct Blocks Total RSF (5) 4.7 million 1.2 million (3.0 million) 6.5 million (11) April 2006 Blocks + New Blocks - Absorption April 2005 Blocks Largest Midtown Blocks Available (>100,00 RSF) April 2005 vs. April 2006 30% Fewer Blocks in 1 Year
Slide 55: New Space Coming on to Market
One Bryant Park 620 Eighth Avenue 1095 Ave/Americas 229 West 43 rd St. Manhattan Office Market – Annual Snapshot New Space Coming on to Market 350,000 RSF Added Per Quarter through 1 st Quarter 2008 350,000 sf 707,540 sf 100,000,000 sf 680,000 sf Bank of America New York Times Verizon Old New York T
Slide 56: Office Market – Floor Height
Office Market - Floor Height 0% 10% 20% 30% 40% 50% Floors 1-9 Floors 10-19 Floors 20-29 Floors 30+ Inventory, Direct vs. Sublet Space Leased Inventory Leased Direct Subleased
Slide 57: Office Market – Floor Height Availability
Office Market – Floor Height 0% 3% 6% 9% 12% 1-9 10-19 20-29 30+ Availability Rates Direct Space Sublet Space
Slide 58: Office Market – Floor Height Asking Rents
Office Market – Floor Height $20 $30 $40 $50 $60 $70 $80 1-9 10-19 20-29 30+ Average Asking Rents Direct Space Sublet Space
Slide 59: Office Market Availability Rates
Office Market 0% 5% 10% 15% 20% 2001 2002 2003 2004 2005 YTD Availability Rates Top 40% Secondary Buildings 3.5%
Slide 60: How will the office market react?
New York City How will the office market react ?
Slide 61: Corporate costs are going up
New York City Corporate costs are going up
Slide 62: Assessed Value and RE Tax Rate
Manhattan Office Market – Annual Snapshot $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2000 2001 2002 2003 2004 2005 2005 8.5% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% Assessed Value RE Tax Rate 25 Midtown Buildings (in $000’s) ($000’s)
Slide 63: Midtown Sample Tax Bill
Manhattan Office Market – Annual Snapshot $0 $2 $4 $6 $8 $10 $12 $14 Compounded Annual Growth Rate of 7.8% Midtown Sample Tax Bill – Average Real Estate Tax per RSF
Slide 64: Living costs are going up
New York City Living costs are going up
Slide 65: Average Rental Rates
Manhattan Office Market – Annual Snapshot $1,500 $1,700 $1,900 $2,100 $2,300 $2,500 $2,700 $2,900 $3,100 2001 2002 2003 2004 2005 Studio 1 Bedroom Average Rental Rates Source: Corcoran
Slide 66: How High Can It Go?
HOW HIGH CAN IT GO?
Slide 67: Still Believe “Build It and They Will Come”
Still Believe “Build It and They Will Come” 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 1950's 1960's 1970's 1980's 1990's 2000's * Assumes complete office development of the World Trade Center and Hudson Yards sites. Hudson Yards is assumed to deliver 2 million sq.
