NATIONAL MULTIFAMILY RESEARCH REPORT FORECAST a Berkshire Hathaway and Leucadia National company

Transcription

1 NATIONAL MULTIFAMILY RESEARCH REPORT FORECAST 218 a Berkshire Hathaway and Leucadia National company

2 The Value of Certainty Berkadia is an industry-leading real estate company. We provide comprehensive capital solutions and investment sales advisory and research services for multifamily and commercial properties, and rank among the largest, highest rated and respected master and primary servicers in the industry. $23 BILLION Berkadia s 217 loan origination volume surpassed $23 billion. $27 BILLION Since 213, our investment sales division has closed more than 2,2 transactions, totaling over $27 billion. 18,5 TRANSACTIONS Over 18,5 transactions financed throughout our history. $11 BILLION Total historical sales by our investment sales advisors exceed $11 billion. $2 BILLION One of the largest loan and servicing portfolios worldwide at more than $2 billion. 7 OFFICES 7 offices nationwide, covering all major markets. a Berkshire Hathaway and Leucadia National company

3 FORECAST 218 TABLE OF CONTENTS NATIONAL TRENDS 2 ALBUQUERQUE 4 ATLANTA 5 AUSTIN 6 BALTIMORE 7 BATON ROUGE 8 BIRMINGHAM 9 CHARLESTON 1 CHARLOTTE 11 CHATTANOOGA 12 CHICAGO 13 CINCINNATI 14 CLEVELAND 15 COLORADO SPRINGS 16 COLUMBUS 17 DALLAS-FORT WORTH 18 DENVER 19 DES MOINES 2 DETROIT 21 EL PASO 22 GREENVILLE SC 23 HOUSTON 24 INDIANAPOLIS 25 INLAND EMPIRE CA 26 JACKSONVILLE 27 KANSAS CITY 28 KNOXVILLE 29 LAS VEGAS 3 LEXINGTON 31 LOS ANGELES-NORTH 32 LOS ANGELES-SOUTH 33 LOS ANGELES-WEST 34 LOUISVILLE 35 MEMPHIS 36 MILWAUKEE 37 MINNEAPOLIS-ST. PAUL 38 NASHVILLE 39 NEW ORLEANS 4 OMAHA 41 ORANGE COUNTY CA 42 ORLANDO 43 PHILADELPHIA 44 PHOENIX 45 PORTLAND 46 RICHMOND 47 SACRAMENTO 48 SALT LAKE CITY 49 SAN ANTONIO 5 SAN DIEGO 51 SEATTLE-TACOMA 52 SOUTH FLORIDA 53 ST. LOUIS 54 TAMPA-ST. PETERSBURG 55 TUCSON 56 TULSA 57 VENTURA COUNTY CA 58 VIRGINIA BEACH 59 WASHINGTON, D.C. 6

4 NATIONAL TRENDS ECONOMY AND APARTMENT SUPPLY The U.S. economy continued its near-record length expansion, recently capped by a 1.4% increase in total nonfarm employment during 217. Growing since June 29, the current positive cycle is the second-largest expansion in more than 15 years. While growth decelerated from the 1.6% increase in 216, employers added a net 1.96 million jobs during the last four quarters. Nearly every employment sector posted gains, while the white-collar industries provided a significant boost to the economy. The 56,6 jobs added in the professional and business services sector led job creation over the last four quarters. The rise in payrolls along with positive contributions from personal consumption expenditures, private inventory investment, nonresidential fixed investment, exports, and federal government spending contributed to a 3.3% increase in real gross domestic product annually through the third quarter of 217. Another sign of a strong economy was 3.6% nominal wage growth through September 217, outpacing the preceding five-year average of 2.6%. The expansion cycle is expected to continue through this year with 2.16 million jobs added for 1.5% growth. The national employment trend of positive, albeit slower, job growth in 217 was reflected across several major metros. Even so, Dallas-Fort Worth and Atlanta topped job creation last year. Employers in the professional and business sector led hiring in both metropolitan areas as total nonfarm employment increased by 13,7 and 82,4 positions, respectively. These two metros are expected to lead annual hiring again, adding 114,1 and 83,8 new jobs, respectively, by year-end. Change (mil) Change 217 (ths)* U.S. GROWTH Percentage Change 4 4% 2 2% % -2-2% -4-4% -6-6% * 218** *Estimate; **Forecast Source: Berkadia, BLS, TOP METROS: GROWTH Percentage Change Dallas-Fort Worth Atlanta L.A. D.C. Phoenix SEA-TAC Minn-St. Paul Inland Empire So. Florida Orlando *Estimate Source: Berkadia, BLS, 5% 4% 3% 2% 1% % Change Change 217* Units Completed (ths) U.S. PIPELINE * 218** As the economy continued to broaden in recent years, multifamily developers have grown the construction pipeline. The increase led to a postrecession high of 352,5 deliveries nationwide during 217, up 1% from additions during 216. Deliveries were robust in Texas last year with 24,111 new units in Dallas-Fort Worth and 2,58 additions in Houston, even accounting for the damage caused by Hurricane Harvey. South Florida was another market to have sizable additions despite hurricane damage, with 14,26 market-rate units coming online. Inventory growth will again be considerable this year in Dallas-Fort Worth and Houston with 28,188 and 14,187 units, respectively. Nationwide, 331,45 units are scheduled to come online by year-end. *Estimate; **Forecast Source: Berkadia, Axiometrics TOP METROS: SUPPLY GROWTH 217 PERFORMANCE HIGHLIGHTS Units Completed 217 (ths)* Dallas-Fort Worth Houston So. Florida Atlanta Units D.C. Occupancy Denver Austin L.A. West SEA-TAC Charlotte 96% 94% 92% 9% Occupancy 217* CHANGE 1,963,4 1.4% YOY $1,26 2.6% YOY 94.8% 1 BPS YOY 352,5 UNITS 1.4% YOY *Estimate Source: Berkadia, Axiometrics 2 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

5 ,, AND INVESTMENT TRENDS $1,4 $1,2 $1, $8 $6 U.S. AND *Estimate; **Forecast Source: Berkadia, Axiometrics 99% 98% 97% 96% 95% 94% TOP METROS: HIGHEST Minn-St. Paul * 218** L.A. South Orange Co. Effective Rent *Estimate Source: Berkadia, Axiometrics Occupancy 216 Occupancy 217 Occupancy* Milwaukee Detroit Pent-up apartment demand elevated occupancy as developers brought a postrecession high in deliveries in 217. Leasing activity swelled last year, up more than 34% from absorption during 216. The surge pushed occupancy up 1 basis points to 94.8% by year-end. The upswing pushed occupancy 2 basis points higher than the preceding five-year average. Across the country, occupancy was highest in several Midwest and Southern California markets. Occupancy was highest in Minneapolis-St. Paul at 96.9%, Los Angeles South at 96.2%, and Orange County at 96.1%, despite slight occupancy drops in all those markets. This year, sustained elevated demand is expected to shift the national average occupancy up 3 basis points to 95.1% by December. L.A. North San Diego Inland Empire Sacramento 98% 96% 94% 92% 9% Ventura Co. With occupancy rising, annual effective rent growth accelerated in 217. After rising 2.5% in 216, effective rent advanced 2.6% last year to $1,26 per month by December. The high cost of home ownership, along with a healthy job market kept rent highest in the Southern California area with Los Angeles West topping the surveyed markets at $2,687 per month in December 217, up 1.4% year over year. In the northern part of the state, Sacramento led rent growth for the second-consecutive year. Effective rent advanced 6.6% annually in the metro to $1,433 per month. With occupancy expected to rise even higher this year, the national average effective rent is forecast to rise 3.6% to $1,36 per month by December. Rising occupancy and payrolls will be key to sustained rent growth over the next four quarters with Washington, D.C., expected to lead effective rent increases at 4.% to $1,789 per month. Multifamily investment activity remained elevated in 217, though slowed from one year prior. Preliminary sales data indicated a 1% decline in annual transactions from 216. Buyers were again most active in the New York City and the Los Angeles areas. Institutional investors and REITs slowed purchasing activity while foreign investors, mainly from Canada, increased their purchases in the U.S. While transactions were down nationwide, the average price per unit purchased elevated 3.% year over year to $145,168 in 217 as values increased across all classes. With minimal interest rate increases and healthy apartment fundamentals, average cap rates compressed 1 basis points to 5.6% nationwide. Effective Rent Growth 217* TOP METROS: GROWTH 9% 6% 3% % Sacramento SEA-TAC Colorado Springs Tucson Richmond $1,433 $1,731 $1,7 $732 $1,34 $1,973 $942 $1,25 $1,947 $1,434 Ventura Co. Las Vegas Orlando San Diego Denver *Estimate Source: Berkadia, Axiometrics 218 PERFORMANCE HIGHLIGHTS U.S. APARTMENT INVESTMENT CHANGE 2,158,4 95.1% $15, $125, Price Per Unit Cap Rate 7.% 6.5% 1.5% YOY 3 BPS YOY $1, 6.% $1,36 3.6% YOY 331,45 UNITS 6.% YOY $75, $5, $25, * 5.5% 5.% 4.5% *Estimate; Property Sale $2.5 Million+ Source: Berkadia, Real Capital Analytics Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 3

6 ALBUQUERQUE 217 REVIEW Favorable apartment fundamentals in Albuquerque persisted in 217 amid modest employment gains compared to most metro areas in the country. While apartment absorption was down 24% from the prior year, leasing activity outpaced the 249 units that came online. Metrowide apartment occupancy averaged 94.5% by the end of the fourth quarter, the highest year-end occupancy rate since 21. In the Northwest submarket, the area with nearly 9% of new apartment stock in 217, the occupancy rate rose 4 basis points, a greater increase than any other submarket in the metro. During the same period, average effective rent across the metro appreciated 2.3% to $819 per month in December. Continued job growth supported the local multifamily market. Albuquerquearea employment expanded 1.2% annually with 4,7 new workers. Net gains were recorded in seven employment sectors. Approximately 9 jobs were created in the financial activities segment, a 4.6% annual gain representing the highest rate of growth among the job sectors. 4,7 1.2% YOY $ % YOY 217 PERFORMANCE HIGHLIGHTS 6.6% 6.5% 6.4% 6.3% 6.2% 6.1% 913, * UN RATE 5.8% 3 BPS YOY 371, 45 Units $13, $11, $9, $7, $5, $3, *Estimate; **Forecast Source: Berkadia, AND HOUSEHOLD $51, % 3 BPS YOY 249 Units 37.6% YOY CHANGE SHARE OF 19.% YE 217.1% YOY YE 217.4% YOY YE % YOY YE 217 BPS YOY Index Value (Base Year 21 = 1) 1, 5, $85 $8 $75 $7-5, -1, -15, * 218** $ * 218** 2, 1,5 1, 5 95% 94% 93% 92% 91% * 1, * 218** 218 PREVIEW Local businesses and institutions are forecast to add 4, net workers to payrolls in 218. The new hires will represent a 1.% year-over-year increase in employment. The job growth will be broad based, originating from manufacturing companies Flagship Food Group and The Raytheon Company, leisure and hospitality destination Santa Ana Star Casino, and the new Facebook data center in Los Lunas. More significant than the Facebook facility itself is its anticipated long-term, multiplier effect of new jobs in other employment sectors, particularly in the southern portion of the metro area. Apartment demand will stay positive this year, although is forecast to trail deliveries by 73%. The supply imbalance will trigger a 9-basis-point reduction in occupancy to 93.6% by year-end. Multifamily developers, eager to avoid a prolonged supply imbalance, are expected to request permits for 418 apartments, 24% lower than average issuance during the previous five years. Meanwhile, operators will keep upward pressure on rents. Monthly effective rent is projected to reach $838 by year-end, a 2.3% annual gain, matching the rate of increase in Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

7 ATLANTA 217 REVIEW Household formation and employment growth propelled multifamily absorption in the Atlanta metro area, which rose 52% in 217. Occupancy averaged 94.3% in the fourth quarter, the same as yearend 216. The heightened apartment demand was present amid 14,71 units delivered, a 41% year-over-year surge from 216. Multifamily deliveries helped accommodate the rapidly growing number of households, which increased 2.3% in 217. Household growth in the Atlanta area exceeded most major metro areas in the country. The advance in employment was similarly robust, as expansion occurred in all 11 job sectors. Employers added 82,4 workers to local payrolls, a 3.% annual increase. More than 28% of the new jobs were in the professional and business services sector, which grew 4.6%. Multifamily operators took advantage of the healthy economic environment, raising effective rent an average of 3.4% in 217. By year-end effective rent averaged $1,147 per month. 82,4 3.% YOY $1, % YOY 217 PERFORMANCE HIGHLIGHTS 7.% 6.5% 6.% 5.5% 5.% $4, * UN RATE 4.4% 9 BPS YOY 13,84 Units $12, $1, $8, $6, Index Value (Base Year 21 = 1) 12, 6, *Estimate; **Forecast Source: Berkadia, $1,2 $1,1 $1, -6, 94.3% BPS YOY 14,71 Units 41.2% YOY CHANGE -12, * 218** AND 95.% 94.5% 94.% $9 93.5% * 218** * 5,953, 2,199,1 $64, % YE % YOY YE % YOY YE % YOY YE BPS YOY , 12, 8, 4, * 218** 218 PREVIEW Another 3.% annual increase in employment is anticipated in 218 as approximately 83,8 jobs are created in the Atlanta metro area. Several mass hirings will contribute to the growth. Jackson Healthcare LLC will hire the first of 1,4 workers this year, while Anthem Inc. fills 9 positions through 219. In Midtown Atlanta, NCR Corporation plans to add hundreds of workers at its world headquarters, and Honeywell will continue adding corporate employees and software engineers as part of a total 8 new jobs through 221. The sustained job growth will bolster apartment demand, as renters are projected to occupy 1,313 additional apartments this year. Meanwhile, developers have 12,32 apartments slated for completion in 218. While approximately 2% of the new stock will be in the Atlanta/Fulton submarket, deliveries in the neighboring South Fulton submarket will also be substantial, accounting for 1% of metrowide deliveries. The metrowide supply imbalance will spur a 2-basis-point dip in occupancy to 94.1% by December. Average effective rent is forecast to rise to $1,174 per month by year-end, a 2.3% annual gain. The issuance of permits for approximately 1,76 multifamily units is expected this year, consistent with the five-year average. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 5

