An overview of prepared for A D V I S O R Y G R O U P World Services Group, Inc. May, 2004 U.S. Economy & Commercial Real Estate Investment Market.

an overview of

prepared for

A D V I S O R Y G R O U P

World Services Group, Inc.May, 2004

U.S. Economy & Commercial Real Estate Investment Market

A D V I S O R Y G R O U P2

Economic Overview


Annual U.S. Inflation Rate1980–2005

0%

2%

4%

6%

8%

10%

12%

14%19

80

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Rol

ling

4-Q

uarte

r Cha

nge

For

ecas

t

Source: Economy.com, Cushman & Wakefield Analytics


U.S. Growth in Gross Domestic Product (GDP)1980–2005

-4%

-2%

0%

2%

4%

6%

8%19

80

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Rol

ling

4-Q

uarte

r Cha

nge

For

ecas

t



U.S. Productivity Growth1980–2004 Q1


0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.1

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

Rol

ling

8-qu

arte

r Cha

nge


U.S. Unemployment Rate1980–2005

0%

2%

4%

6%

8%

10%

12%

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

For

ecas

t



U.S. Growth in Total Employmentvs. U.S. Unemployment Rate 1980–2005

-4%

-2%

0%

2%

4%

6%

8%

10%

12%19

80

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Rol

ling

4-Q

uarte

r Cha

nge

Total Employment

Unemployment

For

ecas

t



Economic Cycle by StateFebruary 2004

Recession

Flat

Expanding


U.S. Investment Market Overview


Percent of Investment in Core Propertiesby Capital Sector2003

REIT23%

Foreign7%

Institutional12%

Private45%

User5%

Unknown8%

Source: Real Capital Analytics, Cushman & Wakefield Analytics


$13.7

$22.5

$27.2

$41.4

$13.9

$27.9

$28.6

$45.0

$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50

Flex/Industrial

Apartment

Retail

Office

Dollar Volume (billions)

2003

2002

U.S. Sales Volumes by Core Property Type2002 vs. 2003



-6%

-4%

-2%

0%

2%

4%

6%

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

Source: NCREIF, Economy.com, Cushman & Wakefield Analytics

Cap Rate Spreads to 10-year Treasuries 1983Q1–2003Q4


9.40%

7.60%

8.20%

8.50%

5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

Flex/Industrial

Apartment

Retail

Office

Average Capitalization Rate by Core Property Type2003



Source: NCREIF, Cushman & Wakefield Analytics

Private Equity Annual Returns by Property Type1978-2003

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03

Industrial Office Retail Apartment


U.S. Office Markets


U.S. Growth in Office-using Employment1980–2005

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%19

80

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Rol

ling

4-Q

uarte

r Cha

nge

For

ecas

t



0 100 200 300 400 500 600 700

San Francisco

Chicago

Los Angeles

Washington DC

New York

Square Feet (millions)

CBD Non-CBD

Top U.S. Office Markets by Sales Volume Office Leasing Market InventoryYear-end 2003

Source: Cushman & Wakefield Research, Cushman & Wakefield Analytics


Vacancy Rates

0%

5%

10%

15%

20%

25%

30%

1997 1998 1999 2000 2001 2002 2003

Chicago Los Angeles

Manhattan San Francisco

Washington DC

Top Tier CBD Office Markets, 1997–2003



Overall Average Asking Rents

$0

$10

$20

$30

$40

$50

$60

$70

1997 1998 1999 2000 2001 2002 2003

ChicagoLos AngelesManhattanSan FranciscoWashington DC

Top Tier CBD Office Markets, 1997–2003



-4.0 -2.0 0.0 2.0 4.0 6.0 8.0

San Francisco

Chicago

Los Angeles

Washington DC

New York

Square Feet (millions)

Construction Completions

Overall Net Absorption

Top U.S. Office Markets by Sales Volume Construction Completions vs. Net Absorption2003



U.S.

New York

Washington DC

Los Angeles

Chicago

San Francisco

76%

78%

80%

82%

84%

86%

88%

$0 $5 $10 $15 $20 $25 $30 $35

Overall Average Asking Rent

Occ

up

an

cy R

ate

Top U.S. Office Markets by Sales Volume Occupancy Rate vs. Average Asking RentYear-end 2003



$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000

San Francisco

Chicago

Los Angeles

Washington DC

New York

Dollar Volume (millions)

Top U.S. CBD Office Markets by Sales Volume2003



$0 $50 $100 $150 $200 $250 $300 $350

San Francisco

Chicago

Los Angeles

Washington DC

New York

Sales Price per Square Foot

Top U.S. Office Markets by Sales VolumeAverage Price per Square Foot2003


U.S

. A

vera

ge $

197


5% 7% 8% 10% 11%

San Francisco

Chicago

Los Angeles

Washington DC

New York

Capitalization Rate

Top U.S. Office Markets by Sales VolumeAverage Capitalization Rate2003


U.S

. A

vera

ge 8

.5%

An overview of prepared for A D V I S O R Y G R O U P World Services Group, Inc. May, 2004 U.S. Economy & Commercial Real Estate Investment Market.

Documents

cushman wakefield research

forecast source

real capital analytics

q1 source

economic overview slide

recession flat expanding

tier cbd office markets

sales volume occupancy