us & intl real estate investments 2008

The Credit CrunchOctober 2008

Get Over It

ULI Fall Meeting – Miami Beach, FL

Jason SpicerManaging Director

US New Construction Completions by Property Type

0.0%1.0%

2.0%3.0%

4.0%5.0%

6.0%7.0%

8.0%9.0%

10.0%19

80

1983

1986

1989

1992

1995

1998

2001

2004

2007

As

% o

f Inv

ento

ry

Retail Office Industrial Apartment

“Too Much” Building in the ’80s…Not a Concern Today

Source: REIS, DTZ

Tech Firms Spurred “Too Much” Office Absorption in the ’90s…Not This Time

Source: REIS, DTZ

Office Absorption vs. Office Employment Growth

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

1995

1998

2001

2004

2007

Office Employment % Growth Absorption As % of Inventory

US Commercial Mortgages Outstanding

$0

$500

$1,000

$1,500

$2,000

$2,500

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

5%

7%

9%

11%

13%

15%

17%

19%

Total in $ Blns ( L ) As % of GDP ( R )

“Too Much” Commercial Leverage in the ‘00s? Looks that Way!...

Source: US Federal Reserve,BEA, DTZ

…A Uniquely American Problem…

US $4.1 trillion

UK $1.35 trillionEurope excluding UK $3.87 trillion

Asia Pacific $2.9 trillion

Source: DTZ

…Thanks, America: REITs, Listed Property Shares Drop In Global Lockstep…

60

70

80

90

100

110

120

130

140

150

160

Jan-

06

Feb-

06

Mar

-06

Apr-

06

May

-06

Jun-

06

Jul-0

6

Aug-

06

Sep-

06

Oct

-06

Nov

-06

Dec

-06

Jan-

07

Feb-

07

Mar

-07

Apr-

07

May

-07

Jun-

07

Jul-0

7

Aug-

07

Sep-

07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb-

08

Mar

-08

Apr-

08

May

-08

Jun-

08

Jul-0

8

EU - European Public Real estate Association INDEX US - Bloomberg US REIT

Australian S&P/ASX 200 Property Trusts Index UK - FTSE ASX Real Estate

Japan - TSEREIT Index Source: Bloomberg, DTZ Research

Credit Crunch

Index (Jan 2006 = 100)

…As Have Investment Sales Transactions…

Global Investment/Sales Transaction Activity, $ Mlns

$0

$50,000

$100,000

$150,000

$200,000

$250,00020

01.1

2001

.220

01.3

2001

.420

02.1

2002

.220

02.3

2002

.420

03.1

2003

.220

03.3

2003

.420

04.1

2004

.220

04.3

2004

.420

05.1

2005

.220

05.3

2005

.420

06.1

2006

.220

06.3

2006

.420

07.1

2007

.220

07.3

2007

.420

08.1

2008

.2

Asia Europe US

Source: DTZ,RCA

…Though Volume Only Now Beginning to Fall in Asia..

Source: DTZc

Property Investment Transaction Volume, 1H08 vs. 1H07

-100.00% -50.00% 0.00% 50.00% 100.00% 150.00%

PragueGreater Berlin

Washington DC MSALos Angeles MSA

Paris/Île-de-FranceWarsaw RegionGreater London

New York MSATokyo

Hong KongMoscow

SingaporeBeijing

US Cap Rates Have Moved Up 50-75 bps, Equating to a 10-15% Value Decline…

Source: DTZ, RCA

US Cap Rates by Property Type

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

01Q

1

01Q

201

Q3

01Q

4

02Q

102

Q2

02Q

302

Q4

03Q

103

Q2

03Q

3

03Q

404

Q1

04Q

204

Q3

04Q

405

Q1

05Q

205

Q3

05Q

4

06Q

106

Q2

06Q

306

Q4

07Q

107

Q2

07Q

3

07Q

408

Q1

08Q

2

Apt. Office (CBD) Retail (Open-Air Ctrs)

…Similar to Pricing Corrections in Europe, Asia…

Source: DTZ

Representative European, Asian Office Markets,Current Office Yields and Increase Since Peak

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Beijing

Singap

ore (R

affles

Plac

e)