8 AUSTIN 217 REVIEW The appeal of Austin to employers and individuals drove rental demand and development across the metropolitan area during 217. Employers added 25,2 net jobs during the last 12 months. The 2.5% local growth outpaced the 1.4% national average increase at the same time. The education and health services sector was a significant economic driver with metro-leading 6,2 personnel added last year. With more employment opportunities, the Austin population grew 2.8% during 217, which was more than double the U.S. average. As a result, demand for housing led to a sharp increase in apartment leasing activity across the metro to hold occupancy at 94.4% year over year. Multifamily developers worked to meet the demand with the addition of 1,636 apartment units since the start of 217, up nearly 13% from deliveries during the year prior. With elevated rental demand amid increased competition, average effective rent rose.5% year over year to $1,218 per month in December ,2 2.5% YOY $1,218.5% YOY 6.2% 6.% 5.8% 5.6% 5.4% 5.2% $8, * UN RATE 3.% 4 BPS YOY $18, $16, $14, $12, $1, Index Value (Base Year 21 = 1) 5, 25, *Estimate; **Forecast Source: Berkadia, $1,3 $1,25 $1,2 $1,15 $1,1 94.4% BPS YOY 1,636 Units 12.8% YOY * CHANGE -25, * 218** AND 95.% 94.8% 94.6% 94.4% 94.2% $1,5 94.% * 218** 217 PERFORMANCE HIGHLIGHTS 1,143 Units 2,144,8 821,2 $71, % YE % YOY YE % YOY YE % YOY YE BPS YOY , 9, 6, 3, * 218** 218 PREVIEW Austin employers are expected to accelerate hiring which will contribute to a rise in apartment occupancy in 218. Total nonfarm employment is forecast to grow 2.8%, or by 29,6 net jobs, over the next 12 months. The annual growth will be up from a 2.5% expansion in 217. Part of the additions will come with the new technology innovation center for Merck Sharp & Dohme Corp. The pharmaceutical company will create at least 6 high-paying positions at the innovation district surrounding the University of Texas. The area is also the focus of multifamily development with a significant share of apartment deliveries for the metro scheduled to come online in the Central submarket by year-end. Even with the additions, robust rental demand in the submarket should push occupancy up 2 basis points to 94.2% by year-end. This trend is expected to be reflected across Greater Austin as average occupancy elevates 2 basis points year over year to 94.6% in December 218, even with 8,871 units scheduled to be added metrowide. As occupancy rises, apartment operators will accelerate rent growth. Effective rent is forecast to reach $1,258 per month in December 218, up 3.2% from the close of 217. In the Central submarket, rent is expected to rise 3.6% to $2,92 per month by year-end. 6 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

9 BALTIMORE 217 REVIEW gains helped keep upward pressure on apartment occupancy despite rapid supply growth. Metrowide, 16,6 workers were hired in the past 12 months, up from the 1,7 employees added in 216. The professional and business services segment provided an outsized boost to the economy in 217 when companies added 11,1 personnel, a 4.5% sector expansion. Overall employment levels grew 1.2% last year, supporting robust leasing activity of 4,66 newly occupied apartments and a 3-basis-point annual rise in occupancy to 94.4%. Moreover, effective rent advanced marketwide to $1,274 per month, up 2.9% year over year, the greatest annual gain since 211. At the same time, builders completed 4,257 apartments during 217. Deliveries were up 56% compared to the prior year, with most new rentals coming online in the Central Baltimore City submarket. Demand remained elevated in Baltimore s urban core, lifting monthly rent 1.9% to $1,469 while occupancy ticked up 3 basis points to 94.% by year-end. 16,6 1.2% YOY $1, % YOY 7.5% 7.% 6.5% 6.% $5, * UN RATE 3.8% 6 BPS YOY $2, $15, $1, Index Value (Base Year 21 = 1) 4, 2, *Estimate; **Forecast Source: Berkadia, $1,32 $1,26 $1,2-2, 94.4% 3 BPS YOY 4,257 Units 56.1% YOY * CHANGE -4, * 218** AND 94.8% 94.4% 94.% $1, % * 218** 217 PERFORMANCE HIGHLIGHTS 4,66 Units 2,82,8 1,11, $78, % YE 217.1% YOY YE 217.6% YOY YE % YOY YE 217 BPS YOY , 4, 2, * 218** 218 PREVIEW Occupancy will continue to improve in 218 as construction tapers amid healthy absorption. Apartment demand will support a 2-basis-point rise in occupancy to 94.6% by December as 3,795 units come online across the metro. Contributing to the overall trend, occupancy will rise in the Central Baltimore City submarket as steady leasing outpaces the one out of every five additions in the area. Local companies will create 15,8 new positions metrowide. -driven demand will support annual effective rent appreciation of 2.5% across Greater Baltimore, ascending to $1,36 per month. Despite setbacks in some sectors of the workforce in 217, Baltimore s outlook remains strong. Amazon.com Inc. will add 1,2 workers to its payrolls locally, a majority of those to be filled at the new 1.15 million-square-foot facility in Cecil County, its third Maryland center. In the financial services sector, Morgan Stanley will begin adding 8 jobs following their newly expanded office in Harbor Point. Baltimore will remain a frontrunner in the education and health services field. The sector employs approximately one-fifth of the metro s workers, and Johns Hopkins continued expansion and position as a global leader bodes well for the local economy. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 7

10 BATON ROUGE 217 REVIEW After years of limited inventory growth, multifamily developers brought a postrecession high of apartments online across Baton Rouge in 217. A total of 1,285 units were added to the market last year, more than double the number of units delivered in 216. The largest project delivered in 217, Tapestry Long Farm, alone brought 262 units to the market. This multifamily development was supported by job growth, especially in the construction industry where the metro s refineries saw increased activity. Employers created a metro-leading 3,9 jobs in the construction industry last year, an increase of 7.8% annually. At the same time, total nonfarm employment expanded 1.5% with 5,9 new workers. Even with leasing activity positive in 217, supplyside pressure shifted occupancy down 9 basis points from 216 to 95.3%. Operators responded to the drop in occupancy by lowering effective rent. At $1,25 per month in December 217, effective rent was down 2.6% from one year prior. 5,9 1.5% YOY $1,25 2.6% YOY 8.% 7.5% 7.% 6.5% 6.% 5.5% * UN RATE 4.2% 1 BPS YOY $15, $125, $1, $75, $5, $25, Index Value (Base Year 21 = 1) 2, 1, *Estimate; **Forecast Source: Berkadia, $1,1 $1,5 $1, $95 $9-1, $ * 218** 95.3% 9 BPS YOY 1,285 Units 134.5% YOY * CHANGE -2, * 218** AND 217 PERFORMANCE HIGHLIGHTS 193 Units 839,4 325, $59, % YE 217.3% YOY YE 217.8% YOY YE 217.4% YOY YE BPS YOY 1,6 1, % 96% 95% 94% 93% 92% 3, 2, 1, -1, * 218** 218 PREVIEW Employers and multifamily developers in the Baton Rouge market are expected to keep adding jobs and delivering new apartment product, respectively, in 218. The job market is forecast to expand by 4,4 jobs in 218, a year-over-year gain of 1.1%. Activity in the construction industry, such as the development of the 8.3 millionsquare-foot Driftwood LNG facility, should be a major contributor to job growth. Also boosting the construction industry are 975 apartment units scheduled to come online in 218. The Park Rowe Village at Perkins Rowe and Springs at Juban Crossing developments are scheduled to bring over 6 units to the market by the end of this year. Furthermore, at least two more apartment communities are expected to finish construction in this year. While annual leasing activity this year is expected to more than double movement in 217, leasing activity will trail inventory growth. Because of this supply-side pressure, occupancy is forecast to end 218 at 94.6%, down 7 basis points year over year. Even with the decline, the occupancy rate will be higher than the preceding five-year average of 93.9%. With continued payroll growth and healthy occupancy, effective rent is forecast to rise to $1,48 per month, a 2.2% annual increase. 8 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

11 BIRMINGHAM 217 REVIEW An upswing in hiring provided a positive boost to the Birmingham apartment market in 217. Total nonfarm employment expanded 1.%, or by 5,2 net jobs, during the last year, accelerating from a.7% increase during 216. Contributing to the rise were the metro-leading 2, personnel added to the leisure and hospitality industry during the prior 12 months. Also in the last year, apartment demand elevated with leasing activity highest in the neighboring Central and East submarkets since the start of 217. Attracting renters was a 1.4% rise in apartment inventory across Greater Birmingham, with an average absorption rate of eight units per property, per month during last year. Apartment development trailed rental demand as average occupancy elevated 7 basis points year over year to 93.3% in December 217, a postrecession high. With the healthy apartment occupancy, average effective rent increased 2.9% annually to $892 per month in December 217. The rise followed a.9% dip in effective rent during the preceding year. 5,2 1.% YOY $ % YOY 8% 7% 6% 5% $4, * *Estimate Source: Berkadia, Real Capital Analystics UN RATE 3.8% 21 BPS YOY $1, $8, $6, Index Value (Base Year 21 = 1) 1, *Estimate; **Forecast Source: Berkadia, $95 $9 $85 $8-1, -2, 93.3% 7 BPS YOY 1,81 Units 2.7% YOY * CHANGE -3, * 218** AND 94.% 93.5% 93.% 92.5% $75 92.% * 218** 217 PERFORMANCE HIGHLIGHTS 1,516 Units 1,15,3 466, $53, % YE 217.2% YOY YE 217.7% YOY YE % YOY YE BPS YOY , 1,5 1, * 218** 218 PREVIEW Continued hiring will underpin sustained apartment absorption across the Birmingham metropolitan area over the next four quarters. The labor force is forecast to grow.9% annually as employers add 4,8 net jobs by year-end. Manufacturer Autocar will contribute to the local economy, launching a $12 million heavy-duty, cabover-engine truck assembly plant in the North submarket. When fully operational, the plant will employ nearly 75 people and provide a more than $645 million economic impact per year in the metro. The plant will help increase apartment leasing activity in the submarket to a near metro high while no new inventory comes online in the area this year. Metrowide, apartment inventory is expected to grow by 246 units in 218, all of which will be in the Central submarket. Apartment absorption is forecast to continue to outpace deliveries across Greater Birmingham, resulting in average occupancy elevating 2 basis points year over year to 93.5% by December 218. The rise will move occupancy to a more than a decade high. With elevated occupancy, effective rent is expected to increase 2.8% to $917 per month by December. With the rise in leasing activity in the North submarket, effective rent is forecast to rise 3.3% annually to $694 per month. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 9

12 CHARLESTON 217 REVIEW Steady job creation and rising household income supported a peak in leasing activity across Greater Charleston in 217. Last year s apartment deliveries considerably outpaced the historical norm. Pent-up demand pushed leasing activity to the highest level in more than 15 years as 2,895 units were absorbed in 217. A 438-unit community in the Mount Pleasant submarket was the largest project that broke ground this year and is scheduled to complete in mid-218. Metrowide occupancy ended the fourth quarter at 94.3%, down 4 basis points year over year, due to the supplyside pressure. While absorption trailed brisk construction, effective rent advanced a modest 1.6% annually to $1,14 per month. Meanwhile, total nonfarm employment expanded by 5, jobs, building on the 1,6 jobs added in 216. A large share of the new jobs were in the professional and business services sector. These highpaying positions helped boost the metro s median household income 2.6% annually to $63,368 in December. 5, 1.4% YOY $1,14 1.6% YOY 9% 8% 7% 6% 5% * UN RATE 3.1% 6 BPS YOY $18, $14, $1, $6, $2, Index Value (Base Year 21 = 1) 2, 1, -1, *Estimate; **Forecast Source: Berkadia, $1,2 $1,1 $1, $ * 218** 94.3% 4 BPS YOY 3,322 Units 96.1% YOY * CHANGE -2, * 218** AND 217 PERFORMANCE HIGHLIGHTS 2,895 Units 777,6 313,3 $63, % YE % YOY YE % YOY YE % YOY YE BPS YOY 1, % 95% 94% 93% 4, 3, 2, 1, * 218** 218 PREVIEW Continued job growth will fuel heightened rental activity in Greater Charleston. Stout leasing activity will outmatch the 3,232 units added to inventory. As demand is expected to escalate for the secondconsecutive year, occupancy will increase 4 basis points to 94.7% at the end of fourth quarter. Demand will be elevated in two submarkets: Airport/North Charleston and Central Charleston. These submarkets will account for 46% of the overall net apartments absorbed during the oneyear forecast period. Metrowide rent will advance to $1,132 per month in December, up 2.5% from the start of the year, on par with the average effective rent growth in the preceding decade. Charleston-based employers will accelerate hiring this year as head counts rise 2.5% with 9, new jobs, up from the 1.4% gain in 217. Volvo Cars USA will provide a significant economic boost to the local economy with production on a new model sedan slated to start in the fall at their first American factory. The automaker will eventually employ 4, workers for two production lines when the $1.1 billion factory in Berkeley County is fully operational in Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

13 CHARLOTTE 217 REVIEW Charlotte s broad-based employment growth in recent years spurred a multifamily construction boom. Local nonfarm employment expanded 2.6% annually, outmatching the national average of 1.4% in 217. The apartment inventory expanded by 9,77 units in 217, up.3% from deliveries during the preceding year. The most recent additions were a more than 15-year high. While deliveries were spread throughout the metro, the bulk of additions were in the neighboring Downtown and N. Tryon St.-The Plaza submarkets. Pent-up demand along with the influx of new inventory helped drive apartment absorption as leasing activity was highest in these areas. Nearly 7,6 units were absorbed metrowide, more than 35% higher than the preceding fiveyear average. Rental demand was buoyed by continual job gains. Even with healthy leasing activity, supply-side pressure drove apartment occupancy down 6 basis points year over year to 94.7% by December. With the decline in occupancy, operators decelerated rent growth. After increasing 3.7% in 216, monthly rent advanced 2.7% last year to $1,59. 3,4 2.6% YOY $1,59 2.7% YOY 7.% 6.8% 6.6% 6.4% 6.2% 6.% $25, * UN RATE 3.9% 1 BPS YOY $15, $125, $1, $75, $5, Index Value (Base Year 21 = 1) 5, 25, *Estimate; **Forecast Source: Berkadia, $1,2 $1,1 $1, $9 $8-25, -5, 94.7% 6 BPS YOY 9,77 Units.3% YOY * CHANGE -75, * 218** AND 96.% 95.5% 95.% 94.5% 94.% $7 93.5% * 218** 217 PERFORMANCE HIGHLIGHTS 7,597 Units 2,553, 988, $59, % YE % YOY YE % YOY YE % YOY YE BPS YOY , 7,5 5, 2, * 218** 218 PREVIEW A slowdown in apartment deliveries should benefit the Charlotte apartment market this year. Construction is scheduled to complete on 8,13 units over the next four quarters, a nearly 12% decrease from 217. Development will be focused outside of the metro s core, with deliveries expected to be highest in the East Charlotte-Albemarle Corridor and the Harris Blvd/Mallard Creek Church Rd submarkets. Further driving rental demand outside the city core is Giti Tire s first North American manufacturing facility in Chester County. The $56 million plant began production on passenger and light truck tires in late-217 and will eventually employ 1,7 people when fully operational. Metrowide, total nonfarm employment is forecast to increase by 29,5 net jobs this year for a 2.5% gain. Rising payrolls will support an acceleration in leasing activity. Annual absorption is expected to exceed inventory growth this year to push up average occupancy 6 basis points to 95.3% by December. Operators will capitalize on the favorable supplydemand environment by raising rent an average of 3.7% over the course of the year, up from 2.7% growth in 217. Monthly rent will average $1,99 by the end of the fourth quarter. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 11

