Dodge 2014Construction OutlookCliff BrewisSenior Director Operations

U.S. Macroeconomic Outlook

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On balance, the pace of economic expansion remains lackluster.

GDP Pattern:

History Forecast 2010 2011 2012 2013 2014

+2.5% +1.8% +2.8% +1.6% +2.7%

Shape of Recovery:• Private Sector Dependency• Sequestration• Government Uncertainty• Fed Tapering• Improving Local Conditions

U.S. Macroeconomic Outlook

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Employment growth has also been tepid.

State Performance: Employment

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Three unique markets

Source: Bureau of Labor Statistics

U.S. Construction Market Outlook –

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The Dodge Momentum Index offers insight on what’s ahead.

Residential- Single Family- Multifamily

Nonresidential- Stores- Offices- Hotels- Other Commercial- Manufacturing

- Education- Healthcare- Other Institutional

Nonbuilding- Highways & Bridges- Environmental Public Works- Other Public Works- Electric Utilities

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U.S. Construction Market Outlook –Percent Change, 2009-2014, for Total Construction Starts and Major Sectors.

.

2013 Value

27% of Total Const.

32% of Total Const.

41% of Total Const.

Los Angeles/Orange County: Single Family

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Continued strong contribution

‘$000.00

Los Angeles/Orange County: Multi Residential

8

Continued strength.

‘$000.00

Los Angeles/Orange County: Retail

9

Modest recovery

‘$000.00

Los Angeles/Orange County: Hotel

10

Occupancy and revenue per room are up

‘$000.00

Los Angeles/Orange County: Health

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We expect consolidations to limit construction

‘$000.00

Los Angeles/Orange County: Education

12

Bottomed out, but not recovering yet.

‘$000.00

Los Angeles/Orange County: Highways

13

Expected to soften after 2014

‘$000.00

Los Angeles/Orange County: Totals

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Unquestionable Improvement

‘$000.00

Structure 2007 2008 2009 2010 2011 2012 2013 2014

EDUC 1,928,343$ 3,255,471$ 1,183,684$ 2,016,495$ 1,193,546$ 1,185,499$ 1,148,236$ 1,205,727$

68.8% -63.6% 70.4% -40.8% -0.7% -3.1% 5.0%

HEALTH 393,261$ 384,757$ 1,084,142$ 331,297$ 713,891$ 365,822$ 174,842$ 300,089$

-2.2% 181.8% -69.4% 115.5% -48.8% -52.2% 71.6%

HIGHWAY 801,558$ 771,075$ 1,051,431$ 999,188$ 984,876$ 961,821$ 807,351$ 899,660$

-3.8% 36.4% -5.0% -1.4% -2.3% -16.1% 11.4%

HOTEL 746,149$ 168,785$ 64,279$ 41,917$ 43,758$ 238,677$ 278,799$ 392,469$

-77.4% -61.9% -34.8% 4.4% 445.4% 16.8% 40.8%

MULTI RES 2,713,135$ 1,755,974$ 341,702$ 518,713$ 1,203,042$ 1,816,763$ 1,363,349$ 1,847,767$

-35.3% -80.5% 51.8% 131.9% 51.0% -25.0% 35.5%

OFFICE 766,938$ 430,160$ 322,480$ 187,487$ 214,915$ 278,535$ 356,031$ 561,973$

-43.9% -25.0% -41.9% 14.6% 29.6% 27.8% 57.8%

ONEFAM 2,540,555$ 1,480,877$ 1,267,419$ 1,496,213$ 1,475,596$ 1,862,355$ 2,684,424$ 3,521,727$

-41.7% -14.4% 18.1% -1.4% 26.2% 44.1% 31.2%

PUB 112,603$ 170,393$ 110,549$ 105,097$ 358,489$ 141,099$ 80,272$ 83,076$

51.3% -35.1% -4.9% 241.1% -60.6% -43.1% 3.5%

RETAIL 662,245$ 740,580$ 291,767$ 330,954$ 339,124$ 441,201$ 340,899$ 432,562$

11.8% -60.6% 13.4% 2.5% 30.1% -22.7% 26.9%

SEWERS 645,512$ 622,493$ 227,269$ 149,272$ 87,656$ 136,334$ 493,459$ 249,552$

-3.6% -63.5% -34.3% -41.3% 55.5% 261.9% -49.4%

WAREH 276,672$ 176,357$ 140,835$ 55,585$ 106,343$ 127,446$ 162,960$ 191,206$

-36.3% -20.1% -60.5% 91.3% 19.8% 27.9% 17.3%

WATER 269,706$ 551,484$ 361,904$ 260,898$ 304,555$ 269,653$ 260,729$ 279,249$

104.5% -34.4% -27.9% 16.7% -11.5% -3.3% 7.1%

TOTAL 15,556,461$ 13,251,992$ 9,064,543$ 10,266,895$ 10,499,030$ 11,832,592$ 13,423,015$ 13,946,086$ -14.8% -31.6% 13.3% 2.3% 12.7% 13.4% 3.9%

QUESTIONS?

•Cliff Brewis•Senior Director Operations•McGraw-Hill Construction/Dodge•510.566.0913•Cliff.brewis@mhfi.com

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