OsloPrag

ueLo

ndon

(City

)Amste

rdam

Lond

on (W

E)Pari

s (CBD)Berl

in

2Q08

Offi

ce Y

ield

-255075100125150175 Yield Increase in B

Ps

Increase Office Yield

Major Global Office Markets, Construction vs. Vacancy, 2Q08

0%

5%

10%

15%

20%

25%M

osco

wB

eijin

gB

anga

lore

Hon

g K

ong

Bar

celo

naLo

ndon

(City

)P

aris

(ID

F)H

oust

onS

inga

pore

Atla

nta

Chi

cago

Bru

ssel

sM

adrid

Am

ster

dam

Dal

las

Vie

nna

Toky

o (5

-ku)

Fran

kfur

tLo

ndon

(WE

)M

unic

hH

ambu

rgS

anB

osto

nLo

s A

ngel

esM

ilan

Rom

eS

tock

holm

New

Yor

kB

erlin

2008

-201

0 C

onst

ruct

ion

Com

plet

ions

As

% o

f Inv

ento

ry

0%

5%

10%

15%

20%

25%

Current A

vailability or Vacancy R

ate

Construction/Inventory Avail/Vac Rate

…While Construction Overseas Is Far Worse:The US Can Spell “Schadenfreude”, Too…

Source: DTZ

115% 50% 28%

“Please Look Closely”

Jane Jacobs, 1916 - 2006

A Very Large Number

$1.2 Trillion8x Annual US Federal Govt Budget Deficit in 2007

6x All (inflation-adjusted) losses from S&L crisis, 1986 - 92

5x Interest Payments on US Govt Debt, 2007

4x Value of all real estate captured by the NCREIF Index

3x Value of Manhattan Commercial Property Stock, 2008

2x All Bank Write-Downs Since 2006 (Through Sept. 2008)

2x Direct Costs of War in Iraq (2002 – present)

1x All Sub-prime Mortgages Outstanding Pre-Crunch

????????????

The Cost of Our Crude Oil Imports Since 9-11

Crude Oil Net Exports (Imports) By Country in Total $ Blns, Since 2002

($1,250)

($500)

$250

$1,000

$1,750

Per

sian

Gul

f Sta

tes

Rus

sia

+ C

aspi

anS

tate

sA

frica

n O

PE

C F

our

Nor

way

Mex

ico

Ven

ezue

la

Can

ada

EU

Rem

aind

er

Indi

a

Kor

ea

Chi

na

Japa

n

Eur

ozon

e 15

US

A

$ B

lns

Source: JODI, DTZ

A Coincidence?

1.2 Trillion

Remaining Barrels of Proven Oil Reserves Worldwide

Time Bomb?Oil Reserves and Production By Year , 2007 - Nations With Largest Reserves

US

Kuwait

Saudi Arabia

Iraq

Mexico

VenezuelaNorway

Iran

AlgeriaLibya

China

BrazilKazakhstan

Russian Federation

Qatar

United Arab Emirates

Angola

NigeriaCanada

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

0 20 40 60 80 100 120 140 160 180

Years of Reserves Left At Current Production Rate

Cur

rent

Pro

duct

ion

Per Y

ear,

Bln

s B

arre

ls Canada + OIL SANDS

…. Crude Oil Reserves May Have A Limited Horizon…

Source: JODI, BP

And While We Are Shifting Closer To Home For Oil…

US Oil and Petroleum Products Imports: Persian Gulf Countries vs. Canada, Mexico

750

950

1,150

1,350

1,550

1,750

1,950

2,150

2,350

2,550

2,750

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Thou

sand

s of

Bar

rels

Per

Day

Persian Gulf Canada Mexico

Source: EIA

…We May Not Be Able To Look South of the Border For Help Much Longer…

October 22, 2008“Mexico's oil output for September was 2.72 million barrels a day, the lowest monthly level since 1995, Pemex said this week. For the year's first nine months, Mexico's output fell 10% from the year-earlier period and exports plunged 18%.

Mexico's ability to stem the slide in oil production carries important consequences for its financial stability, the U.S. and the global oil market. Mexico has been one of the world's top 10 producers since the late 1970s, and has long been one of the top three sources of foreign oil for the U.S. Its decline will aggravate the U.S.'s reliance on the Middle East for oil. Mexico also relies on oil export money for nearly 40% of government spending.