14 CHATTANOOGA 217 REVIEW For the second year in a row, manufacturing job creation buoyed Chattanooga-area employment, as the automotive sector continued its rapid buildup. Volkswagen Group was one of Chattanooga s fastest growing companies, adding approximately 1, jobs over the last year, which had a trickle-down effect on automotive suppliers staffing up to meet increased demand for automotive parts and components. Overall, Chattanooga businesses advanced employment by 5,8 net workers last year. With rising head counts, developers moved to meet anticipated multifamily rental demand, adding 738 units to inventory during 217, more than a two-fold increase from the prior five-year annual average of 36 units. Newly occupied apartment units trailed the influx of deliveries, causing a 3-basis-point decline in occupancy to a still-healthy 94.6% at the end of fourth quarter. Coinciding with a 2.2% increase in median household income, effective rent advanced 3.7% year over year, reaching $925 per month at year-end. 5,8 2.3% YOY $ % YOY 9% 8% 7% 6% 5% 4% * UN RATE 3.2% 19 BPS YOY $12, $1, $8, $6, $4, $2, Index Value (Base Year 21 = 1) 1, 5, -5, -1, *Estimate; **Forecast Source: Berkadia, $1, $95 $9 $85 $8 $ * 218** 94.6% 3 BPS YOY 738 Units 92.7% YOY * CHANGE -15, * 218** AND 217 PERFORMANCE HIGHLIGHTS 626 Units 558,4 228,3 $52, % YE 217.8% YOY YE % YOY YE % YOY YE BPS YOY % 96% 95% 94% 93% 92% 1,6 1, * 218** 218 PREVIEW Metrowide employment is forecast to rise by 6,4 workers this year, a gain of 2.4% that will support rising apartment absorption. Occupancy will ascend 5 basis points to 95.1%, 3 basis points higher than the annual five-year average, while effective rent appreciates 2.8% to $951 per month by year-end. Healthy apartment fundamentals will encourage developers to increase planning activity by 46%, keeping the multifamily construction pipeline full. Meanwhile, 1,228 units are scheduled to come online metrowide during 218. Deliveries will be concentrated in the Central submarket where five projects will begin lease-up. The largest development in this area will be a $45 million, four-story luxury apartment community at the former Choo Choo Hotel complex. Leasing for 48 of the 284 units is scheduled to commence in the fourth quarter and complete mid-219. The University of Tennessee at Chattanooga will continue to have an outsized impact on multifamily housing in Chattanooga s downtown area. The university anticipates welcoming 13,23 students by fall 219, up 13% from fall 217. The additional students are expected to bolster leasing activity among the new downtown developments. 12 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

15 CHICAGO 217 REVIEW Multifamily developers worked to meet rising rental demand across Greater Chicago as apartment occupancy elevated during 217. The apartment inventory expanded by 8,92 new units during the last four quarters, up more than 2% from 216 deliveries. The bulk of deliveries were in the Gold Coast/River North submarket. Located adjacent to Downtown Chicago and its numerous large employers, residents sought the new inventory, with the area leading leasing activity for the metro during the last 12 months. Rental demand in the Gold Coast/River North submarket, as well as across Greater Chicago, exceeded inventory growth in 217. Metrowide, occupancy elevated 2 basis points year over year to 94.6% by December. Helping fuel the demand for apartments was the.4% annual increase in the labor force. Chicago employers added a net 18, jobs in 217, the eighth-consecutive year of expanding employment. With occupancy and payrolls rising, effective rent advanced 2.1% during the last four quarters to $1,557 per month. 18,.4% YOY $1, % YOY 7.% 6.6% 6.2% 5.8% 5.4% $1, * UN RATE 5.% 8 BPS YOY $2, $175, $15, $125, Index Value (Base Year 21 = 1) 2, 1, *Estimate; **Forecast Source: Berkadia, $1,7 $1,6 $1,5 $1,4-1, -2, 94.6% 2 BPS YOY 8,92 Units 2.5% YOY * CHANGE -3, * 218** AND 95.5% 95.% 94.5% 94.% $1,3 93.5% * 218** 217 PERFORMANCE HIGHLIGHTS 9,784 Units 9,533,1 3,666,5 $71, % YE 217.1% YOY YE 217.7% YOY YE % YOY YE BPS YOY , 9, 6, 3, * 218** 218 PREVIEW An uptick in hiring should bolster household formation and apartment leasing in the Chicago metropolitan area this year. Total nonfarm employment is forecast to expand.8% annually in 218, up from a.4% increase during the preceding year. Supporting the rise are more than $2 billion in large-scale developments. The $47.2 million, 224,354-square-foot McDonald s Vendor Village in the City West submarket is scheduled to complete in late-218 and will house nearly 1, new employees. The $32.7 million, 9-room Nobu Hotel Chicago is also to open in the area this year, creating jobs in the leisure and hospitality industry. Apartment development is also focused in the City West submarket, with a metroleading 1,15 units scheduled to come online over the next four quarters. Even with the influx of new inventory, deliveries should trail leasing activity as City West occupancy elevates 4 basis points to 95.1% by yearend. Metrowide, occupancy is also forecast to rise 4 basis points annually to 95.% by December 218. The increase will shift occupancy to the highest year-end level since 2. With high occupancy, effective rent is forecast to reach $1,61 per month by December, up 3.4% year over year. At the same time, City West rent is expected to advance 3.6% to $2,47 per month. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 13

16 CINCINNATI 217 REVIEW Job growth throughout metro Cincinnati in 217 remained on par with the market s five-year average as employers added 19,7 new jobs. The 1.8% rate of expansion registered slightly below 216 s postrecession high of 2.2%. While all job sectors grew in 217, gains were heavily concentrated in the leisure and hospitality and the trade, transportation, and utilities sectors. Three new downtown Cincinnati hotels and expanded operations by DHL International and Amazon.com Inc. served as the catalyst for the addition of a combined 1, new jobs in those sectors. Renters occupied 1,839 units in 217, down from the prior year. The decline in absorption paired with the addition of 2,345 new units by developers were key contributors to the year-over-year occupancy rate dropping 2 basis points to 95.%. Average effective rent increased 2.% annually to $919 per month by yearend. Meanwhile, the rent share of wallet dropped 1 basis points to 17.4% as the median household income rose 2.9%. 19,7 1.8% YOY $919 2.% YOY 9% 8% 7% 6% 5% $2, * UN RATE 4.3% 1 BPS YOY $6, $5, $4, $3, Index Value (Base Year 21 = 1) 3, 15, *Estimate; **Forecast Source: Berkadia, $95 $9 $85 $8 $75-15, -3, 95.% 2 BPS YOY 2,345 Units 1.2% YOY CHANGE -45, * 218** AND 95.5% 95.% 94.5% 94.% 93.5% $7 93.% * 218** 217 PERFORMANCE HIGHLIGHTS 1,839 Units * 2,18,2 868, $63, % YE 217.5% YOY YE % YOY YE % YOY YE BPS YOY , 3, 2, 1, -1, * 218** 218 PREVIEW Apartment development will be focused around major employers as hiring accelerates this year. Deliveries in the Downtown and Northern Kentucky submarkets will account for 6% of all metrowide additions. These submarkets support 37% of the market s multifamily inventory and are home to four of the metro s top 1 largest employers: the city of Cincinnati, General Electric, Kroger, and the Cincinnati/Northern Kentucky International Airport. Growth by organizations in these submarkets will be a major contributing factor in the addition of approximately 22,7 jobs in 218, the second-highest number of jobs added since the Great Recession. Apartment operators will continue to benefit from metrowide job growth as effective rent grows 2.1%, reaching $938 per month in December. Metrowide, 2,166 units are scheduled to come online in 218, surpassing leasing activity by 15% and marking the third-consecutive year supply has outpaced demand, even as construction activity has steadily declined. This widening gap between new supply and demand is projected to push annual year-end occupancy levels down 1 basis points to 94.9%, commensurate with the market s five-year average. 14 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

17 CLEVELAND 217 REVIEW Decelerating single-family home sales velocity and steady job growth in the Cleveland metropolitan area led to a strong year for multifamily in 217. Local companies added 11,3 workers for a 1.1% expansion last year. The employment gains and a.3% increase in households contributed to a rise in apartment absorption as 1,86 units were newly occupied in 217, surpassing the five-year average of 1,132 units. Leasing activity heightened in the Lakewood/ Linndale/Brooklyn submarket as renters were attracted to new supply. Metrowide, builders brought 1,188 units online. Amid a supply shortfall occurring for the past several years, builders broke ground on seven new multifamily communities in 217 slated to add 785 units to inventory when all properties are completed. With leasing activity surpassing inventory growth, metrowide occupancy elevated 4 basis points to 95.2%, marking a postrecession year-end high. With rising occupancy, effective rent advanced 1.8% annually to $911 per month. 11,3 1.1% YOY $ % YOY 8.5% 8.% 7.5% 7.% $2, * UN RATE 6.5% 8 BPS YOY $8, $6, $4, Index Value (Base Year 21 = 1) 2, *Estimate; **Forecast Source: Berkadia, $1, $95 $9 $85 $8-2, -4, 95.2% 4 BPS YOY 1,188 Units 17.7% YOY * CHANGE -6, * 218** AND 95.5% 95.% 94.5% 94.% 93.5% $75 93.% * 218** 217 PERFORMANCE HIGHLIGHTS 1,86 Units 2,46,1 869, $57,46 19.% YE 217.3% YOY YE 217.3% YOY YE % YOY YE BPS YOY ,5 2, 1,5 1, * 218** 218 PREVIEW Continued growth in multifamily inventory, demand, and rent are expected this year amid expanding employment. Construction is scheduled to complete on 1,38 units over the next four quarters, a 16% increase from additions in 217. Development is focused around the metro s core with nearly two out of every five deliveries scheduled to come online by year-end in the neighboring East Cleveland/Cleveland Heights and Lakewood/Linndale/Brooklyn submarkets. In the area, MetroHealth, Ohio s statewide health care system, is planning a $1.25 billion expansion at the main campus, expected to break ground this year and continue through 222. The development will boost the construction industry as total nonfarm employment is forecast to grow 1.% by December with 1,9 net jobs. The rising workforce will boost rental demand across Greater Cleveland, with the Lakewood/ Linndale/Brooklyn submarket leading absorption. Metrowide leasing activity is expected to exceed inventory growth to shift up average occupancy 1 basis points over the next four quarters to 95.3% in December. With the elevated occupancy, average effective rent is forecast to advance 2.9% annually to $937 per month, up from 1.8% growth in 217. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 15

18 COLORADO SPRINGS 217 REVIEW Local employers added 3,5 workers to payrolls in 217, a 1.2% annual increase, fueling sustained apartment absorption and sturdy rent appreciation. Job growth eased from the 2.9% gain in 216 when 8,1 employees were added to metroarea head counts. The education and health services sector advanced with the creation of 1,7 jobs in 217, a sector expansion of 4.1%. Despite the slowdown in job growth, apartment absorption remained elevated with 312 newly occupied units. In the last quarter, builders completed a 3-unit project near the expanding UC Health Memorial Hospital North, part of the 666 apartments delivered throughout the metro in 217. With deliveries outpacing leasing activity, occupancy fell 7 basis points to 95.3%. Despite the drop, occupancy was in step with the prior five-year average of 95.2%. Effective rent surged 7.4% year over year in the Central submarket, helping boost overall rent growth in the Greater Colorado Springs area to $1,7 per month, an annual rise of 5.%. 3,5 1.2% YOY $1,7 5.% YOY 8% 7% 6% 5% * UN RATE 2.7% 6 BPS YOY $175, $125, $75, $25, Index Value (Base Year 21 = 1) 1, 5, -5, *Estimate; **Forecast Source: Berkadia, $1,1 $1, $9 $8 $ * 218** 95.3% 7 BPS YOY 666 Units 16.6% YOY * CHANGE -1, * 218** AND 217 PERFORMANCE HIGHLIGHTS 312 Units 73,4 277,1 $65, % YE % YOY YE % YOY YE % YOY YE BPS YOY % 96% 95% 94% 93% 1, * 218** 218 PREVIEW The Colorado Springs apartment market will continue to be supported by broad-based employment expansion in 218. Leasing activity will accelerate this year, up from the 312 units absorbed in 217. Monthly effective rent is anticipated to reach $1,95 by year-end, advancing 2.3%, albeit at a slower pace compared to the prior five-year average of 6.2%. Concurrently, employment in Colorado Springs will rise 2.1% this year with 6,1 additions to payrolls. Overall hiring will outperform the projected national rate of growth of 1.5% during the same time. The education and health services sector, as in many metros across the country, has proven most resilient. The $154 million Children s Hospital Colorado currently under construction on the northeast side of town will help bolster the health care segment when it completes towards the end of this year, creating jobs for 55 pediatric health professionals. Apartment development across the metro is expected to intensify. Roughly 2,72 units are in the planning stage and builders are slated to deliver 98 apartments in the next four quarters. New inventory will outmatch demand causing the occupancy rate to fall 8 basis points to 94.5% during the forecast period. 16 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

19 COLUMBUS 217 REVIEW Year-over-year leasing activity in greater Columbus was up 15% as net absorption totaled 3,27 units in 217. Meanwhile, new deliveries increased 2% as developers expanded apartment inventory by 3,53 units this year. This stability in supply and demand resulted in the year-end occupancy rate remaining unchanged at a healthy 95.3% and outpacing the prior five-year average of 95.%. As occupancy levels remained stable, the rate of effective rent growth increased from 3.% in 216 to an impressive 3.4% in 217 to $9 per month. With the Columbus economy nearing full employment after 29,1 jobs were added in 216, the number of new jobs in 217 declined slightly. The 22,3 jobs added by employers equated to a 2.1% annual increase and surpassed the national growth rate by 7 basis points. Job growth was positive in eight employment sectors including a metro high of 6, jobs added by companies operating in the professional and business services sector. 22,3 2.1% YOY $9 3.4% YOY 9% 8% 7% 6% $2, * UN RATE 4.1% 1 BPS YOY $8, $6, $4, Index Value (Base Year 21 = 1) 4, 2, *Estimate; **Forecast Source: Berkadia, $95 $9 $85 $8 $75-2, 95.3% BPS YOY 3,53 Units 19.6% YOY CHANGE -4, * 218** AND 95.5% 95.% 94.5% 94.% 93.5% $7 93.% * 218** 217 PERFORMANCE HIGHLIGHTS 3,27 Units * 2,73,2 824,7 $66, % YE % YOY YE % YOY YE % YOY YE BPS YOY 1, , 4, 3, 2, 1, * 218** 218 PREVIEW Metrowide, employers are forecast to add an additional 22,6 jobs to expand employment an additional 2.1% in 218, bolstered by numerous expansion projects across the metro area including Nationwide Children s Hospital and the Rickenbacker Global Logistics Park. The $3 million, 597,-square-foot Bridge Park mixeduse development in Dublin will add 373, square feet of office space and 224, square feet of retail and restaurant space to the city, creating hundreds of new jobs. Construction jobs will be in high demand in the coming year as large-scale projects including the 22-acre, $75 million Facebook data center gets underway. The manufacturing sector will continue to build on the momentum carried over from 217 as Fluvitex USA Inc. and Ohio Pack LLC begin hiring for new facilities in Groveport and Heath. Net leasing activity in 218 is projected to slow roughly 35% in 218 to 2,117 units. An increase in construction activity that will bring 3,87 new units to market is expected to upset the supply-demand balance in the market over the past three years, dropping occupancy 9 basis points to 94.4% by yearend. Effective rent is expected to increase by 1.6% annually, reaching $915 per month. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 17

