CBRE Multifamily Client Call - 112718
CBRE Multifamily Client Call - 112718
CBRE Multifamily Client Call - 112718
CLIENT CALL
1. WELCOME
5. Q & A
400
317
300 269
215
200
100
-100
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18*
Source: CBRE Research, CBRE Econometric Advisors, Q3 2018. Total for 66 metro markets tracked by CBRE
EA. Absorption is counted in the quarter in which property has stabilized. *Year ending Q3 2018.
Annual Completions
Units in 000s
350
200
150
100
50
-
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18*
Source: CBRE Research, CBRE Econometric Advisors, Q3 2018. Total for 66 metro markets tracked by CBRE EA. Completed units are counted in the quarter in
which property has stabilized.
%
6 5.1
4
2.6
2
-2
-4
-6
-8
Q3 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 2016 Q3 2017 Q3 2018
4 6
3.6
2 4.8
4 4.2
0 -0.1
-2
2
-4
-6 0
Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3 2016 Q3 2018 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3 2016 Q3 2018
Source: CBRE Research, CBRE Econometric Advisors, Q3 2018. Mid-rise is a separate category not included in these statistics.
8
Las Vegas
Left of line = garden rent Right of line = high-rise rent
growth above high-rise Orlando growth above garden
7
Phoenix Jacksonville
6 Atlanta
Long Island
Salt Lake City San Diego
Inland Empire Tampa
5 Houston San Jose
Garden
Sacramento
Pittsburgh Washington, D.C.
San Francisco Columbus
Ft. Lauderdale
4 San Jose Indianapolis
Raleigh Kansas City
Orange County Mlps Boston Miami Detroit
Ft. Worth Denver
3 Charlotte Los Angeles Philadelphia Cincinnati
New York Portland Oakland
West Palm Beach
Dallas Nashville
2 Baltimore
Newark Austin
San Antonio
Chicago
1
St. Louis
0
-4 -2 0 2 4 6 8 10 12
High-Rise
Source: CBRE Research, CBRE Econometric Advisors, Q3 2018. Mid-rise is a separate category not included in these statistics.
Source: CBRE Research, CBRE Econometric Advisors, Q3 2018. Metros with an inventory of 125,000+ units.
6
MOST DYNAMIC Orlando
5
Percentage Employment Growth
Units Comple-
Added tions to
Metro
Past 4 Inventory
Qtrs. (%)*
Sum of Markets 276,300 1.9
1 New York Metro 34,000 1.5 Numbers on map represent units added in thousands.
2 Dallas/Ft. Worth 21,000 3.0
3 Los Angeles/So. Calif. 18,800 1.2
12 Seattle
4 Washington, D.C. 12,300 2.1
5 Seattle 12,000 3.2
6 Denver 11,400 3.7 7 Boston
10
7 San Francisco Bay Area 10,500 1.8 34
Chicago 9 New York City
8 Boston 10,100 2.1
9 Miami/South Florida 9,700 1.7 12 SF Bay Area 12
Washington, D.C.
10 Chicago 8,900 1.2 11 Denver
11 Atlanta 8,700 2.0 LA/So Cal
Nashville 6 8 Charlotte
12 Orlando 8,100 4.0 19
8 Phoenix
13 Charlotte 7,700 4.9 Dallas/Ft. Worth 9 Atlanta
14 Phoenix 7,600 2.2 21
15 San Antonio 7,500 4.5 Austin 7
San Antonio 8
16 Austin 6,800 3.3 6 Houston 8 Orlando
17 Nashville 5,900 4.4 10 South Florida
18 Houston 5,600 0.9
Source: CBRE Research, CBRE Econometric Advisors, Q3 2018. *On table, markets highlighted in red have greater risk of overbuilding based on high
completions-to-inventory ratio.
Source: CBRE Research, CBRE Econometric Advisors, Q3 2018. Economic scenario is “Moody’s Analytics.” Metros with an inventory of 100,000+ units.