Like many world oil producers, Mexico has aging oil fields. The country is believed to hold vast untapped fields in the deep waters of the Gulf of Mexico, but Pemex lacks the technology to access them. At current rates of decline, Mexico could become a net oil importer within four or five years.” (emphasis added)

….Asian Trading Partners Rely Heavily On Middle East Oil…

% of Net Oil Imports Coming from Persian Gulf/Middle East, 2006 or 2007 (where available)

0%10%20%30%40%50%60%70%80%90%

US

Chi

na

Indi

a

Kor

ea

Japa

n

….Which They Use To Make Things To Sell to the USA…

Japan

USAChina

SouthKorea

+48b (#1)

+13b (#2)+33b ( #2)

+32b (#3)

+256b (#1)

+83b (#1)

Balance of Trade (Net Exports), 2007

Sources: National Trade Ministries, CIA, World Bank

…Hence the Geography of Sovereign Wealth Funds:Resource-Rich Nations and Asian Savers

Source: WSJ, Forbes, Morgan Stanley, DTZ

Sovereign Wealth Funds and National Savings Funds, $ Blns

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

KoreaAlaskaQatarLibya

AustraliaCanadaRussiaChina

KuwaitSaudi Arabia

NorwaySingapore

UAE

. Both Groups Buying Up Pieces of Western Banks…

Source: DTZ, compiled from publicly available information

Country TargetSingapore UBS, Standard Chartered, Merrill Lynch, BarclaysAbu Dhabi Citigroup China Morgan Stanley, Barclays Oman UBS Dubai HSBC, Deutsche Bank Kuwait Citigroup, Merrill Lynch Qatar CSFB, Barclays Libya Fortis, Unicredit

SWF Corporate Equity/Debt Infusions To Banks, Last 12-18 Months:

To Date, Asians Have Been Strongest Holders of US Debt Obligations, In All Forms…

Source: Treasury, Federal Reserve

% US Securities Held by Foreigners, 1994 - 2007

0

10

20

30

40

50

60

1994 2000 2002 2003 2004 2005 2006 2007

Dec. Mar. June June June June June June

%

Equities Treasuries US Govt Agency (MBS) Corporate + Other Debt

$ Mils% of Total

Excl. Tax Havens

Asian "Savers" 2,690,629 28% 34%Tax Havens 1,953,032 20%UK 920,630 9% 12%Canada 475,196 5% 6%Belgium 396,431 4% 5%Ireland 342,028 4% 4%Switzerland 328,982 3% 4%Netherlands 321,378 3% 4%Persian Gulf States 308,394 3% 4%Germany 265,770 3% 3%France 221,164 2% 3%Australia 165,387 2% 2%Russia 147,699 2% 2%Group Subtotal 8,536,720 87% 84%Total 9,771,725 100% 100%

2007 Foreign Securities Ownership

…And Are The New Class of Real Estate Investors…

10 Nations to Watch in Real Estate

1. UAE –ADIA

2. Singapore –GIC, Temasek

3. Norway –Property Adviser

Selected 2008, To Invest 2009?

4. Kuwait –St. Martin’s (FGF), GRF

5. China –CIC Established 2007,

RE Investment Manager Search 2008?

6. Russia – FGF Established 2007, To

Invest 2009?7. Canada – CPPIB,AIMCo

8. Australia –FFMA,

Supers

9. Qatar -QIA

10. S. Korea –KIC,

New RE Allocations

2008

….As They Buy Into Storied Western Developers, Investors….

SWF Corporate Equity/Debt Infusions, Last 12-18 Months:

Carlyle 7.5%Related Companies 20% (Debt)

British Land 3%Kor Hotel Group (LA) 50%

Apollo 9%Blackstone 10%

Chelsfield (London) 20%

Source: DTZ, compiled from publicly available information

….Not To Mention The US Skyline….