20 DALLAS-FORT WORTH 217 REVIEW For the second-consecutive year, more than 1, jobs were created in the Dallas-Fort Worth metro area. increased 2.9% annually with 13,7 new workers in 217, a deceleration from 3.8% growth in the prior year. Despite the slowdown, job growth was still more than twice the national rate of expansion in 217. While all employment sectors grew, staffing in five sectors swelled by more than 3%. Much of the growth was in the Plano/Allen/McKinney submarket, where multiple corporate and regional relocations and expansions made a profound impact on the local economy. Over the past two years, multifamily developers feverishly added new stock to the submarket in anticipation of thousands of new workers arriving in the area. In 217, more than 2% of the 24,411 new apartments in the Metroplex came online in the Plano/Allen/McKinney submarket. Metrowide, the new inventory outpaced absorption by 22%, which led to a 5-basis-point annual decrease in occupancy to 94.7% in December. Meanwhile, average effective rent increased 2.7% to $1,12 per month. 13,7 2.9% YOY $1,12 2.7% YOY 7.% 6.5% 6.% 5.5% 5.% * *Estimate Source: Berkadia, Real Capital Analystics UN RATE 3.4% 6 BPS YOY $125, $1, $75, $5, $25, *Estimate; **Forecast Source: Berkadia, 94.7% 5 BPS YOY 24,411 Units 27.4% YOY *Estimate Source: Berkadia, Real Capital Analystics 7,449,4 2,662,3 $65, % YE % YOY YE % YOY YE % YOY YE BPS YOY Index Value (Base Year 21 = 1) 2, 1, $1,2 $1,1 $1, $9 $8 $7-1, * 218** CHANGE -2, * 218** AND 217 PERFORMANCE HIGHLIGHTS 19,996 Units % 95.3% 95.1% 94.9% 94.7% 94.5% * 32, 28, 24, 2, 16, 12, * 218** 218 PREVIEW Driven by accelerating household formation and job growth, apartment absorption is forecast to surpass deliveries in 218. Builders are scheduled to complete approximately 1 apartment communities this year. The completions, coupled with more than 2 additional properties underway, will result in deliveries topping 28,1 units. Apartment absorption is estimated to exceed 3,2 units. The enormous leasing activity is projected to drive occupancy up 5 basis points to 95.2%. Operators will capitalize on the vigorous demand by raising effective rent 3.5% during the year. By December, effective rent is forecast to reach an average of $1,14 per month. Developers are expected to request permits for 28,185 apartments in 218, 3% greater than 217. This year the local job growth rate is again expected to outpace most metro areas in the country. Employers are projected to add 114,1 new workers to payrolls this year, a 3.1% year-over-year increase. A significant amount of this growth will originate within major developments Legacy West District, $5 Billion Mile, and Arlington Stadium District. Over the long term, other massive projects including Dallas Midtown and Hidden Ridge in Irving will also become sizable centers of employment. 18 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

21 DENVER 217 REVIEW Payrolls expanded in metro Denver by 1.6% in 217, eclipsing the national growth rate by 2 basis points. While the 23,8 jobs added were the metro s lowest since 21, the metrowide unemployment rate of 2.2% reflected a strong economy that is operating at full capacity, limiting the number of jobs that can be added. Vigorous rental activity pushed absorption totals to their highest level in over a decade at 11,24 units, more than double the number recorded one year prior. Leasing activity was strongest in the Denver-Downtown submarket where 3,926 apartment units were absorbed at the same time a significant amount of new product came online. Marketwide, developers were active, adding 11,74 units in 217, a 51% annual increase. This swell of activity combined with a slight imbalance favoring demand pushed year-over-year occupancy up 3 basis points to 94.5%. Strong economic activity, including a 2.% rise in median household income, enabled operators to reduce concessions, resulting in effective rent increasing 4.3%. By year-end effective rent averaged $1,434 per month. 23,8 1.6% YOY $1, % YOY 7.% 6.5% 6.% 5.5% 5.% $5, * UN RATE 2.2% 6 BPS YOY $25, $2, $15, $1, Index Value (Base Year 21 = 1) 6, 3, *Estimate; **Forecast Source: Berkadia, $1,6 $1,5 $1,4 $1,3 $1,2-3, 94.5% 3 BPS YOY 11,74 Units 5.8% YOY CHANGE -6, * 218** AND 96.% 95.5% 95.% 94.5% 94.% $1,1 93.5% * 218** 217 PERFORMANCE HIGHLIGHTS 11,24 Units * 2,99, 1,136,5 $77, % YE % YOY YE % YOY YE % YOY YE BPS YOY , 12, 9, 6, 3, * 218** 218 PREVIEW The multifamily construction boom is expected to continue as the 1,17 units added in 218 will trail only 217 for the largest number of annual deliveries over the past decade. Rental activity will be on par with the previous year s total, as 11,24 net units are expected to be absorbed during the upcoming 12 months. A widening supply-demand gap will push year-overyear occupancy up 5 basis points to 95.%, slightly above the 94.9% five-year average. With rising occupancy, average effective rent will reach $1,487 per month in December, up 3.7% annually. The Denver-Downtown submarket will continue to positively influence overall multifamily fundamentals as robust rental demand in the submarket will surpass deliveries for the second-consecutive year, driving up occupancy 6 basis points, and supporting a 4.1% rise in effective rent. An upswing in Denver s job growth will foster a bright outlook for the local multifamily market as a net 27, jobs are added this year. The highly anticipated $824 million Gaylord Rockies Resort and Convention Center will open to kick off the ski season, bringing jobs to the leisure and hospitality sector, while over 1 million square feet of office space will come online, providing space for expanding companies to accommodate new workers. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 19

22 DES MOINES 217 REVIEW Multifamily developers ramped up apartment deliveries across Greater Des Moines amid a growing workforce. Construction completed on 2,559 units during the last four quarters, the highest annual inventory growth in more than 15 years. The bulk of deliveries were in the downtown area near major employers that include UnityPoint Health s Iowa Methodist Medical Center. The hospital is part of the education and health services sector, which expanded 2.9% with 1,5 new jobs in 217. Metrowide, total nonfarm employment increased by 8,1 net workers during the last 12 months. The 2.2% local workforce expansion outpaced the 1.4% national average growth at the same time. Robust job expansion contributed to heightened annual rental demand in the metro last year, which was up 81% from leasing activity during 216. Even with the rise, the peak in deliveries caused average occupancy to dip 1 basis points year over year to 94.7% by December. At the same time, effective rent lowered.2% to $898 per month at year-end. 8,1 2.2% YOY $898.2% YOY 8.5% 8.% 7.5% 7.% 6.5% 6.% * UN RATE 2.9% 3 BPS YOY $7, $65, $6, $55, $5, $45, Index Value (Base Year 21 = 1) 2, 1, *Estimate; **Forecast Source: Berkadia, $95 $925 $9 $875 $85-1, 94.7% 1 BPS YOY 2,559 Units 16.% YOY * CHANGE -2, * 218** AND 96.% 95.5% 95.% 94.5% 94.% $ % * 218** 217 PERFORMANCE HIGHLIGHTS 2,347 Units 651,7 258,6 $66,9 16.1% YE % YOY YE % YOY YE % YOY YE BPS YOY 2, 1,5 1, 5 3, 2, 1, * 218** 218 PREVIEW Sustained hiring will underpin elevated apartment demand in the Des Moines metropolitan area over the next 12 months. Employers are forecast to add 8,2 net jobs by year-end for a 2.2% expansion, matching employment growth during 217. The opening of the new, $11 million Convention Center Hotel at the Iowa Events Center during the first quarter will provide a boost to the leisure and hospitality industry. The 33-room, eight-story hotel is projected to bring 3 million people to Des Moines and have an economic impact of $1 billion in its first 2 years. Also in the first quarter, construction is scheduled to begin on Apple s $1.3 billion, 4,-square-foot data center on 2, acres in Waukee. While the project will only employ 5 workers when complete in 22, building the center will create 5 construction jobs. With rising payrolls, apartment leasing activity is forecast to exceed the preceding fiveyear average and to surpass the 938 units scheduled to come online by year-end. Healthy absorption will push occupancy up 1 basis points year over year to 95.7% by December 218. Occupancy will reach its highest year-end level since 212. Also this year, effective rent is expected to increase 3.1% to $926 per month. 2 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

23 DETROIT 217 REVIEW Metrowide employment expanded 2.% in 217, a deceleration from the year before, though still greater than the average increase during the prior five years. Employers added 39,1 net workers to payrolls, with the greatest hiring in the professional and business services sector, where 12,4 positions were filled, a 3.% annual gain. The rate of growth was the same in the financial activities segment, with 3,6 new workers, boosted by hundreds of new hires at United Shore Financial Services LLC and Credit Acceptance Corporation. In the leisure and hospitality and the education and health services sectors, expansion of 2.8% and 1.8% was recorded, respectively, as 5,7 workers were hired in each of the two sectors. Apartment operators increased rents amid the continued economic growth. During 217, average effective rent increased 2.8% to $943 per month in December. Metrowide occupancy dipped 1 basis points annually to 96.% as new multifamily completions outpaced leasing activity by 16%. 39,1 2.% YOY $ % YOY 8.5% 8.% 7.5% 7.% 6.5% $2, * UN RATE 3.9% 18 BPS YOY $1, $8, $6, $4, Index Value (Base Year 21 = 1) 7, *Estimate; **Forecast Source: Berkadia, $1, $95 $9 $85-7, $ * 218** 96.% 1 BPS YOY 2,97 Units 29.4% YOY CHANGE -14, * 218** AND 217 PERFORMANCE HIGHLIGHTS 1,757 Units 97% 96% 95% 94% 93% * 4,298,9 1,739,7 $6, % YE 217 % YOY YE 217.7% YOY YE % YOY YE BPS YOY , 4, 2, * 218** 218 PREVIEW Multifamily builders have approximately 2,17 units scheduled for delivery in the metro area this year. Additionally, more than 7,4 units among 49 apartment developments are in various stages of the planning process. Leasing activity is forecast to trail deliveries by more than a two-to-one ratio this year. The supply imbalance will spur a 4-basis-point reduction in occupancy to a still-healthy 95.6% by yearend. Over the course of the year, effective rent is projected to increase 1.9% to an average of $961 per month in December. The near-term and extended employment environment is promising in the Detroit metro area. In 218, job growth of 2.% is forecast as payrolls are augmented with 4,6 new workers. Staffing in the manufacturing industry may be unpredictable in 218, as some automotive-related companies have recently reported slackening sales, while other companies plan to expand. In the long term, however, the automotive industry s gradual shift to autonomous vehicles is expected to result in thousands of new, highly skilled, generously paid workers whose discretionary income will spill over to benefit other segments of the local economy. Meanwhile, Bedrock Detroit LLC s plan to invest $2.1 billion among several projects in the city of Detroit bodes well for long-term white-collar job growth. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 21

24 EL PASO 217 REVIEW Sustained employment growth and vigorous apartment demand marked the El Paso economy in 217. Employers added 9,1 workers to local payrolls, a 2.9% year-over-year gain. The professional and business services segment expanded with 2,6 workers, bolstered by hiring for 3 jobs at Conduent Inc., an east El Paso call center. The trade, transportation, and utilities industry grew by 1,9 jobs. The sector was supported by the opening of Cabela s, the first retailer to open in the $1 million West Towne Marketplace in west El Paso. Strong renter demand returned in 217, where net apartment absorption totaled 1,487 units, supported by an uptick of 2.1% in median household income alongside a 4-basispoint decrease in rent share of wallet. Occupancy escalated to 92.8% by the fourth quarter, up from 9.7% at year-end 216, and surpassing the five-year average of 92.3%. Also spurring demand were affordable rents. Effective rent ended 217 at $757 per month, up.2% year over year. 9,1 2.9% YOY $757.2% YOY 12% 8% 4% % * UN RATE 4.1% 8 BPS YOY $12, $8, $4, $ Index Value (Base Year 21 = 1) 1, 5, *Estimate; **Forecast Source: Berkadia, $8 $775 $75 $725 $ * 218** 92.8% 21 BPS YOY 515 Units 2.% YOY * CHANGE -5, * 218** AND 217 PERFORMANCE HIGHLIGHTS 1,487 Units 854,3 28,6 $46, % YE % YOY YE % YOY YE % YOY YE BPS YOY % 94% 92% 9% 88% 1,6 1, * 218** 218 PREVIEW Metrowide employment is expected to rise again in 218, expanding 2.7% as businesses are forecast to add 8,7 workers to payrolls. The construction sector will continue to be supported by ongoing development at Marriott s downtown hotel, Topgolf at Montecillo, West Towne Marketplace, and El Paso s West Side Natatorium. The construction of new shopping centers and office space across the city has pushed the value of commercial construction to historic levels. Confident in uninterrupted economic growth resulting in apartment demand in the near term, multifamily developers will ramp up planning activity 21% this year, requesting permits for 1,1 apartments. One of the largest projects in the construction pipeline is the mixed retail development planned for northwest El Paso, flanked by office and living spaces located near the intersection of Interstate 1 and Loop 375. Marketwide leasing will remain robust over the next 12-month forecast period, resulting in 737 newly occupied apartments. By year-end the occupancy rate will push up to 94.3%. Effective rent is projected to rise 2.8% to $779 per month by December, significantly higher than the post-recession average of 1.5%. 22 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

