Presented toASPE

March 28, 2016

2016 Construction Forecast

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1. US Construction2. California 3. Santa Clara County4. Employment

Table of Contents

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Self Portrait Working on Presentation

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Annual Rate of Construction Spending US (Billions)1

Public ($) Private ($) Total ($)2005 256.3 904.3 1160.6

2006 280.9 896.8 1177.7

2007 297.8 842.4 1140.2

2008 319.6 737.1 1053.7

2009 309.6 593.0 902.5

2010 301.0 486.9 787.9

2011 286.6 529.7 816.4

2012 270.1 614.9 885.0

2013 266.5 663.9 908.4

2014 283.5 698.6 982.1

2015 294.3 828.2 1122.5

1Numbers come from December Annual Construction Report for the US Census Bureau, except for 2015 numbers which came from the November Report.

United States Construction Starts ($ Billions)

(McGraw Hill)

In billons 2014Actual

2015Estimate

2016Forecast

% change 14-15 % change 15-16

Total Construction 594,706 674,750 711,975 +13.5% +5.5%

Residential 231,613 272,475 316,000 +17.6% +15.9%

Single Family 163,750 187,400 224,750 +14.4% +19.9%

Multifamily 67,863 85,075 91,250 +25.4% +7.3%

Nonresidential 220,078 219,875 239,075 -0.1% +8.7%

Nonbuildings 143,015 182,400 156,900 +27.5% -14.0%

5ENR Magazine, November 16, 2015, p 21

FMI Construction Put In Place Forecast 2016 ($ Billions)

In billons 2014Actual

2015Estimate

2016Forecast

% change 14-15 % change 15-16

Total Construction 964,303 1,025,941 1,093,490 +6.4% +6.6%

Total Residential 345,993 375,691 408,538 +8.6% +8.7%

Total Nonresidential

388,896 423,964 452,247 +9.0% +6.7%

Non-buildings 229,414 226,286 232,705 -1.4% +2.8%

6ENR Magazine, November 16, 2015, p 21

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Dodge Construction Growth Forecast

Annual % Change for $Volume of Construction Starts

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

+12.0 +10.0 +6.0 +5.0 +2.0 +5.0 +12.0 +13.0 +3.0 -7.0

2008 2009 2010 2011 2012 2013 2014 2015 2016

-13.0 -24.0 +2.0 +1.0 +12.0 +11.0 +9.0 +13.0 +6.0

ENR Magazine, November 16, 2015, p 20

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Dodge ConstructionUS Outlook-2016

• Total Construction up 6% in dollars to $712 Billion• Multi Family Housing up 7% in dollars & 9% in units• Single Family Housing up 20% in dollars & 17% in units• Commercial Buildings up 11% in dollars• Public Works flat in 2016.• Electric Utilities down -43% in dollars• Institutional Buildings up +9% in dollars• Manufacturing Plant down -1% in dollarsData is based on Construction Starts

Dodge and Data Analytics, Press Release Nov. 2, 2015

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Pattern of US Construction Starts 2016 (in billions $)

2011 2012 2013 2014 2015 2016

Total Construction

441.3 492.5 545.2 594.7 674.7 712.0

Single FamHousing

97.3 125.8 159.2 163.8 187.4 224.8

Multi FamHousing

29.7 40.6 51.5 67.9 85.1 91.2

Commer. Build 48.3 55.1 67.3 81.2 84.3 93.7Instit. Build 100.3 91.8 92.0 103.6 110.2 120.3Manuf.Build 17.3 13.1 18.8 35.3 25.3 25.0Pub. Works 106.9 112.3 126.7 119.8 122.4 122.9

Elec. Utilities 41.5 53.8 29.7 23.2 60.0 34.0

Dodge and Data Analytics, Press Release Nov. 2, 2015

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California Building Permits 2015 through November

New Commercial New Industrial Alters/Additions

$7,342,509,409 $1,074,922,745 $10,880,234,291

New Other Total Non Residential Total All Construction(including Res)

$3,909,705,070 $23,207,371,515 $49,882,506,068

Information from the California Building Industry Foundation. 2015 data is through November 2015

Single Family Valuation New Multi Family Valuation

Residential Alterations

$13,029,225,070 $7,892,729,667 $5,753,178,956

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California Housing Starts-2004-2015

New Housing Units0

50000

100000

150000

200000

250000212960

208972

164280

113034

64962

36209 44762 4733659638

8531085846

107586

2004 2005 2006 2007 2008 20092010 2011 2012 2013 2014 2015

Information from the California Building Industry Foundation. 2015 data is through November 2015

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California New Housing Starts Forecast (thousands)

Housing Starts0

50

100

150

200

78.999.8

132.5148.3 153.1 158.5

2014 2015 2016 2017 2018 20191Eberhard School of Business, Metro Forecast, September 2015

San Jose, Sunnyvale, Santa Clara Construction Starts

In millions ($) 2011Actual

2012Actual

2013Actual

2014Actual

2015 Forecast

Total Construction 2,391 4,153 4,257 5,509 4,211

Residential 828 1,047 1,154 954 1,232

Non Residential 790 1,603 2,120 4,158 2,496

Comm/Manuf 259 475 692 3,684 1,944

Office/Bank 168 284 302 3,054 1,451

Institutional 531 1,128 1,427 474 552

Nonbuildings 773 1,503 983 397 482

13ENR Magazine, November 23/30, 2015, pCA4

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Santa Clara County Residential Permits