Orlando 203,663 8,666 10,130 8,137 4.2 8,308 4.4 3.4 1,248 6.3
Phoenix 350,955 6,541 10,509 7,585 2.2 10,853 3.3 4.4 1,065 6.3
Tampa 236,446 4,257 6,290 5,408 2.3 6,246 2.8 4.0 1,192 4.8
Austin 208,486 11,138 14,247 6,816 3.4 7,387 3.9 4.8 1,240 2.8
New York 1,952,186 32,469 54,271 29,369 1.5 35,416 1.9 2.8 2,662 1.0
Seattle 374,151 14,375 20,395 11,958 3.3 12,230 3.5 4.1 1,698 2.0
Cumulative Investment Volumes Through Year ($ B) Ytd through Sept Total ($ billions) Chg (%)
80
Garden 75.7 73.7 2.8
Mid/High-Rise 44.4 33.6 32.4
40
Total 120.1 107.2 12.0
0
J F M A M J J A S O N D
Source: CBRE Research, Real Capital Analytics, Q3 2018. Calculations based on unrounded totals; column sums may not total due to rounding.
This data represents all sales $2.5M+ and excludes any entity level transactions.
RCA defines a portfolio as comprised of two or more distinct assets that trade
together between the same buyer and seller.
10 9.5
9.3 9.1
9 9.0
7
6.4
6
5 4.9
4
0
All Garden High-Rise
Net Buyer/Seller? net buyer net seller net seller net buyer
Source: CBRE Research, Real Capital Analytics, Q3 2018. There are also “other” and “unknown” categories to bring the market share totals to 100%.
Total Direct Multifamily Investment by Offshore Buyers • Ytd 2018 acquisitions by offshore
$ billions Garden Mid/High-Rise
buyers = $7.9 billion, -20.4% from
the prior year
18
• Ytd 2018 market share was 6.6%
down from last year’s ytd figure of
15
9.3%
• Canada is leading country source
12 by far for direct investment.
-------------------------------------------------
9
• International capital is also
making multifamily investment via
6 other avenues:
• Development
• Debt financing
3
• REIT stock purchasing
• Fund investment
0 • Equity investment in
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Ytd Ytd companies
17 18
$300
$310
$302
$285
$250
$261
$250
$ Billions
$200
$195
$173
$150
$148
$146
$138
$133
$100
$110
$108
$104
$88
$83
$73
$50
$69
$53
$50
$0
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
F
18
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Sources: FFIEC (HMDA), OTS Thrift Financial Report, ACLI
Investment Bulletin, MBA Commercial Mortgage Banker
Origination Survey, MBA CREF Forecast, and Freddie Mac, 2018.
CMBS Issuers
Life 3%
Companies
6% Lender Category
Total $ Billions
Q2 2018
GSEs 632
Others
10% Commercial Banks 460
CMBS Issuers 41
Commercial Banks
34% Total 1,352
4/26/2018, 4.64
5 1/11/2017, 4.35
4
11/21/2018, 4.52
6/25/2018, 4.14
1/11/2018, 3.88
9/7/2017, 3.43
3
0
7
8
17
17
17
18
18
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01
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CBRE 23 CBRE MULTIFAMILY NATIONAL CLIENT CALL | NOVEMBER 27, 2018
WHY GE MATTERS: THE IMPACT OF BROADER MARKET
VOLATILITY ON AGENCY CMBS
• Investment Grade Corp debt serves as a proxy for ABS/Agency CMBS buyers.
• Corp credit spreads have widened and as a result, fixed income credit instruments, such as CMBS,
Fannie Mae and Freddie Mac MBS, has widened as well to meet the broader market yield expectations.
• Sector-specific Agency CMBS supply has been a factor recently and will remain a headwind through
year-end.
CBRE 24 CBRE MULTIFAMILY NATIONAL CLIENT CALL | NOVEMBER 27, 2018
HEADWINDS
• Home Sales are Down Due to Higher Mortgage Rates and Continued
Tight Credit
• Tax Reform
0
Q3 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3 2016 Q3 2018
300
200
100
-100
Q2 2002 Q2 2004 Q2 2006 Q2 2008 Q2 2010 Q2 2012 Q2 2014 Q2 2016 Q2 2018
Source: CBRE Research, CBRE Econometric Advisors, NCREIF, Q2 2018 (cap rates), U.S. Department of the Treasury, Q3 2018 (10-year).