25 GREENVILLE SC 217 REVIEW Approximately 6,1 new households formed in the Greenville metro area in 217. The 1.8% annual increase in households outpaced the 1.2% gain in population. Household formation and sustained job growth boosted apartment demand last year. Operators recorded net absorption of 2,62 units metrowide, more than three times greater than average absorption during the previous five years. The heightened apartment leasing activity lifted occupancy 2 basis points annually to 94.7% by the end of the fourth quarter. During the same period, average effective rent reached $917 per month, a 1.6% yearover-year gain. Apartment demand was supported by a 1.5% annual increase in employment as 6,2 jobs were created. Institutions in the education and health services sector led hiring with the addition of 2, jobs, a 4.% yearly increase. Multifamily builders completed 12 apartment communities in the Greenville metro area last year, seven of which were in the Northwest submarket. 6,2 1.5% YOY $ % YOY 7.5% 7.% 6.5% 6.% 5.5% 5.% * UN RATE 3.4% 5 BPS YOY $12, $1, $8, $6, $4, $2, Index Value (Base Year 21 = 1) 2, 1, *Estimate; **Forecast Source: Berkadia, $95 $9 $85 $8-1, -2, $ * 218** 94.7% 2 BPS YOY 2,91 Units 33.8% YOY CHANGE -3, * 218** AND 217 PERFORMANCE HIGHLIGHTS 2,62 Units 98% 96% 94% 92% 9% * 91,2 352,3 $54,22 2.3% YE % YOY YE % YOY YE % YOY YE BPS YOY 1, ,5 2, 1,5 1, * 218** 218 PREVIEW Local companies and institutions are projected to create 5, jobs in 218, equating to 1.2% annual growth. The manufacturing industry will be boosted by the first of hundreds of new workers at Techtronic Industries expanded production facility in Anderson and the addition of 17 highly paid workers at Lockheed Martin s F-16 manufacturing plant in Greenville. Contributors to long-term expansion in the manufacturing sector include Teijin LTD, where 2 workers will be hired in 219, and Arthrex Manufacturing Inc., which will fill 1, jobs from 219 to 225. In the local multifamily market, 89 apartments are scheduled for delivery. Additionally, the development pipeline includes 11 multifamily properties at various stages of the planning process representing a potential of approximately 2,95 new apartments. While employment will continue to expand, the slower rate of growth is expected to similarly affect apartment demand. Leasing activity is forecast to trail deliveries by approximately 16%, spurring a 2-basis-point decrease in occupancy to 94.5%. Meanwhile, monthly effective rent is projected to rise 2.% to an average of $936 by year-end. Permit issuance for 1,28 apartments is anticipated this year, an 8% annual increase, as developers demonstrate confidence in apartment demand in the coming years. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 23

26 HOUSTON 217 REVIEW The Houston market showed resilience in 217, despite the effects of Hurricane Harvey. Even with the loss of 2, jobs in September following the hurricane, total nonfarm employment expanded.5% last year to match job growth in 216. With 1,8 new personnel, hiring in the education and health services sector was a significant contributor to the overall net 15,8 workers added in 217. growth along with displaced residents seeking housing contributed to a significant rise in rental demand. With 22,353 units absorbed in 217, leasing activity was more than double the year before. The rise in demand as well as 2.5% of apartment stock damaged by Hurricane Harvey contributed to a 5-basispoint annual rise in occupancy to 92.8% in December. Following a decline in effective rent during the first half of 217, the upswing in occupancy during the remainder of the year shifted rent growth positive. At $1,41 in December, monthly effective rent was up.3% from the close of 216. The annual rise followed a 3.6% decline during ,8.5% YOY $1,41.3% YOY 7.% 6.8% 6.6% 6.4% 6.2% UN RATE 5.1% 4 BPS YOY $12, $15, $9, $75, $6, 6.% $45, * *Estimate; **Forecast Source: Berkadia, 92.8% 5 BPS YOY 2,58 Units 6.8% YOY * 6,967,7 2,438,4 $64, % YE % YOY YE % YOY YE % YOY YE BPS YOY Index Value (Base Year 21 = 1) 2, 1, -1, $1,1 $1,75 $1,5 $1,25 $1, * 218** CHANGE -2, * 218** AND 217 PERFORMANCE HIGHLIGHTS 22,353 Units % 94% 93% 92% 91% 3, 2, 1, * 218** 218 PREVIEW As employers accelerate hiring, apartment demand is forecast to rise across Greater Houston this year. Total nonfarm employment is expected to expand.9% by December, up from.5% growth in 217. With rebuilding following Hurricane Harvey and work on large-scale projects like the $82 million Houston Ship Channel marine terminal in Pasadena, the construction industry is expected to have rising head counts. Overall, 26,3 workers are forecast to be added by year-end. At the same time, annual leasing activity is expected to accelerate nearly 13% from 217 absorption. Facilitating the rise will be more apartment inventory available as 14,187 units are scheduled to come online by year-end. This metro trend will be reflected in the Montrose/River Oaks submarket, where multifamily leasing activity is expected to surpass the metroleading completions to shift occupancy up to 94.%. Metrowide, apartment occupancy is forecast to rise 17 basis points over the next four quarters to 94.5%. Encouraged by soaring occupancy, operators will accelerate rent growth. Reaching $1,79 by December, effective rent is forecast to rise 3.6%, up from.3% annual growth in 217. In the Montrose/River Oaks submarket, monthly rent is expected to rise 3.3% to $1,63 by December Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

27 INDIANAPOLIS 217 REVIEW Apartment occupancy remained healthy as Indianapolis employment expanded 2.2%, or by 23,7 jobs, in 217. The 4,6 new hires in the trade, transportation, and utilities industry significantly boosted the Indianapolis economy last year. Rising payrolls in recent years prompted developers to elevate multifamily permitting issuance at the same time, resulting in apartment inventory expanding with 2,923 new units in 217. While deliveries were spread throughout the metro, the bulk of new inventory was in the Hamilton County submarket, a hub for financial services firms including headquarters for Allied Solutions which began recruiting for 6 open positions last year. Renters in this area quickly absorbed units as occupancy surged 7 basis points annually to 94.% by December. Conversely, metrowide occupancy lowered 3 basis points to 93.3% because of supply-side pressure. Supported by sustained employment effective rent advanced 2.5% to $84 per month. 23,7 2.2% YOY $84 2.5% YOY 9% 8% 7% 6% 5% 4% $2, * UN RATE 3.3% 3 BPS YOY $7, $6, $5, $4, $3, Index Value (Base Year 21 = 1) 4, 2, *Estimate; **Forecast Source: Berkadia, $9 $85 $8 $75-2, 93.3% 3 BPS YOY 2,923 Units 5.% YOY * CHANGE -4, * 218** AND 95.5% 94.5% 93.5% 92.5% $7 91.5% * 218** 217 PERFORMANCE HIGHLIGHTS 2,335 Units 2,32,4 83, $61, % YE 217.9% YOY YE % YOY YE % YOY YE BPS YOY 1,6 1, , 4, 3, 2, 1, * 218** 218 PREVIEW Sustained job growth will accelerate apartment demand in Indianapolis this year. Local employment will increase 2.2% in 218, exceeding the 1.5% national growth rate, as employers add 23,8 new jobs. The longterm employment outlook bodes well for the metro as construction persists on Indiana University Health s $1 billion downtown project and Community Health Network s 15-bed hospital on the eastside, the latter of which is slated to open early 219. Technology hiring will gain momentum as Salesforce.com Inc. hires more than 8 workers on top of its existing 1,4-person workforce, as it fills space at Salesforce Tower on Monument Circle. Apartment leasing activity will increase this year with 3,59 newly occupied rentals, up 31% from the 2,335 units absorbed in 217. Inventory will taper in the next four quarters as builders will add 2,182 apartments, 17% less than the prior five-year average. As supply growth moderates, healthy leasing will push up occupancy 7 basis points this year. At 94.%, occupancy will reach its highest year-end level since 2. Supporting the overall trend, brisk leasing activity in the Hamilton County submarket will increase the occupancy rate by 7 basis points to end the year at 94.7%. Metrowide effective rent will advance 3.2% annually to $867 per month by December. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 25

28 INLAND EMPIRE CA 217 REVIEW Effective rent increased in all 18 submarkets of the Inland Empire in 217. Average effective rent reached $1,422 per month by year-end 217. The 3.7% annual rent appreciation last year was a deceleration from the frenzied rent growth in the prior two years. Local single-family home sales velocity rose more than 15% in 217, a factor in the 37% yearover-year decline in apartment absorption. Operators recorded net absorption of 1,134 apartments in 217, approximately 48% below the previous five-year average. Apartment occupancy was 95.8% at the end of the fourth quarter, 3 basis points lower than year-end 216. Builders delivered 1,768 units in 217, up nearly 5% from the prior year. The new inventory was distributed among five communities finished in 217 and five properties scheduled for completion in 218. Meanwhile, employment expanded 2.9% annually with 41,4 jobs created. Numerous major developments supported a torrent of hiring in the construction sector a 14.5% annual increase as 13,9 new jobs were filled. 41,4 2.9% YOY $1, % YOY 6.5% 6.% 5.5% 5.% 4.5% * UN RATE 5.3% 4 BPS YOY $18, $16, $14, $12, $1, Index Value (Base Year 21 = 1) 8, 4, *Estimate; **Forecast Source: Berkadia, $1,5 $1,4 $1,3 $1,2-4, $1, * 218** 95.8% 3 BPS YOY 1,768 Units 4.6% YOY CHANGE -8, * 218** AND 217 PERFORMANCE HIGHLIGHTS 1,134 Units 97% 96% 95% 94% 93% * 4,541, 1,42,3 $6, % YE 217.1% YOY YE % YOY YE % YOY YE BPS YOY , 3, 2, 1, * 218** 218 PREVIEW Apartment communities in the Inland Empire will remain an attractive alternative to many households unable to afford exorbitantly expensive singlefamily homes in the neighboring coastal counties in Southern California. Renters are projected to occupy 1,886 additional apartments in the Inland Empire in 218, a 66% increase over 217. Eager to meet future demand, developers are expected to request permits for 2,868 apartments this year, 5% higher than average issuance during the prior five years. An outsized number of apartments under construction will be completed this year, resulting in 3,825 new units, the greatest annual deliveries since 26. The multifamily planning pipeline suggests a deceleration in completions in 219 and possibly 22. This year the heightened deliveries will outpace absorption by more than two to one, spurring an 8-basispoint decrease in occupancy. By year-end, metrowide occupancy is projected to fall to a still-healthy 95.%. During the same period, effective rent is forecast to rise 2.4% to $1,457 per month. Sustained healthy job growth is anticipated. Employers in the metro area are forecast to hire 44,1 workers this year, a 3.% annual increase. 26 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

29 JACKSONVILLE 217 REVIEW In 217, the Jacksonville workforce rose by 9,2 jobs, up 1.4% and on par with the U.S. percentage gain. Substantial hiring occurred in the largest employment sector trade, transportation, and utilities where 4,3 positions were filled. Persistent staffing additions supported a 2.2% increase in occupied multifamily stock, compared to 1.5% in the preceding year, as newly leased apartments heightened by 2,459 units in the most recent 12-month period. Rental demand strengthened measurably for more affordable rentals, as four of the eight submarkets with the largest occupancy improvements occurred in areas with below-market rents. Nevertheless, 11 of the metro s 17 submarkets posted occupancy improvements of varying degree. Year-end occupancy reached the highest point since 25, as the metrowide rate ascended 2 basis points year over year to 94.5%. Rising occupancy made way for expansion of monthly rent. Effective rent advanced 4.3% annually to $995 per month in the fourth quarter, well above the preceding five-year annual average increase of 3.%. 9,2 1.4% YOY $ % YOY 8.% 7.5% 7.% 6.5% 6.% $1, * UN RATE 3.7% 11 BPS YOY $9, $7, $5, $3, Index Value (Base Year 21 = 1) 4, 2, *Estimate; **Forecast Source: Berkadia, $1,1 $1, $9 $8-2, $ * 218** 94.5% 2 BPS YOY 2,347 Units 37.4% YOY * CHANGE -4, * 218** AND 217 PERFORMANCE HIGHLIGHTS 2,459 Units 1,519,9 594,1 $59,589 2.% YE % YOY YE % YOY YE % YOY YE BPS YOY % 95% 94% 93% 92% 3, 2, 1, * 218** 218 PREVIEW Jacksonville apartment supply will accelerate for the third-consecutive year, accompanied by healthy employment growth, although completions will outpace demand and effectively apply downward pressure on occupancy. Construction is scheduled to complete on 2,96 units by year-end, and while deliveries will be scattered throughout the metro area, builders will be particularly active on seven projects in the East Jacksonville and the Southside/Bay Meadows submarkets, where leasing activity is predicted to be strong. Occupied stock will rise 1.6% or by 1,872 newly leased units in 218. Metrowide occupancy will descend 7 basis points to 93.8% by December due to supplyside pressure. Concurrently, rent growth will taper to 1.9%, reaching $1,14 per month by year-end. Permitting activity indicates prolonged development in the coming years. Permits for 3,517 multifamily units are forecast for this year, following issuance of 3,22 units in 217. Metro-area employment is set to rise by 18,5 positions this year. The hiring will augment local staffing levels by 2.7% over the next 12 months, compared to a 1.5% nationwide gain. The trade, transportation, and utilities sector will be boosted this year by Amazon.com Inc. creating 1,5 full-time jobs by late-219 at its new fulfillment center in the Jacksonville North submarket. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 27

30 KANSAS CITY 217 REVIEW Multifamily development was focused around employment hubs in Greater Kansas City during 217, and residents sought housing nearby. Construction completed on a metro-leading 1,31 units in the Downtown/ East KC submarket last year. Deliveries were more than double the additions during 216 in the area around the metro s central business district. An additional 764 units came online during the last four quarters in the Overland Park South submarket, home to the Sprint/Nextel campus. Metrowide, 3,955 units were added to the inventory in 217, up more than 15% from the year before. At the same time, apartment absorption heightened 14% year over year. Leasing activity was highest in the Downtown/East KC submarket. Boosting rental demand metrowide was a 1.2% expansion in total nonfarm employment with 13,3 new jobs. Even with healthy rental demand, leasing activity trailed deliveries to shift occupancy down 2 basis points annually to 94.7% in December 217. Simultaneously, effective rent increased 1.1% to $939 per month. 13,3 1.2% YOY $ % YOY 7.5% 7.% 6.5% 6.% 5.5% $4, * UN RATE 3.7% 5 BPS YOY $1, $85, $7, $55, Index Value (Base Year 21 = 1) 4, 2, *Estimate; **Forecast Source: Berkadia, $1, $95 $9 $85-2, 94.7% 2 BPS YOY 3,955 Units 15.1% YOY * CHANGE -4, * 218** AND 95.5% 95.% 94.5% 94.% $8 93.5% * 218** 217 PERFORMANCE HIGHLIGHTS 3,498 Units 2,125,3 857,1 $66, % YE 217.6% YOY YE % YOY YE % YOY YE BPS YOY 1, , 4,5 3, 1, * 218** 218 PREVIEW Apartment occupancy is expected to remain elevated as employers accelerate hiring across Kansas City over the next four quarters. While leasing is expected to decelerate from 217, annual rental demand will be on par with the five-year average. Absorption is forecast to nearly keep pace with the 3,492 units delivered by yearend to hold occupancy at 94.7% in 218. In the highly desired Downtown/East KC submarket, leasing activity is expected to surpass the metro-leading deliveries to shift occupancy up to 94.%. Outside the metro core, builders will bring new inventory online in every submarket over the next four quarters. Beyond the multifamily pipeline, several large-scale developments across Greater Kansas City will boost the construction industry this year. The $193 million new Johnson County Courthouse and the $113 million redevelopment of the Westbrooke Village Shopping Center are set to begin this year and continue through 22. Overall, Kansas City employment is forecast to expand 1.7%, or by 18,5 jobs, over the next four quarters, up from the 1.2% increase in 217. Apartment operators will capitalize on the rising payrolls and healthy occupancy by advancing effective rent. At $961 per month in December 218, effective rent will be up 2.4% annually. 28 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