Net Buyers/Sellers of US Property in 1H2008

-$3,504

-$2,763

-$900

$884

$2,133

$3,878

-$4,00

0-$3

,000

-$2,00

0-$1

,000 $0

$1,00

0$2

,000

$3,00

0$4

,000

$5,00

0

REIT/REOC

Private

Corporate/User

Institution

Opportunity Fund

Offshore

MillionsSource: DTZ, RCA

GM Bldg

$2 BMiddle Eastern

Chrysler Bldg

$900 MMiddle Eastern

120 Park


527 Madison

$225 MJapanese

MiamiCenter

$265 MJapanese

OneSansome

$370 MKorean

…They’re HEERRREEEE…Do The Nationalities Look Familiar At This Point? But Don’t Worry…

Top 2008 US Investment/Sales, An International Affair1301Sixth

$1.45 BGerman

Source: RCA, DTZ

…Despite The Temptations for Conspiracy Theorists…

Source: EPA, DTZ, Fox Mulder & Dana Scully

US Fleetwide Miles Per Gallon by Marketing Group, MY 2008

1012141618202224262830

Toyota Honda HK Nissan BMW VW AVG. GM Ford Chrysler

2008 Oil SWF Acquisitions

We Aren’t Alone - Sovereign Wealth Funds, Key 2008 Acquisitions in London

Willis BldgLime StreetLondon


MetropoleWhitehall St

London

$260 MMiddleEastern

Kensington High St London

$640 MMiddleEastern

Source: DTZ

London Bridge TowerLondon


Chelsea BarracksLondon

$1.9 BilMiddle Eastern

We Aren’t Alone - Sovereign Wealth Funds, Key 2008 Acquisitions in Europe and Asia

Roma EstShopping CtrRome

$630 MSingapore50%

Menara YNHKuala

Lampur


The Westin Tokyo

$715 MSingapore

Iso Omena”Big Apple” MallHelsinki

$535 MSingapore 40%

Source: DTZ

Oil Nations: Why Build These Vast Cities?...

King Abdullah Economic City, Saudi Arabia$27 billion, Projected Population 1.5 million

City of Silk, Kuwait$85 billion, Projected Population: 750,000

Dubailand, Dubai UAE $65 billion, Projected “Population”: 2.5 million

…Especially Zero-Carbon and Car-Free Ones?

Masdar, Abu Dhabi UAE, $22 billionProjected Population: 30,000

…To Employ Young Locals For A Post-Oil Future!

Source: McKinsey, Global Insight, BP, IIF

Arabian Peninsula vs "Developed" World (G8+), Population by Age Cohort - 2010 Projection

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

75+

55 to 74

35 to 54

15 to 34

0 to 14

Age

Coh

ort

% of PopArabia Developed

…Asians Look Into a Childless Future…

Source: UN Population Division

North Asia (China, Japan, Korea) Fertility Rate - Children Per Woman1950-2050

1

2

3

4

5

6

7

1950

-195

5

1955

-196

0

1960

-196

5

1965

-197

0

1970

-197

5

1975

-198

0

1980

-198

5

1985

-199

0

1990

-199

5

1995

-200

0

2000

-200

5

2005

-201

0

2010

-201

5

2015

-202

0

2020

-202

5

2025

-203

0

2030

-203

5

2035

-204

0

2040

-204

5

2045

-205

0

China Japan Republic of Korea

ReplacementLevel = 2.1

North Asia (China, Japan, Korea) Net Reproduction RateDaughters Per Woman 1950-2050

0

0.5

1

1.5

2

2.5

3

1950

-195

5

1955

-196

0

1960

-196

5

1965

-197

0

1970

-197

5

1975

-198

0

1980

-198

5

1985

-199

0

1990

-199

5

1995

-200

0

2000

-200

5

2005

-201

0

2010

-201

5

2015

-202

0

2020

-202

5

2025

-203

0

2030

-203

5

2035

-204

0

2040

-204

5

2045

-205

0

China Japan Republic of Korea

…Exacerbated By A Lack of Female Children…


ReplacementLevel = 1

North Asia (China, Japan, Korea) Net Migration Rate, 1950-2050

-2

-1

0

1

2

3

4

5

619

50-1

955

1955

-196

0

1960

-196

5

1965

-197

0

1970

-197

5

1975

-198

0

1980

-198

5

1985

-199

0

1990

-199

5

1995

-200

0

2000

-200

5

2005

-201

0

2010

-201

5

2015

-202

0

2020

-202

5

2025

-203

0

2030

-203

5

2035

-204

0

2040

-204

5

2045

-205

0

Rat

e P

er 1

,000

Res

iden

ts

China Net migration rate Japan Net migration rate Korea Net migration rate

…Which Coupled With Limited Migration…


US Level =+/- 4

…Makes for Shrinking and Ageing Societies…


North Asia (China, Japan, Korea) Median Age vs. Population Growth Rate 1950-2050

0

15

30

45

60

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Med

ian

Age

(Yea

rs)