Year 2006 2007 2008 2009 2010Buildings 2,260 2,060 1,067 643 851

Units 6,075 4,123 3,462 1,054 4,011

Con.Cost($) 1,221,896,290 988.906,795 649,043,037 305,153,891 715,846,355

Year 2011 2012 2013 2014 2015Buildings 1,028 1,554 1,994 1,860 1,630

Units 3,064 5,479 7,621 9,424 4,826

Con.Cost($) 700,203,207 1,045,660,437 1,613,258,474 1,766,267,674 1,168,495,961

Census Bureau Statistics

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Santa Clara County Real Estate Trends-Retail

• By the end of 2015, vacancy to decline to 3.5%• Dvlpmnt. pipeline-2.3 Million sq. ft. (263,000 underway)• 2015 will bring roughly 500,000 sq. ft. to market• Almaden Ranch and Bass Pro Shops highlight 2015

Deliveries• Demand for retail space will surpass growth for 5th straight

year, making average asking rent to $32.30 per sq. ft.

Marcus & Millichap San Jose Metro Area Retail Research Report 3rd Quarter 2015

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Santa Clara County Real Estate Trends-Commercial

• 4.5 million sq. ft. will be completed in 2015.• 1.6 million sq. ft completed in 2014• Asking rents will rise to $39.11 per sq. ft• Vacancy down to 9.7% in 2015

Marcus & Millichap San Jose Metro Area Commercial Research Report 2nd Quarter 2015

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Santa Clara County Real Estate Trends-Apartments

• 2,700 units are being finished in 2015.• Vacancy at 3%• Effect rents will climb 9.1% to $2500 per

month.• 6,800 units to be completed into 2016

Marcus & Millichap San Jose Metro Area Apartment Research Report 4th Quarter 2015

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Santa Clara County Trends-Commercial pt. 2

• 15% increase in office rents in 2015• 10% increase in office rents in 2016• 3.11 million sq. ft. under construction or to be

completed in 2016• 2015 was the best recorded year in history for

commercial real estate leasing in Silicon Valley. No repeat performance in 2016.

“Valley Party Isn’t Over,” Feb. 19, San Jose Mercury News, p. B7

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Santa Clara County Housing Market

2015

2014

$0 $200,000 $400,000 $600,000 $800,000 $1,000,000

$890,000

$800,000

$640,000

$600,000

Bay AreaSanta Clara

Median Sale Price for Single Family Homes

Total Sales of Single Family Homes

2015

2014

0 10000 20000 30000 40000 50000 60000 70000

13030

12354

63563

59099

Bay AreaSanta Clara

“Housing” Mercury News, Jan. 21, 2016 p.1

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Santa Clara County-ConstructionEmployment Statistics by Month-

Jan.07-Nov.15

Peak Employment- September 2000, 52,200 November 2015 Employment 45,000

05000

100001500020000250003000035000400004500050000

Employment

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Santa Clara County Construction Employment-Annual Average

In Thousands

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150.05.0

10.015.020.025.030.035.040.045.050.0

44.441.6 43.0 44.5 46.8 47.2

44.2

34.4 32.2 31.434.7

37.5 39.243.2

Bureau of Labor Statistics-San Jose, Santa Clara, Sunnyvale Statistical Area

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Estimated California Construction Unemployment Rates %

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150.0

5.0

10.0

15.0

20.0

25.0

30.0

7.25.2

6.9 7.8

16.9

24.2

25.2

17.4

13.8

9.1 8.56.5

Bureau of Labor Statistics

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Bay Area Forecast-Unemployment (%)

Metro Area 2014 2015 2016 2017 2018

San Francisco 4.3 3.5 3.1 2.9 2.7

San Jose 5.3 4.2 3.9 3.5 3.4

Oakland 6.0 4.9 4.5 4.1 3.9

California 7.5 6.3 5.7 5.3 5.1

Eberhardt School of Business, September 2015, Metro Forecast

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Largest Metro Private Economies 2015

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4.8 4.4 4.1 4 4 3.8 3.6 3.6 3.5 3.5

2.3

1 Year Employment Growth (%)

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Other Trends

•An average of 40,000 new Construction jobs will be created each year over the next five year forecast. By 2020, Construction jobs will still remain 30,000 jobs shy of the peak in the mid 2000’s.1

•Construction material prices fell for the sixth consecutive month in December, losing 1.2 percent on a monthly basis and 4 percent on a yearly basis. Construction input prices have fallen 7.2 percent since peaking in August 2014, and have fallen in eleven of the previous sixteen months. industry has recovered just 30% of the 2.2 million jobs it lost during the sub-prime mortgage crisis from 2006 to 2010. In 2015, however, it gained jobs at more than twice the rate of the overall labor market. 3

•According to the Wall Street Journal, Santa Clara County fully recovered from the recession in 2015 based on four metrics-GDP, Jobs Recovered, Unemployment Rate and Home Prices•Wells Fargo Construction Optimism Quotient for 2016 is 108, down from a high of 130 in 2015. Lowest number was 42 in 2009.4

•Total available space in the Silicon Valley now measures 23.8 million square feet, translating into an overall availability rate of 7.2% for all product types throughout the Valley.5

1 Eberhardt Economic Forecast, Sept. 30, 20152 ABC Press Release, Jan. 15, 20163 Wall Street Journal Economics Blog, Jan. 12, 20164 Wells Fargo Construction Industry Forecast 2016.5“Valley Party Isn’t Over,” Feb. 19, San Jose Mercury News, p. B7