31 KNOXVILLE 217 REVIEW Multifamily developers focused apartment deliveries around employment hubs in the Knoxville metro during 217. Builders added 469 units last year, all along the interstate corridors of Knoxville s Northeast and Southwest submarkets. The area is home to the major employment centers in the vicinity of the West Town Mall and Knoxville Center. With leasing activity down to 33 net units in 217, the year-end occupancy rate declined 9 basis points to 94.9%. Yearover-year effective rent increased a modest 1.7% to $88 per month in December. The government and the manufacturing sectors led job growth, increasing 2.6% and 2.5%, respectively. These sectors contributed 2,6 of the net 3,6 jobs added metrowide last year. Part of the additions came with the new Lifetime Products manufacturing facility in Knox County. At full production, the facility will support nearly 1,3 jobs. Overall job growth was tamped down by the combined 1,1 positions eliminated from the professional and business services and the information sectors last year. 3,6.9% YOY $88 1.7% YOY 7.5% 6.5% 5.5% 4.5% 3.5% * UN RATE 3.3% 16 BPS YOY $125, $1, $75, $5, $25, Index Value (Base Year 21 = 1) 15, 7,5 *Estimate; **Forecast Source: Berkadia, $95 $9 $85 $8 $75-7,5-15, 94.9% 9 BPS YOY 469 Units 26.% YOY CHANGE -22, * 218** AND 96.5% 95.5% 94.5% 93.5% 92.5% $7 91.5% * 218** 217 PERFORMANCE HIGHLIGHTS 33 Units * 88,6 366,5 $53, % YE 217.9% YOY YE % YOY YE % YOY YE BPS YOY ,6 1, * 218** 218 PREVIEW Workforce participation is set to surpass 4, as employers add 3,9 jobs in 218, marking the ninth-consecutive year of job gains in greater Knoxville. An uptick in manufacturing employment is expected as firms like LeMond Composites, SCCY Industries, and DENSO Manufacturing Tennessee Inc. add over 6 new positions combined. After no deliveries in 217, the Central/Southeast and the Northwest submarkets will receive a combined 643 of the 678 new metrowide units in 218. The 315-unit Riverwalk at the Bridges is located on the former Baptist Hospital site, overlooking the Tennessee River and is located approximately one mile from the University of Tennessee campus. With 328 units, Greystone s Pointe Knoxville is located near Interstate 4 and Pellissippi State Community College, and is the largest apartment community to come online over the past few years. Leasing activity at these communities should help increase yearover-year absorption totals to 198 units. The disparity between absorption and deliveries during 218 will drop the average occupancy rate 9 basis points to 94.% in December. Operators are expected to increase effective rent 1.8% this year. By year-end, average effective rent will reach $896 per month. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 29

32 LAS VEGAS 217 REVIEW After hitting a postrecession peak at the end of 216, apartment occupancy remained elevated in the Las Vegas metropolitan area last year. Apartment occupancy was 94.1% in December of 217, the same rate as one year prior. Annual absorption was up nearly 11% as leasing activity nearly kept pace with the 3,438 deliveries since the start of last year. Contributing to the rise in rental demand was a 2.8% annual increase in employment with 27, net additions. Apartment development was focused outside the core of the city, with a metroleading 1,359 deliveries in the Henderson/ Southeast submarket and 1,336 units added in the Clark County/Other submarket. Even with the influx of new inventory in these areas, apartment occupancy elevated to 94.6% and 94.8%, respectively in 217. At the same time, effective rent advanced 4.4% in the Henderson/Southeast submarket and 4.8% in the Clark County/Other submarket. Metrowide, effective rent increased 4.6% year over year to $942 per month in December , 2.8% YOY $ % YOY 6.5% 6.3% 6.1% 5.9% 5.7% 5.5% $2, * UN RATE 4.9% 4 BPS YOY $12, $1, $8, $6, $4, Index Value (Base Year 21 = 1) 5, 25, -25, -5, *Estimate; **Forecast Source: Berkadia, $1, $9 $8 $7 94.1% BPS YOY 3,438 Units 44.9% YOY * CHANGE -75, * 218** AND 94.5% 94.% 93.5% 93.% $6 92.5% * 218** 217 PERFORMANCE HIGHLIGHTS 3,153 Units 2,239,1 829,3 $54, % YE % YOY YE % YOY YE % YOY YE BPS YOY ,5 3, 1, * 218** 218 PREVIEW The Las Vegas workforce is expected to exceed 1 million for the first time this year. Employers are forecast to create 19, net jobs for a 1.9% annual increase. Several large-scale projects are boosting the construction industry and the overall economy. Construction began in late-217 on the new $1.9 billion Las Vegas Raiders NFL stadium, which will require 3, workers to complete by 22. The $1.4 billion expansion of the Las Vegas Convention Center is set to start this year, requiring more than 7,9 construction workers over the length of the project. In the multifamily market, construction is scheduled to complete on 2,398 apartment units during the next four quarters. New inventory will be concentrated in the Henderson/Southeast submarket with 1,7 units planned to come online by yearend. While metrowide deliveries will be down from last year, annual additions will be 17% higher than the five-year average. Apartment inventory growth is expected to outpace positive absorption to shift average occupancy down 6 basis points to 93.5%. This trend will be reflected in the Henderson/ Southeast submarket, where occupancy is expected to drop to 93.8%. With metrowide occupancy declining, annual effective rent growth will decelerate to 2.5% this year, as rent finishes 218 at $966 per month. 3 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

33 LEXINGTON 217 REVIEW With rising occupancy in recent years, multifamily developers ramped up construction activity in the Lexington metropolitan area. As a result, construction completed on 93 units during the last year, the most annual additions since 213. The latest deliveries were spread throughout Greater Lexington, with a metro-leading 339 units in the West Fayette County submarket. Even with positive demand, occupancy shifted down 4 basis point year over year to 92.9% in the area. The submarket trend was reflected in the metro as Greater Lexington occupancy lowered 3 basis points annually to 94.1% in December 217 because of the supply-side pressure. Even with the downshift, apartment occupancy was 9 basis points higher than the preceding fiveyear average. With steady demand amid rising inventory, average effective rent advanced 2.6% year over year to $842 per month. Underpinning healthy apartment fundamentals was expanding payrolls, as total nonfarm employment expanded 1.5%, or by 4,1 jobs, in ,1 1.5% YOY $ % YOY 8.% 7.5% 7.% 6.5% 6.% 5.5% * UN RATE 3.7% BPS YOY $9, $8, $7, $6, $5, $4, Index Value (Base Year 21 = 1) 12, 6, *Estimate; **Forecast Source: Berkadia, $9 $85 $8 $75-6, 94.1% 3 BPS YOY 93 Units 89.7% YOY * CHANGE -12, * 218** AND 95% 94% 93% 92% $7 91% * 218** 217 PERFORMANCE HIGHLIGHTS 747 Units 513,6 28,1 $59, % YE 217.9% YOY YE % YOY YE % YOY YE 217 BPS YOY , * 218** 218 PREVIEW With job creation accelerating, apartment occupancy and rent growth are expected to remain healthy across Lexington in 218. Total nonfarm employment is forecast to expand 1.8% over the next four quarters, up from 1.5% annual growth in 217. Boosting the metro s economy will be the new $8 million North American engineering headquarters for Toyota Motor Corp. in Scott County. The 235,-square-foot production, engineering, and manufacturing center opened in the fourth quarter of 217 and will eventually house 6 engineers as well as 2 additional workers. Also supporting future job growth are expansions by FedEx Freight and UPS Inc. at their Lexington hubs. Total nonfarm employment is forecast to rise by 5,1 net jobs by December. While rental demand is expected to persist, the opening of two new dorms at the University of Kentucky is drawing some renters away from market-rate units to shift leasing activity negative this year. The down swing in absorption will lower occupancy 5 basis points to 93.6% by year-end. Even with the drop, occupancy will be 2 basis points higher than the preceding five-year average. Annual effective rent growth is expected to moderate this year. At $858 per month by December, rent will be up to 1.8% annually, after rising 2.6% in 217. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 31

34 LOS ANGELES-NORTH 217 REVIEW Apartment demand rebounded in Los Angeles North as rent growth tapered in 217. Operators recorded net absorption of 1,484 apartments, a pronounced reversal from negative absorption of 11 units in 216. The thrust of leasing activity occurred in the neighboring South Glendale/Highland Park and Pasadena submarkets, also the two areas with the majority of new apartment inventory. Multifamily deliveries increased 42% on an annual basis in 217 as 2,448 units came online in Los Angeles North, outpacing absorption by 65%. In the wake of the supply imbalance, apartment occupancy decreased 3 basis points to 95.9% by December, still topping the countywide occupancy rate of 95.6%. Effective rent appreciation continued, though at a decelerated annual rate of 3.3% in 217 compared to 5.3% in the prior year. Average effective rent reached $2,93 per month in the fourth quarter, 6.9% lower than the countywide average. Meanwhile, employment grew 1.3% during the year as payrolls in the county expanded with 57,6 new workers. 57,6 1.3% YOY $2,93 3.3% YOY 5.5% 5.% 4.5% 4.% 3.5% * UN RATE 4.7% 4 BPS YOY $3, $25, $2, $15, $1, *Estimate; **Forecast Source: Berkadia, 95.9% 3 BPS YOY 2,448 Units 41.6% YOY * 1,173,7 3,457,7 $62,15 4.5% YE 217.3% YOY YE % YOY Index Value (Base Year 21 = 1) 12, 6, $2,2 $2,1 $2, $1,9 $1,8-6, -12, -18, CHANGE -24, * 218** AND 97.% 96.5% 96.% 95.5% 95.% $1,7 94.5% * 218** 217 PERFORMANCE HIGHLIGHTS 1,484 Units YE % YOY YE 217 BPS YOY 4,5 3, 1,5-1, * 218** 218 PREVIEW High single-family home prices are expected to keep many prospective home buyers sidelined and ensure a steady pool of multifamily renters this year. An additional 4,373 apartments are projected to be occupied in Los Angeles North in 218, firmly extending the rebound in leasing activity that occurred last year. Nearly 3,5 apartments are slated to come online this year. An additional 33 multifamily communities in Los Angeles North are in various stages of planning. These planned developments represent the potential of another 15,3 apartments added to local inventory. By the end of the fourth quarter of this year, occupancy in the region will average 96.2%, a 3-basis-point gain from 217 and 2 basis points higher than the countywide average. Operators in Los Angeles North will keep upward pressure on rent, though at a decelerated rate from 217. During 218, average effective rent is forecast to rise 3.1% to $2,159 per month by year-end, making the region an attractive alternative to Los Angeles West, where average effective rent will approach $2,8 per month. The favorable apartment fundamentals will be supported by rising employment. Businesses and institutions in Los Angeles County will welcome 67,3 new workers in 218, a 1.5% year-over-year increase. 32 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

35 LOS ANGELES-SOUTH 217 REVIEW Three adjoining submarkets in Los Angeles South were the beneficiaries of renters fleeing pricier areas in the county. Multifamily occupancy surged last year in the El Segundo/Hermosa Beach/Redondo Beach, Hawthorne/North Torrance, and West Torrance/Ranchos Palos Verdes submarkets. The three areas also benefited from major developments underway in the South Bay and the ability of El Segundo and Hawthorne to attract new businesses. Rising occupancy in the three submarkets was in stark contrast to the rest of Los Angeles South and all 1 submarkets in the neighboring Los Angeles West region in particular, the adjacent, higher-rent submarkets of Central L.A. and Marina Del Rey/Venice/Westchester. Declining occupancy elsewhere in Los Angeles South led to a 3-basis-point annual decrease in occupancy in the region to 96.2%. Meanwhile, effective rent rose to $1,888 per month, a 3.8% gain, compared to 2.8% growth countywide. grew 1.3% during 217 with 57,6 new hires. 57,6 1.3% YOY $1, % YOY 5.5% 5.% 4.5% 4.% 3.5% * UN RATE 4.7% 4 BPS YOY $3, $25, $2, $15, $1, *Estimate; **Forecast Source: Berkadia, 96.2% 3 BPS YOY 1,222 Units 32.5% YOY 1,173,7 3,457,7 $6, % YE 217.3% YOY YE % YOY Index Value (Base Year 21 = 1) 12, 6, $2, $1,9 $1,8 $1,7 $1,6-6, -12, -18, * 218** CHANGE -24, * 218** AND 217 PERFORMANCE HIGHLIGHTS 26 Units % 96.5% 96.% 95.5% 95.% * YE % YOY YE BPS YOY 4,8 3,6 2,4 1, * 218** 218 PREVIEW Countywide employment is expected to grow 1.5% this year as companies add 67,3 workers to payrolls. Major capital projects underway, including the NFL Los Angeles Rams and Chargers stadium in Inglewood and the $1.3 billion Middle Harbor project at Port of Long Beach, will continue to sustain the construction sector this year. Additionally, the new NFL stadium will generate significant job growth among multiple employment sectors in the surrounding area following completion in 22. The emphasis of several South Bay municipalities in attracting biotechnology, aeronautical, and creative companies also bodes well for the long-term economic vitality of the region. Continued economic expansion this year will spur apartment demand in Los Angeles South. Net absorption of 3,495 apartments is expected, nearly 17 times greater than last year s leasing activity. The number of newly leased units in 218 will nearly match total deliveries, resulting in average occupancy of 96.2%, the same as year-end 217. Monthly effective rent is forecast to advance 3.3% annually to an average of $1,951 by yearend. Developers will continue adding to the planning pipeline with multifamily permits issued for just over 2, apartments in 218. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 33