-1.5-1-0.500.511.522.533.5

Population G

rowth R

ate (%

)

China Population growth rate Japan Population growth rate Korea Population growth rate

China Median age Japan Median age Korea Median age

…Which They Must Invest For…

Source: Watson Wyatt, P&I Online

“Big Japanese fund may shift assetsMove would create opportunities for absolute-return and active managers”

June 9, 2008

Signs that Japanese regulators are seeking ways to boost returns of the country's huge public pension fund could eventually open new opportunities for foreign asset managers in areas such as absolute return and alternatives.

Executives with foreign and domestic managers alike said recommendations in May by Japan's Council on Economic and Fiscal Policy for managing the ¥150 trillion ($1.4 trillion) Government Pension Investment Fund, Tokyo, are early steps in a process that could see more of that fund's assets moved from low-yielding Japanese government bonds to actively managed and absolute-return strategies.

Fund CountryTotal assets $

MlnsGovernment Pension Inv. Japan $1,072,429Government Pension Norway $370,985ABP Netherlands $314,969National Pension Korea $231,966Local Government Officials Japan $144,447Postal Savings Fund Taiwan $129,397PFZW Netherlands $128,615Canada Pension Plan Canada $123,903Pension Fund Association Japan $112,698Ontario Teachers Canada $110,600

10 Largest Non-US Pension Funds

Haven’t We Gone Through This Before?

The British Are Coming!Germans Russians Japanese

Middle Easterners? Chinese? Asians?

…Drop in Oil Prices Doesn’t Change Story That Much…

Source: McKinsey, Global Insight, BP, IIF

Petrodollar Foreign Assets, $ Trillions, Oil Prices at:

$0$2$4$6$8

$10$12$14

2007

2008

2009

2010

2011

2012

2013

$30 pb $50 pb $70 pb $100 pb

…So If You Think This is Merely A Repeat of the 70s…

US Oil Consumption and Prices, 1965 - 2007

11,000

13,000

15,000

17,000

19,000

21,000

1965 1970 1975 1980 1985 1990 1995 2000 2005

Thou

sand

s of

Bar

rels

Per

Day

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Price per B

arrel

Consumption Prices Per Barrel, 2007 dollars

Source: EIA, BP, JODI

…Think Again

52%


…Something *IS* Different “This Time”…

Global Oil Consumption: US, China and India, 1965 - 2007

-

2,000

4,000

6,000

8,000

10,000

12,000

1965 1970 1975 1980 1985 1990 1995 2000 2005

Thou

sand

s of

Bar

rels

Per

Day

24%

26%

28%

30%

32%

34%

36%

38%

US

% of Total C

onsumption

India Daily ConsumptionChina Daily ConsumptionUS Share of Global Oil Consumption


…All That Oil Is Imported…

Net Oil Imports, Ths. Barrels/Day 1990 - 2006

-500

1,000

2,500

4,000

5,500

7,000

8,500

10,000

11,500

13,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

China & India Japan US


And It Could Get Much Worse….

A Brief Review of History…

1st Century (AD/CE) - Global GDPPPP Basis

India33%

China26%

All Others2%

Rest of Asia8%

Africa9%

Roman Empire

22%

Source: DTZSource: Maddison

Year 1000 - Global GDPPPP Basis

India28%

China22%

Japan3%

All Others8%

Western Europe

9%

Rest of Asia7%

Africa12%

Poland11%

Source: DTZ

Notice Anything Yet?

Source: Maddison

A Trend?


India26%

China26%

Japan3%

Poland7%

All Others19%

Rest of Asia8%

Britain1%

Russia3%

France4%

"USA"0.3%

Germany3%

Source: Maddison

See it yet?


