Local and National Economic Trends

1
Local and National Economic Trends
Eastside Business Round Table
January 17, 2008
2
Supply Side Economics

• Incentives to increase supply
• Managing money supply
• Tax cuts and James Tobin
• Limit Theory
• lim f(x)f(a)
• x ? a
• Energy
• Water
• Infrastructure

3
The Sub-prime Crisis
4
The Sub-prime Crisis
5
Property Pain
6
National Real Estate Market
7
Consumer Confidence
8
Seattle-Bellevue Economic Barometer Q3 07
9
Economic Barometer and Rateof Job Growth
10
Economic Barometer and U.S. Stock Market (Percent
Change in SP 500 Index)
11
Economic Barometer and Increase in Retail Sales
in King County
12
King County Retail Sales (to Q2 07)
13
Economic Barometer and Increase in BO Taxes
Paid in Seattle and Bellevue
14
Economic Barometer and Increase in King County
Housing Permits Authorized
15
Business Confidence Index
16
Economic Barometer and Puget Sound Business
Confidence Index
17
Seattle-Everett MSA Employment
18
Unemployment
19
Employment - Information Services
20
Employment Index
21
Expected Change in Total Employment
22
Changes in Capital Expenditure for Information
Technology
23
Percent of Firms that will Increase Prices and
Fees
24
Expected Change in Revenue
25
Revenue Index
26
When will the Local Economy Begin to Cool Down
27
Home Prices Puget Sound
28
King County Home Sales
29
King County Condo Sales
30
Apartment Vacancy and Rent

• Vacancies are lower due to
• Strong job growth
• In-migration
• Rising home prices
• Condominium conversions

31
Vacancy Rates
32
Apartment Investment Trends
33
Puget Sound Office Market

• During the third quarter of 2007 1.0 million
  square feet of new space was delivered and 914241
  sf. was absorbed.
• 50 of new construction is pre-leased by
  companies such as Microsoft, Google, Yahoo,
  Amazon.
• Rates rose by 5.15 and 6.55 last quarter in
  Seattle CBD and Bellevue CBD respectively.
• Puget Sound vacancy rate 10.45
• Eastside vacancy rate was 8.9 in third quarter
  with lease rates near 38, the highest in Puget
  Sound.
• Eastside has 5 class A projects scheduled to
  deliver in 2008.

34
Expected Change in Total Space Required
35
Industrial Space

• By mid 2007, developers delivered 4.5 msf of new
  industrial space, compared to 414,000sf by mid
  2006.
• The vacancy rate for the Puget Sound dropped from
  7.19 to 6.70.
• Eastside dropped from 10.30 to 8.90
• The Kent Valley experienced the highest
  absorption, 619,458 sf for the 3rd quarter of 07.

36
Expected Change in Energy Costs
37
Currencies and Commodities

• Crude Oil

38
US Economy
39
Conclusions