36 LOS ANGELES-WEST 217 REVIEW Employers in Los Angeles County added 57,6 workers to payrolls in 217, a 1.3% year-over-year increase. Institutions in the education and health services sector led hiring, with 27, jobs filled, a 3.5% annual gain. The greatest rate of growth was present in the construction industry as 8,8 jobs were created, an expansion of 6.6%. The industry was supported by major developments including the Wilshire Grand Center, Metropolis Los Angeles, and the Banc of California Stadium. Developers concentrated multifamily development in the urban core, as new inventory in the Central L.A. and Westlake/Downtown/Silver Lake submarkets accounted for 56% of deliveries in Los Angeles West in 217. Overall, 1,11 apartments were delivered, an increase of more than 22% from 216. Apartment absorption trailed deliveries by 48%, resulting in an 8-basis-point decrease in occupancy to 95.1% in December. Monthly effective rent increased to $2,687 by year-end, a 1.4% annual gain, half the 2.8% rate of increase countywide. 57,6 1.3% YOY $2, % YOY 5.5% 5.% 4.5% 4.% 3.5% * UN RATE 4.7% 4 BPS YOY $36, $33, $3, $27, $24, *Estimate; **Forecast Source: Berkadia, 95.1% 8 BPS YOY 1,11 Units 22.3% YOY 1,173,7 3,457,7 $79,29 4.8% YE 217.3% YOY YE % YOY Index Value (Base Year 21 = 1) 12, 6, $2,8 $2,7 $2,6 $2,5 $2,4 $2,3-6, -12, -18, * 218** CHANGE -24, * 218** AND 217 PERFORMANCE HIGHLIGHTS 5,241 Units % 96.% 95.5% 95.% 94.5% 94.% * YE % YOY YE BPS YOY 12, 9, 6, 3, * 218** 218 PREVIEW Approximately 5,8 apartments are scheduled for delivery in Los Angeles West this year. More than 4 multifamily communities will be completed. New product will be distributed among all 1 submarkets, ranging from 341 units in Santa Monica to 765 units in the Hollywood/Los Feliz area. The two largest communities slated for delivery are the 695-unit, The Lexington mid-rise project in the Hollywood/Los Feliz submarket and the 648-unit, 36-story Circa apartment tower in the Central L.A. submarket. expansion and the perennial barriers to homeownership will spur elevated apartment demand. Net absorption of 7,842 apartments is anticipated, fueling a 6-basis-point annual increase in occupancy to 95.7% in December. Unlike the northern and southern portions of the county, rent appreciation in Los Angeles West is forecast to accelerate from last year s rate of growth. A 3.5% year-over-year increase in effective rent is projected, exceeding the 3.3% countywide gain. By year-end, monthly effective rent in the region will average $2,781. Expecting sustained apartment demand, developers are projected to request permits for 7,22 apartments this year, in line with the five-year average. is forecast to grow 1.5% during the year as 67,3 workers are added to payrolls across the county. 34 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

37 LOUISVILLE 217 REVIEW Anchored by the expanding manufacturing and logistics employment sectors, Louisville s sustained economic growth triggered vibrancy in the multifamily sector. Metrowide payrolls increased 1.5% in 217 with 1, additions, building on the 17,7 jobs created in the prior 12-month period. Developers pushed a significant amount of new apartment product into the market this year, a supply expansion of 2.3%. The 2,7 new rentals capped a peak construction year with the largest portion of the inventory delivered in the Northeast Jefferson County submarket, where multifamily development has been historically strong. Inventory growth could not keep pace with the positive leasing activity which pushed up occupancy in Greater Louisville 5 basis points year over year to 95.% in December. The year-end occupancy rate was higher than the metro s prior five-year average of 93.9%. With increased competition for renters, effective rent growth moderated from 3.5% in 216 to 2.7% last year as rent reached $883 per month in December , 1.5% YOY $ % YOY 9% 7% 5% 3% 1% $2, * UN RATE 4.1% BPS YOY $1, $8, $6, $4, Index Value (Base Year 21 = 1) 2, 1, *Estimate; **Forecast Source: Berkadia, $95 $9 $85 $8-1, -2, 95.% 5 BPS YOY 2,7 Units 95.3% YOY * CHANGE -3, * 218** AND 96.5% 95.5% 94.5% 93.5% $ % * 218** 217 PERFORMANCE HIGHLIGHTS 2,438 Units 1,292,4 53,4 $58, % YE 217.5% YOY YE 217.9% YOY YE % YOY YE BPS YOY 1, , 2, 1, * 218** 218 PREVIEW Steady economic growth is expected this year, keeping leasing activity healthy, although absorption is expected to decelerate from 217. Construction is scheduled to complete on 1,113 apartments this year. While deliveries will be spread throughout Greater Louisville, additions to the West Central submarket are expected to lead the metro. The demand shortfall will cause metrowide occupancy to fall 5 basis points to 94.5% by year-end. Even with the downshift, effective rent will advance this year, albeit at a slower pace, a 2.% annual gain to $91 per month by December. Local companies will ramp up hiring this year by adding 14,7 jobs for a 2.2% increase. Despite the decrease in overall absorption, heightened apartment demand surrounding newly completed employment hubs is expected, concentrated around the 375-bed Norton Audubon Hospital, downtown s 3-story Omni Louisville Hotel, and the $27 million expansion of Kentucky s International Convention Center. Furthermore, Ford Motor Company, GE Appliances, and UPS Worldport continue to experience major growth in their advanced manufacturing and logistics operations. Combined, they are investing nearly $8 million in local expansions and renovations. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 35

38 MEMPHIS 217 REVIEW Occupancy rates in Greater Memphis ended 217 on a postrecession high of 93.7% as leasing activity exceeded deliveries by 35%. The 1,566 units absorbed and 1,157 deliveries both reflected new five-year benchmarks in renter and developer activity. Downtown Memphis received much of the attention from developers as two of the area s largest projects, the 154-unit 266 Lofts and 265-unit Parcels at Concourse came online. The new inventory attracted renters to the Downtown/ Midtown submarket where heightened demand led the metro. Operators benefited from high-water marks in occupancy and demand as effective rent increased by 2.3% to $823 per month in December. Elevated rental activity was supported by the highest growth rate of people ages 2 to 34 during the past five years and another solid year of hiring by Memphis-area businesses, as head counts increased by 1.1%. Of the 6,8 net jobs added, 5,8 were added by companies in the trade, transportation, and utilities sector, as FedEx and United Parcel Service expanded operations at Memphis International Airport. 6,8 1.1% YOY $ % YOY 9% 8% 7% 6% 5% 4% $1, * UN RATE 4.% 15 BPS YOY $6, $5, $4, $3, $2, Index Value (Base Year 21 = 1) 2, 1, *Estimate; **Forecast Source: Berkadia, $9 $85 $8 $75 $7-1, -2, 93.7% 5 BPS YOY 1,157 Units 5.7% YOY CHANGE -3, * 218** AND 94.% 93.5% 93.% 92.5% 92.% $ % * 218** 217 PERFORMANCE HIGHLIGHTS 1,566 Units * 1,347,4 513,6 $54, % YE 217.3% YOY YE 217.9% YOY YE % YOY YE BPS YOY ,6 1, * 218** 218 PREVIEW Multifamily construction activity will slacken in 218 with the delivery of 81 units, down 31% from the previous year, and 14% below the market s five-year average. Located within a short commute of the rapidly expanding employment hubs at Memphis International Airport, developers are particularly active in the Poplar Pike/Germantown/Cordova submarket where three projects are slated to complete before the third quarter including the Fieldstone VIII, Irene Woods, and Thornwood I communities. During this same time, a net total of 654 units are expected to be newly occupied by renters through December, 11% below the market s average absorption for the previous five years. With deliveries outpacing leasing activity for the first time in four years, the metro s occupancy rate is forecast to drop 1 basis points to 93.6% by December. Even with the decline, occupancy will outpace the fiveyear average by 7 basis points. The 6,6 jobs added throughout Greater Memphis in 218 will mark the eighth-consecutive year of payroll expansion. Sustained economic growth will keep apartment demand positive and enable marketwide effective rent to reach $844 per month by year-end, a 2.6% annual appreciation, surpassing the 2.3% five-year average. 36 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

39 MILWAUKEE 217 REVIEW Multifamily developers worked to meet heightened rental demand across the Milwaukee metropolitan area as payrolls rose in 217. Construction completed on 3,459 units over the last four quarters, the highest annual inventory growth in more than 15 years. While deliveries were spread throughout Greater Milwaukee, a large share of additions were in the City East submarket with 656 units. Inventory growth could not keep pace with positive leasing activity, although, as occupancy elevated to 95.% in the area. The metro reflected the submarket trend, as robust rental demand outpaced apartment completions to push Greater Milwaukee average occupancy up 2 basis points year over year to 96.1% in December. Underpinning the rise in demand was an upswing in hiring. Total nonfarm employment expanded.3% annually, or by 2,3 jobs, after remaining essentially flat in 216. With rising payrolls and higher occupancy, average effective rent advanced 1.4% year over year to $1,18 per month by December. 2,3.3% YOY $1,18 1.4% YOY 7.5% 7.% 6.5% 6.% 5.5% * UN RATE 3.5% 8 BPS YOY $9, $8, $7, $6, $5, Index Value (Base Year 21 = 1) 25, *Estimate; **Forecast Source: Berkadia, $1,2 $1,1-25, $1, 96.1% 2 BPS YOY 3,459 Units 93.% YOY * CHANGE -5, * 218** AND 97% 96% 95% $9 94% * 218** 217 PERFORMANCE HIGHLIGHTS 3,618 Units 1,573,9 644,2 $63,5 21.1% YE 217.1% YOY YE 217.7% YOY YE % YOY YE BPS YOY , 3, 2, 1, * 218** 218 PREVIEW Amid continued positive apartment demand, steady inventory growth is expected this year. Construction is scheduled to complete on 2,24 units by year-end, outpacing the 1,595-unit annual average over the preceding five years. Deliveries, once again, will be spread throughout Greater Milwaukee, although additions to the Northshore/NW Milwaukee submarket are expected to lead the metro. Beyond multifamily development, several large-scale projects will boost the Milwaukee economy. Milwaukee County will spend $55 million to construct a new terminal at Mitchell International Airport. Overall, employment is forecast to expand.4% with 3,5 net jobs added over the next four quarters. The increase in employment will keep leasing activity healthy this year, though absorption is expected to decelerate from 217. The supply-demand imbalance will push metrowide occupancy down 5 basis points to 95.6% by the end of the year. This trend will be reflected in the Northshore/ NW Milwaukee area, where occupancy is forecast to drop to 94.4% by year-end. Even with the downshift, metrowide average effective rent is expected to rise 2.1% year over year to $1,132 per month while Northshore/NW Milwaukee rent is forecast to growth 2.2% to $1,128 per month. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 37

40 MINNEAPOLIS-ST. PAUL 217 REVIEW participation surpassed 2 million for the first time as employers expanded payrolls by 44,3 workers in 217 to sustain elevated apartment demand. The 2.2% increase in head counts equated to the second-highest number of new workers in the postrecession era. Allina Health was a key contributor to 14,4 new jobs added in the education and health services sector with the opening of the River Falls Clinic. Amazon.com Inc. added an additional 1, workers to its Shakopee facility, the most by a single company in the Twin Cities in 217. The uptick in job growth supported the absorption of 4,155 apartment units in 217, on par with the five-year average. Even with healthy leasing activity, supply-side pressure dropped occupancy 2 basis points year over year to 96.9% in December. The 4,926 new units added during the last 12 months were the most to hit the market since 25. Buoyed by substantial job growth and high occupancy rates, annual effective rent increased 3.2% annually to $1,276 per month by year-end. 44,3 2.2% YOY $1, % YOY 8% 6% 4% 2% % $ * UN RATE 3.5% 2 BPS YOY $16, $12, $8, $4, Index Value (Base Year 21 = 1) 6, 3, *Estimate; **Forecast Source: Berkadia, $1,35 $1,3 $1,25 $1,2 $1,15-3, -6, 96.9% 2 BPS YOY 4,926 Units 71.7% YOY CHANGE -9, * 218** AND 97.5% 97.% 96.5% 96.% 95.5% $1,1 95.% * 218** 217 PERFORMANCE HIGHLIGHTS 4,155 Units * 3,67,5 1,413, $74, % YE % YOY YE % YOY YE % YOY YE BPS YOY 7,5 5, 2, * 218** 218 PREVIEW A strong economic base that is home to the fifth-largest concentration of Fortune 5 companies in the nation is expected to add 4,6 new jobs across Greater Minneapolis- St. Paul in 218. Widespread hiring following the completion of the $225 million Hennepin County Medical Center expansion during the first quarter and projects at the Mall of America and Minneapolis International Airport will highlight job growth in 218. The diverse and consistently expanding economy continues to be a cornerstone for the Greater Minneapolis-St. Paul s elevated occupancy compared to most other metropolitan areas in the country. Multifamily developers are expected to add 3,964 units through December 218, the majority of which will be in the Minneapolis submarket, which includes downtown and the University of Minnesota, two of the region s top demand drivers. Despite solid job additions, leasing activity is expected to trail deliveries in the coming year. The 1,539 units absorbed represents the first time in five years deliveries will outpace absorption by over 1, units, resulting in average occupancy declining to 96.2%. Slowed leasing activity may increase pressure on operators to raise concessions, as effective rent is forecast to grow 2.5% to $1,38 per month. 38 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

41 NASHVILLE 217 REVIEW Nashville s remarkable postrecession recovery fueled population growth, which exceeded 1.9 million residents in 217, surpassing Memphis as the most populated metro in Tennessee. The area s economic vitality also continued to boost apartment absorption, construction, and rent growth. Local employers created 29,9 jobs last year. The 3.1% job growth, more than double the national rate, helped Nashville employment approach 1 million workers. The infusion of new jobs perpetuated apartment demand, rising 8% year over year. Across the metro, builders completed 8,458 units. Home to prominent employers and Vanderbilt University, the Downtown/West End/Green Hills submarket received more than half of the new rentals. Downtown projects generated demand as robust leasing of 4,162 units nearly kept pace with the elevated supply. Like many other metros with blistering multifamily development, Nashville s supply imbalance sent the occupancy rate down 3 basis points to 95.2% in December. Meanwhile, monthly effective rent fared better, reaching $1,136, a 1.1% annual increase. 29,9 3.1% YOY $1, % YOY 7.5% 7.% 6.5% 6.% 5.5% 5.% $25, * UN RATE 2.4% 17 BPS YOY $15, $125, $1, $75, $5, Index Value (Base Year 21 = 1) 5, 25, *Estimate; **Forecast Source: Berkadia, $1,2 $1,1-25, $1, $ * 218** 95.2% 3 BPS YOY 8,458 Units 44.4% YOY * CHANGE -5, * 218** AND 217 PERFORMANCE HIGHLIGHTS 7,649 Units 1,92,2 758,7 $64, % YE % YOY YE % YOY YE % YOY YE BPS YOY % 96% 94% 92% 9, 7, 5, 3, 1, * 218** 218 PREVIEW Developers in the Nashville metro area increased apartment stock by 2% over the last five years, one of the largest expansions in the nation. The whirlwind of multifamily construction should begin to slacken this year as builders are forecast to complete 5,65 rentals, down from last year s spike of 8,458 units. While demand will persist for new units, absorption will not keep pace with the recent influx of supply. Consequently, metrowide occupancy is projected to be 94.8% by December, down 4 basis points from 217. Meanwhile, effective rent will appreciate 2.3% over the forecast period to average $1,162 per month. Monthly effective rent will be bolstered by the Downtown/West End/Green Hills submarket, up 3.1% year over year to a metro-leading $1,621 by the end of fourth quarter. Local businesses are expected to accelerate hiring by a net 35,1 new jobs, expanding payrolls 3.5%, once again topping the U.S. increase of 1.5%. The Downtown/ West End/Green Hills submarket, which hosts a sizable share of new construction, is in the heart of the metro s largest office and college district that includes major demand drivers such as Hospital Corporation of America, Bridgestone America, Vanderbilt University, and Belmont University. This activity bodes well for demand of the 3,143 units scheduled to come online in this submarket in 218. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 39