India19%

China40%

Rest of Asia6%

Russian Empire

6%Africa5%

USA2%

Britain6%

Germany5%

France6.6%

Japan4%

Source: Maddison

UK, US Dominance A Blip In History


China9%

British Empire

20%

Eastern Europe

5%

All Others17%

Rest of Asia5%

USA18%

Russian Empire

9%

Germany9%

France5.3%

Japan3%


China5%

India4%

Japan3%

Germany5%

S.+ C. America

7%

Rest of Asia5%

Eastern Europe

4%

Soviet Union10%

All Others20%

USA26%Britain

6.5% France4%

Source: Maddison

China, India: Reverting to the Mean/Historic Norms


South Korea2.0%

Brazil3.0%

Mexico2.2%

Russia3.5% United

Kingdom3.4%

Japan7.1%

India5.1%People's

Republic of China11.7%

Canada1.9%

All Others20.1%

United States22.8%

Eurozone17.1%

Source: World Bank

The Case For India

Country Total English

Speakers United States 251,388,301 India 90,000,000 Nigeria 79,000,000 United Kingdom 59,600,000 Philippines 42,500,000 Germany 36,000,000 Canada 25,246,220 Australia 17,357,833 Pakistan 17,000,000 France 16,000,000

Largest Fluent English-Speaking Populations

Source: CIA, Census

(London)October 23rd, 2003

“Britain's industrialisation was secured by destroying the manufacturing capacity of India...Throughout the late 18th and 19th centuries, India was forced to supply raw materials to Britain's manufacturers, but forbidden to produce competing finished products...Now the jobs we stole 200 years ago are returning to India. There is a profound historical irony here. Indian workers can outcompete British workers today because Britain smashed their ability to compete in the past. Having destroyed India's own industries, the East India Company and the colonial authorities obliged its people to speak our language, adopt our working practices and surrender their labour to multinational corporations. Workers in call centres in Germany and Holland are less vulnerable than ours, as Germany and Holland were less successful colonists, with the result that fewer people in the poor world now speak their languages.” (emphasis added)

It’s Payback Time!

Putting It All Together:

Emergence of Industrial China, India+

Flat Oil Production=

New Floor For Oil Prices ($50? $60?)

Massive Wealth Creation in China, India

Massive Wealth Transfer to Net Oil Producing Nations and Cities…

FOR NOW…

Will Technology Turn These Areas Into New Saudi Arabias?

Orinoco Heavy Sands

Venezuela1.2 trillion barrels22% recoverable

= 267 billion barrels

Poor quality, dirty “Orimulsion”

Bakken FormationUSA/Canada

167 - 300 billion barrels1% - 18% - 50% recoverable?

= 3 billion barrels oil?150 billion barrels oil?

Athabasca SandsCanada

1.7 trillion barrels10% recoverable

=170 billion barrels oil

How Much of City Migration Reflects Oil Prices?

Source: Census

Urban Population Growth - Key Cities, 2006 vs. 2007

(15,000)

(10,000)

(5,000)

-

5,000

10,000

15,000

Man

hatta

n(c

ount

y)

San

Fran

cisc

o(c

ity)

Bos

ton

(city

)

Los

Ang

eles

(city

)

Chi

cago

(city

)

New

Res

iden

ts

2006 2007

How Much of Driving Decline Is The Economy vs. Oil Prices?

US Highway Driving

2,400

2,500

2,600

2,700

2,800

2,900

3,000

3,10019

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

YO

Y to

Jul

y 20

08

Bill

ions

of M

iles

Driv

en

8,800

9,000

9,200

9,400

9,600

9,800

10,000

10,200

Miles Per C

apita

Miles Per Capita Total Highway Driving

Source: Federal Highway Administration, Census

,1995 - 2008

Will Ridership Reverse Itself If Oil Drops Even Lower?

US Public Transit Ridership, # Trips

1

2,001

4,001

6,001

8,001

10,001

12,00119

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

1H07

1H08

# Pu

blic

Tra

nsit

Trip

s

BUS COMMUTER PARATRANSIT HEAVY LIGHT TROLLEY OTHER

Source: APRA

…Or Will Light Rail Have Lasting Impact on Development Patterns?…

Miles of Light Rail Track in Major US Cities

557.4

814.8

938.6

0

100

200

300

400

500

600

700

800

900

1000

2000 Current 2010-2012

Source: DTZ, APRA, Various Local Transportation Agencies

…As We Rebuild “The Greatest Streetcar System in the World”…

Jane Jacobs, 1916 – 2006“Dark Age Ahead”, 2004“Much has been written about the General Motors campaign that replaced 146 electric-powered mass transit systems with General Motors gasoline-powered buses.”