Slide 68: New Construction Times Square
New Construction 4 Times Square 3 Times Square 5 Times Square 1745 Broadway 383 Madison Ave. 1999 2001 2002 2002 2002 Conde Nast Reuters Ernst & Young Random House Bear Stearns 222 East 41st St. 60 Columbus Circle 731 Lexington Ave. 300 Madison Ave. 7 Times Square 2002 2003 2004 2004 2004 Jones, Day
Slide 69: New Construction
620 Eighth Ave. One Bryant Park 505 Madison Ave. Site 26 2006 2006 2006 2006 New York Times Bank of America CIT Goldman Sachs New Construction 2006
Slide 70: Build it and they will come
New York City Build it and they will come
Slide 71: Select Westside Development Sites
Select Westside Development Sites
Slide 72: Westside Development
Westside Development
Slide 73: Downtown Manhattan
DOWNTOWN MANHATTAN
Slide 74: Downtown Office Market
Downtown Office Market Downtown Availability Rates – Market Inflection Points 6 Years 5 Years 1995 ? 0% 5% 10% 15% 20% 25% 30% 1990 2000 2006 YTD
Slide 75: Downtown Residential Conversions
Downtown Residential Conversions 0.0 0.5 1.0 1.5 2.0 2.5 3.0 1997 1998 1999 2000 2001 2002 2003 2004 1000 1500 2000 2500 RSF Units Proposed Units: 3,000 RSF: 3,684,000 Buildings: Completed Units: 5,562 RSF: 6,158,576 Buildings:
Slide 76: Planned & Proposed Residential Conversions Downtown
233 Broadway* 5 Beekman St. 170 Broadway 15 Maiden Lane 90 West St. 40 Rector St. 40 Fulton St. Broad St.* Exchange Place 63 Wall Street 100 Maiden Lane 10 Hanover Sq. 91-99 John St. 85 John St. 127 John St. 271 Church St. 270 Broadway 53 Park Place 110/120 Church St. 150 Nassau St. 15 Park Row 17 J
Slide 77: World Trade Center Transportation Hub
Downtown World Trade Center Transportation Hub Santiago Calatrava's design
Slide 78: Downtown Historical Leasing Activity
1996 1998 2000 2002 2004 2006 Downtown Historical Leasing Activity K E Y Full Year Year to Date May 2006
Slide 79: Manhattan Office Market – Annual Snapshot
Manhattan Office Market – Annual Snapshot Sublet Blocks Direct Blocks Total RSF (10) 4.7 million 2.5 million (3.3 million) 5.5 million April 2006 Blocks + New Blocks - Absorption April 2005 Blocks Largest Downtown Blocks Available (>100,000 RSF) January 2004 vs. April 2006 20% Fewer Blocks in over 2
Slide 80: Asking Rents Discount of Downtown to Midtown
Average: 31% Asking Rents % Discount of Downtown to Midtown 10% 20% 30% 40% 50% 2Q '92 3Q' '93 4Q '94 1Q'96 2Q '97 3Q '98 4Q '99 1Q '01 2Q '02 3Q '03 4Q '04 1Q '06 Average: 31% Today: 48% 34% W/out 7 WTC
Slide 81: Incentive Programs – Downtown
World Trade Center Sites and 7 World Trade Center • Annual rent reduction incentive • Commercial rent tax exemption • Sales tax exemption • PILOT Other Downtown Incentives • REAP • Commercial Rent Tax Exemption • Sales Tax Exemption Pre-1975 Buildings • Real Estate Tax Abatement • Lower Manhattan En
Slide 82: Resolution Reached on Demolition Liberty Street
Downtown Resolution Reached on Demolition 130 Liberty Street
Slide 83: Lower Manhattan Rebuilding
Lower Manhattan Rebuilding
Slide 84: Across the Rivers
ACROSS THE RIVERS
Slide 85: Alternative Office Markets
Alternative Office Markets Size of Markets (Millions RSF) 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Long Island City Brooklyn NJ Waterfront
Slide 86: Alternative Office Market Availability Rates
Alternative Office Market Historical Availability Rates 0% 5% 10% 15% 20% 25% 2001 2002 2003 2004 2005 2006 Brooklyn Waterfront
Slide 87: Alternative Office Market Average Asking Rent
Alternative Office Market Average Asking Rent $20 $21 $22 $23 $24 $25 $26 $27 $28 $29 $30 2001 2002 2003 2004 2005 2006 Brooklyn Waterfront
Slide 88: Long Island City
Alternative Office Market Long Island City
Slide 89: NYC Population Boom
New York City Economy NYC Population Boom (YR 2005 – vs. 2025 Estimate) 1,000 1,500 2,000 2,500 3,000 Manhattan Brooklyn Queens Bronx Staten Island YR 2005 YR 2025 Source: NY Times
Slide 90: NYC Population Change
New York City Economy NYC Population Change (YR 2005 – vs. 2025 Estimate) Source: NY Times 1,000 1,500 2,000 2,500 3,000 White Black Asian Hispanic YR 2005 YR 2025