OFFICE MARKET AT-A-GLANCE

There's hope on the horizon for the national office market. The vacancy rate for CBD office space dropped from 15.3% in the first quarter of 2003 to 14.1% in the second quarter. In addition, CBD leasing activity was up to 29 million sq. ft. from 17.6 million sq. ft. in the first quarter.

National Office Market Overview as of 2Q 2003
CBD Non-CBD
Inventory (sq. ft.) 1.1 billion 1.7 billion
Vacancy Rate 14.1% 19.4%
Average Rental Rates $26.48 $23.28
Leasing Activity (sq.ft.) 29.0 million 64.4 million
YTD Overall Absorption (sq. ft.) -19.2 million -16.5 million
YTD Investment Sales Activity (sq. ft.) 20.1 million 31.4 million
Source: Cushman & Wakefield


HOTEL DEVELOPMENT REBOUNDS

With the Iraqi offensive completed, the SARS scare ending and the upturn in the stock market, conditions seem ready to improve for the beleaguered hotel sector. And developers are ready to capitalize on an upswing. Case in point: the number of completed upscale hotel projects is expected to increase a whopping 74% between 2003 and 2004.

Scheduled Hotel Completions
2003 Projects Rooms 2004 Projects Rooms
Upscale 86 10,332 150 17,485
Midscale With Food & Beverage 44 3,362 42 3,586
Midscale Without Food & Beverage 261 21,425 304 25,981
Economy 93 6,243 78 6,227
Source: Lodging Econometrics


MULTIFAMILY JITTERS INCREASE

The national apartment market finished the second quarter with a 6.8% vacancy rate, its highest in a decade, reports Marcus & Millichap. But the volume of supply is moving in the right direction: Completions of apartment complexes have declined every year since 2001.

POSITIVE SIGNS OF JOB GROWTH

There are a few regions of the country that are actually experiencing job growth. The South has remained stable over the past year, while the West is even experiencing a slight up-tick in employment. Washington, D.C., with its focus on federal government, remains somewhat insulated from the rest of the nation's employment troubles.

Top Five MSAs for Job Growth
Metropolitan Statistical Area Annual Job Growth
2000 2001 2002 2003
Washington, D.C. 4.9% 2.5% -0.1% 1.0%
Riverside, Calif. 6.3% 4.7% 2.5% 1.8%
Las Vegas 5.7% 6.3% -0.5% 2.1%
West Palm Beach, Fla. 4.1% 5.2% 1.1% 2.7%
Tampa, Fla. 5.6% 0.6% 0.2% 1.0%
National 2.6% 0.8% -1.3% -0.2%
Source: Census Bureau/Reappoint/GMAC Institutional Advisors


MAGNET MARKETS

Metros with a high diversity quotient, or that have a large senior population, are expected to grow the fastest over the next 25 years. Areas with a low diversity quotient are more likely to shrink.

Population Forecasts for the Fastest Growing Metros
Metro Area 2000 2015 2025 %Change
1. Laredo, Texas 194,636 295,656 367,815 89.0%
2. Punta Gorda, Fla. 142,297 215,186 265,542 86.6%
3. Las Vegas 1,581,525 2,355,460 2,897,008 83.2%
4. Austin 1,259,929 1,843,311 2,251,148 78.7%
5. Provo, Utah 370,532 531,378 643,683 73.7%
6. Phoenix 3,276,401 4,531,884 5,416,621 65.3%
7. Naples, Fla. 253,806 350,581 418,739 65.0%
8. Medford, Ore. 181,824 248,931 295,966 62.8%
9. W. Palm Beach, Fla. 1,137,775 1,551,564 1,837,450 61.5%
10. Wilmington, N.C. 234,816 319,409 378,676 61.3%
Source: Woods & Poole Economics; MapInfo, 2003