“The [GM] Consortium bought electric streetcar lines, demolished them, and replaced them with buses, then resold the lines, tying up the sales with contracts that specified future suppliers of buses, oil and tires. In the 1930s with this tactic perfected, scores of transit systems were bought by a GM subsidiary called National City Lines….(which) together with two additional puppet subsidiaries, by 1950 controlled transit systems in eighty-three cities.”

“In 1946, when these systems were succumbing to the GM vision…a former employee wrote from Florida, where he had been serving as a naval commander, to alert hundreds of mayors…he asked what is still a good question: ”Who will rebuild them for you?” Again, belatedly, Congress and the Department of Justice took notice. Nine corporations and seven of their executives were indicted for illegal acts in restraint of trade, tried and convicted.” (pages 186; 38, 39 and 40)

…Light Rail and Transit-Oriented Development…In Texas?UNT Study Evidences A Value Premium.

BroadstoneAmbrose: 300

residential units with retail below; the development is a direct result

of the Green Line expansion

Renaissance Initiative: a long-range plan to pave the way for transit-oriented development;

a number of infrastructure improvements have been

identified; High Street Residential (Trammell Crow) hired to develop TOD sites in

Carrollton

W Dallas –Victory: 252 rooms, 61 residences

The House: 28 story high-end condo

building designed by Phillippe Starck and

YOO

Victory Tower (Mandarin

Oriental): 120 rooms, 90 residences

Cityville at Southwestern Medical District: 263

residential units and 43,000-sf of retail space

Lake Highlands

Town Center: a new DART rail station

will be built to service the

LHTC which calls for 1.3

msf of residential

space, 300,000-sf of retail and 50-100,000-sf of office spaceThe Butler: 460 apartments

as well as retail space

Source: DART, DTZ

Or Will We Forget, Again….Until Next Time?

Richard M. Nixon, 1974

% of US Oil Imported

In 1973 - 35%

In 2007- 60%

“Let this be our national goal, at the end of this decade, in theyear 1980, the United States will not be dependent on any other country for the energy we need”

…Reality Check…

Source: EIA

US Oil and Petroleum Product Use By Sector, 2007

Commercial2%

Residential4%

Industrial25%

Transportation69%

…Some Areas More Heavily Dependent Than Others…

Residential Sector Use Motor Gasoline TotalArizona DC DC Rhode IslandLouisiana New York Rhode Island New YorkFlorida Rhode Island New York CaliforniaCalifornia Hawaii Arizona MassachusettsHawaii Illinois Michigan ArizonaMaine Wyoming Alaska AlaskaVermont South Carolina Louisiana WyomingNew Hampshire Alabama Wyoming LouisianaConnecticut Vermont Texas North DakotaRhode Island Mississippi Hawaii Texas

Total Energy Consumption

Per Capita

States With Highest/Lowest Per Capita Petroleum Consumption:

Hig

hest

Low

est

Source: EIA

Electric Car? Electricity Not Dependent on Foreign Oil

Source: EIA

US Electricity Generation by Power Source, 2006

Hydro7%

Other1%

Petroleum2%

Nuclear19%

Renewables2%

Coal49%

Natl Gas20%

US, China and India – Clean Coal Technology?

Source: EIA

World's Proven Coal Reserves, 2006

Russia17%

China13%

Australia9%

S. Africa5%

All Others19% USA

27%

India10%

Conclusions

Global Yield Increases, Investment Volume Declines: No Markets Spared

US Real Estate Developers: Bright Spot! No Overbuilding

New Kids On the Block: SWFs from Oil Wealth and Asian Savers

Significant Investment To Continue Post-Financial RecoveryCan’t Beat ‘Em, Join ‘Em? Ignore SWFs At Your Peril

Look Closely At Energy Usage Patterns, They Will Dictate:Strength of SWF Investment in US and other nationsAttractiveness of Certain Metros, Submarkets, Microlocations in US

us & intl real estate investments 2008

Real Estate

office employment growth

dtz researchpage

asian office markets

current office yields

property type10

us federal reserve

growth absorption

dtzc page