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Reasons to be Optimistic
Housing Engine Just Getting Started
88% of metros registering home price gains
48 out of 152 metros reporting home price gains of 10% or more

ABOUT COMMERCIAL REAL ESTATE IN 2014

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#

Housing materials account for 15% of warehouse inventories

9 8 7 6 5 4 3 2 1

Source: National Association of Realtors

America's Energy Boom

11 10
10M

4.00 3.90
8.1M 7.5M

Million Barrels

Imported Crude Oil U.S. Produced Crude Oil Regular-Grade Average Price/Gallon

9 8 7 6 5
5.2M

3.80 3.70 3.60

$3.50 $3.46 $3.39

3.50 3.40

07 08 09 10 11 12 13 14 15
Source: U.S. Energy Information Administration

Tech Cycle Still Has Legs

Venture capitalists invested

$7.7B in U.S. tech companies in Q3 2013

By 2017 it is projected that there will be over 3 billion mobile-connected devices, 2 billion more than exist today

Source: PriceWaterhouseCoopers

GDP Getting Stronger

5% 4% 3% 2% 1% 0% 13 13 14

Consensus Forecast for 2014

14
Every 50 bps increase in GDP generates 7.2 msf of additional demand for ofce space

5 Most Optimistic Economists

5 Most Pessimistic Economists

Source: National Association of Business Economics

More Condent Consumers

Consumer Condence Index (CCI) January 2013 (after scal cliff debate): 58.4 October 2013 (during government shutdown): 72.4
A rise in the CCI is typically followed by a decline in ofce vacancy rates two quarters later
Source: The Conference Board

Fed Likes What It Sees

"Recent economic indicators have increased our condence that the job market gains will continue, Ben Bernanke, December 2013. In January, the central bank will reduce its monthly bond buying program from $85B to $75B

2014 198,000 jobs per month are forecasted

Source: U.S. Bureau of Labor Statistics

Risk of Recession Low

Only 4% probability of a severe recession in 2014, according to Moody's Analytics

Better Balance Sheets

Household Debt Service Ratio lowest rate in 30 years at 10% Corporate prots are near record levels of $1.2T

Fiscal Drag Fades

The Bipartisan Budget Act of 2013 signed into law on December 26, 2013 The deal funds the government through fall 2015, removing a layer of scal uncertainty weighing on the U.S. economy for 3 years

Cassidy Turley U.S. Research 2101 L Street, NW, Ste. 700, Washington, DC 20037
www.cassidyturley.com/research

2013
Source: Federal Reserve

2013 180,000 jobs created per month

Job growth increases demand for apartment units

2014

Job Growth