42 NEW ORLEANS 217 REVIEW Underpinned by healthy household formation, apartment demand surged in the New Orleans metropolitan area last year. With 1,379 units absorbed over the last four quarters, occupancy elevated 9 basis points to 94.4% by year-end. Pent-up demand in the Central New Orleans submarket boosted overall absorption where newly leased units outmatched deliveries by more than two to one, lifting occupancy 11 basis points since January. At the same time, the metro s monthly effective rent appreciated.8% to $994. Also supporting rising leasing activity was the leisure and hospitality industry. As one of the metro s largest employment sectors, employers in the industry created 3, positions in 217. Organizations in the education and health services and the professional and business services sectors combined to recruit 3,3 employees. Growth in these segments was offset by contraction in five employment sectors. Overall, employment growth was.1% as 4 net jobs were added metrowide. 4.1% YOY $994.8% YOY 1% 9% 8% 7% 6% * UN RATE 4.7% 8 BPS YOY $12, $9, $6, $3, $ Index Value (Base Year 21 = 1) 15, 7,5-7,5 *Estimate; **Forecast Source: Berkadia, $1,5 $1, $95 $9 94.4% 9 BPS YOY 667 Units 2.8% YOY * CHANGE -15, * 218** AND 96.5% 95.5% 94.5% 93.5% $ % * 218** 217 PERFORMANCE HIGHLIGHTS 1,379 Units 1,28,1 523, $54, % YE 217.6% YOY YE % YOY YE % YOY YE BPS YOY ,5 1, , * 218** 218 PREVIEW Hiring will accelerate in New Orleans this year as industries like petrochemical and health care invest in the metro. Monsanto is spending $975 million to expand operations at its Luling site. Yuhuang Chemical Inc. began construction on a multiphase $1.9 billion methanol manufacturing complex in St. James Parish which will create 2,1 construction jobs and 4 permanent jobs when complete in 219. Construction is underway on New Orleans Children s Hospital, a $225 million, 17-acre expansion project. Metrowide head counts are forecast to rise.3%, or by 2, jobs in 218. Supported by rising payrolls, demand for apartments will remain strong, paving the way for healthy rent growth and an upswing in occupancy. Effective rent will advance 3.1% to $1,25 per month during the oneyear period. At the same time, occupancy will reach 94.9%, up 5 basis points, the highest year-end rate in four years. Following a peak delivery cycle in 217, one apartment community under construction is set to finish in the Central New Orleans submarket during first quarter, accounting for all the scheduled 153 additions this year. Meanwhile, nine properties are in the planning pipeline at the start of this year, comprised of 2,194 multifamily units if all proposed projects come online. 4 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

43 OMAHA 217 REVIEW Multifamily developers worked to meet pent-up rental demand in Omaha last year. Construction completed on 1,925 units, more than a 15-year high. While deliveries were spread throughout the metro, approximately three out of every 1 additions were in the South Omaha submarket. Renters sought the new inventory, as the area also led the metro in leasing activity. Even with metrowide annual leasing activity more than double the previous year, demand trailed inventory growth to shift occupancy down 1 basis points year over year. At 94.9% in December 217, occupancy was still 7 basis points higher than the preceding fiveyear average. Contributing to the surge in rental demand was an upswing in hiring. Omaha employers created 1,6 new jobs. The 2.1% annual growth was up from a 1.1% increase during 216. Boosted by rising payrolls and healthy occupancy, average effective rent advanced 2.4% annually to $885 per month by December 217. In the highly sought South Omaha submarket, rent advanced 1.2% to $925 per month. 1,6 2.1% YOY $ % YOY 9% 8% 7% 6% 5% * UN RATE 3.% 4 BPS YOY $1, $8, $6, $4, $2, Index Value (Base Year 21 = 1) 2, 1, -1, *Estimate; **Forecast Source: Berkadia, $1, $9 $8 $7 94.9% 1 BPS YOY 1,925 Units 121.5% YOY * CHANGE -2, * 218** AND 95.5% 95.% 94.5% 94.% $6 93.5% * 218** 217 PERFORMANCE HIGHLIGHTS 1,753 Units 937,2 369,2 $63, % YE 217.9% YOY YE % YOY YE 217.8% YOY YE BPS YOY 1, ,5 2, 1,5 1, * 218** 218 PREVIEW After the influx of new inventory last year across Greater Omaha, developers will taper apartment deliveries this year. A total of 1,329 units are scheduled to come online by year-end, approximately 31% fewer deliveries than 217. Development will be concentrated in the South Omaha submarket, home of the University of Nebraska Omaha and its more than 15,7 students and 2,1 faculty and staff. With a growing student body and around 2,6 beds available on campus, the university drives rental demand in the area. While deliveries decelerate, metrowide leasing activity is expected to slow as well, although remain positive. The supplydemand imbalance will shift occupancy down 4 basis points to 94.5% by year-end. Apartment operators will respond to the downshift in occupancy by slowing effective rent growth. After increasing 2.4% in 217, rent is forecast to advance 2.% this year to reach $93 per month by December. The rising labor force will underpin healthy apartment fundamentals this year. Omaha employers are forecast to create 8,4 new jobs for 1.6% annual growth in 218. Part of the additions will come as Toast Inc. opens an office in downtown early this year that is part of an announced 1,-job global expansion by the software company by year-end. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 41

44 ORANGE COUNTY CA 217 REVIEW Apartment fundamentals stayed on a positive track amid continued job growth in 217. Orange County s annual apartment absorption elevated 32% from 216, as renters gravitated toward the Irvine and South Anaheim submarkets. Underpinning rising rental demand were 14,7 workers added metrowide, a.9% year-over-year employment expansion in 217. Flourishing leasing activity supported annual effective rent growth of 2.1% to $2,9 per month by December. One of the much-anticipated apartment developments to complete was the Jefferson Platinum Triangle. On 84 acres, this 4-unit housing community was targeted at the trendy, urban-style renter, with easy access to ARTIC, popular shopping, tech jobs, and entertainment located in the South Anaheim neighborhood. Overall, multifamily builders delivered 5,96 rentals. Marketwide occupancy ended the year at 96.1%, declining 3 basis points annually due to supply-side pressure; however, it outperformed the postrecession average rate of 95.5%. 14,7.9% YOY $2,9 2.1% YOY 9% 7% 5% 3% 1% $1, * UN RATE 3.7% 1 BPS YOY $3, $25, $2, $15, Index Value (Base Year 21 = 1) 1, 5, *Estimate; **Forecast Source: Berkadia, $2,2 $2, $1,8 $1,6-5, 96.1% 3 BPS YOY 5,96 Units 1.7% YOY * CHANGE -1, * 218** AND 98.5% 97.5% 96.5% 95.5% $1,4 94.5% * 218** 217 PERFORMANCE HIGHLIGHTS 4,879 Units 3,18,3 1,6,8 $85, % YE 217.1% YOY YE 217.9% YOY YE % YOY YE BPS YOY , 6, 4, 2, * 218** 218 PREVIEW Several years of sustained hiring and rising apartment leasing across Orange County will lead to a postrecession high in deliveries this year. Construction is scheduled to complete on 6,316 units by year-end, a 2.2% supply expansion and the highest annual deliveries in more than 15 years. Beyond apartment development, several largescale projects will support the construction industry this year. The start of development of two luxury hotels in Anaheim, Westin s 613-room, seven-story resort and a yetunnamed 7-room Disneyland structure, will create construction jobs this year and permanent positions next year. These hotel projects, coupled with the recently expanded Anaheim Convention Center and the long-awaited Star Wars opening at Disneyland, foreshadow a promising year for the hospitality employment sector. Overall, employment is expected to expand 1.3% in 218 with 2,1 new positions to help drive apartment demand. Even with sturdy net absorption, supply-side pressure will cause occupancy to lower 8 basis points annually to 95.3% by yearend. An increasing workforce and healthy leasing activity will support a 2.8% boost in metrowide effective rent growth, estimated to conclude the year at $2,66 per month. 42 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

45 ORLANDO 217 REVIEW The Orlando economy and apartment market continued to shine in 217. Businesses and institutions in the area hired 4,4 additional workers last year, a 3.3% annual gain. The largest employment sector, leisure and hospitality, grew 3.7% year over year with 9,4 new hires. Numerous major developments and infrastructure projects supported the construction industry, where employment surged 9.2% with 6,4 new workers. These developments included the KPMG Global Training Center in Lake Nona, Skyplex in Orlando, and expansion of the Orlando International Airport. Sustained job growth over multiple employment sectors boosted the apartment market. Builders delivered 8,151 apartments in 217, the greatest number of annual deliveries since 2. Meanwhile, apartment demand surged to the highest annual absorption in 13 years. By the end of the fourth quarter, metrowide occupancy reached 95.7%, a 2-basis-point increase from one year prior. Effective rent advanced 4.5% year over year to an average of $1,25 per month. 4,4 3.3% YOY $1,25 4.5% YOY 7.5% 7.% 6.5% 6.% 5.5% * UN RATE 3.4% 11 BPS YOY $13, $11, $9, $7, $5, *Estimate; **Forecast Source: Berkadia, 95.7% 2 BPS YOY 8,151 Units 46.% YOY 2,556,3 952, $57, % YE % YOY YE % YOY YE % YOY YE BPS YOY Index Value (Base Year 21 = 1) 6, 3, $1,3 $1,2 $1,1 $1, $9-3, * 218** CHANGE -6, * 218** AND 217 PERFORMANCE HIGHLIGHTS 8,21 Units % 95.5% 95.% 94.5% 94.% * 1, 8, 6, 4, 2, * 218** 218 PREVIEW Local employment is forecast to grow 3.4% with the creation of 43, jobs this year. Rising household income in many parts of the country will lead to extra discretionary income, which bodes well for the local tourism industry. The construction sector will be supported by several major projects underway. Long-term developments, including Creative Village in Downtown Orlando and Lake Nona Town Center, will bolster the construction industry and result in thousands of additional jobs upon completion. These massive developments will generate extended demand for multifamily housing. In the near term, developers will keep adding to the local inventory, with 6,489 apartment units scheduled for delivery this year. Approximately 44% of the new stock will be in the neighboring Maitland/Winter Park and South Central/527/441 submarkets. Metrowide apartment absorption is projected to subside from last year s torrid pace, but remain healthy, totaling 5,961 move-ins. The supply imbalance will lead to a 1-basis-point annual dip in occupancy to 95.6% by December. Like absorption, rent growth will persist, although decelerate. Average monthly effective rent is forecast to rise 2.2% annually to $1,232 by year-end. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 43

46 PHILADELPHIA 217 REVIEW Following several years of moderate apartment construction activity in the Philadelphia metro area, deliveries spiked to a 15-year high of 3,298 units in 217. Deliveries were the highest in the Center City submarket, accounting for more than half of all new units. Home to a large millennial and baby-boomer population, the Center City submarket also paced the metro in leasing activity, accounting for 1,921 of the 2,649 net leases signed in 217. The supply-demand imbalance metrowide pushed the occupancy rate down 3 basis points to 95.2% in December. Employers created a net 39,2 new jobs. The 1.3% expansion registered 1 basis points below the national growth rate and the metro s five-year average. Gains were sizable in the professional and business services and the education and health services sectors, with a combined 24,8 new jobs. The addition of well-paying jobs emboldened operators to increase monthly effective rent on average 2.%, reaching $1,49 by year-end. 39,2 1.3% YOY $1,49 2.% YOY 7.5% 7.% 6.5% 6.% 5.5% 5.% $5, * UN RATE 4.7% 3 BPS YOY $15, $13, $11, $9, $7, Index Value (Base Year 21 = 1) 8, 4, *Estimate; **Forecast Source: Berkadia, $1,5 $1,45 $1,4 $1,35 $1,3-4, -8, 95.2% 3 BPS YOY 3,298 Units 44.6% YOY * CHANGE -12, * 218** AND 95.8% 95.6% 95.4% 95.2% 95.% $1, % * 218** 217 PERFORMANCE HIGHLIGHTS 2,649 Units 6,84,5 2,365, $75, % YE 217.2% YOY YE 217.7% YOY YE % YOY YE BPS YOY ,5 2,8 2,1 1, * 218** 218 PREVIEW Philadelphia employers will elevate hiring in 218, fueling a rise in apartment demand. Metrowide workforce participation is forecast to approach 3 million wage earners as companies add 41,7 workers. Job growth will be highlighted by the completion of Comcast s 1.3 million-squarefoot Innovation and Technology Center, located in Philadelphia s Center City submarket. Comcast will relocate 4, employees to the building and recruit an additional 1,5 employees this year. Seeking to capitalize on the completion of Comcast s new office and appeal to workers who desire the increasingly popular livework-play environments, developers are expected to add 81% of the metrowide total of 2,577 apartment units to the Center City submarket in 218. Across the metro, elevated hiring activity will support increased leasing activity in 218, as yearover-year absorption totals are forecast to rise 16% and push up the occupancy rate 4 basis points annually to 95.6%. Rental demand is predicted to remain strong in the Center City submarket, and as with 217, will lead the metro in newly occupied units. Amid rising payrolls and positive leasing activity, the metro s average effective rent is forecast to end the year at $1,455 per month, an annual appreciation of 3.2%. 44 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

47 PHOENIX 217 REVIEW Rising apartment demand across Greater Phoenix kept occupancy elevated in 217. Annual absorption was up more than 21% from 216, with leasing activity highest in the Chandler/Gilbert submarket. A factor attracting residents to the area was a metro-high 1,272 units coming online in the submarket. Another demand driver was job growth in the area, as companies like Walgreens and Stantec relocated hundreds of jobs to Chandler. Metrowide, total nonfarm employment expanded 2.4%, or by 48,5 net jobs, during 217. Local growth outpaced the 1.4% national rise. While payrolls and apartment demand rose, deliveries tapered. Construction completed on 6,275 units across Greater Phoenix, 5% fewer than additions in 216. With leasing activity nearly on par with inventory growth, average apartment occupancy was 94.2% in December 217, the same rate as one year prior. While occupancy held steady, the rate was 5 basis points higher than the five-year average. Also in the last year, effective rent advanced 3.7% to $989 per month in December. 48,5 2.4% YOY $ % YOY 6.5% 6.% 5.5% 5.% $6, * UN RATE 4.% 3 BPS YOY $12, $1, $8, Index Value (Base Year 21 = 1) 1, 5, *Estimate; **Forecast Source: Berkadia, $1,1 $1, $9 $8-5, -1, 94.2% BPS YOY 6,275 Units 5.% YOY * CHANGE -15, * 218** AND 95.% 94.5% 94.% 93.5% $7 93.% * 218** 217 PERFORMANCE HIGHLIGHTS 5,954 Units 4,821,8 1,763,7 $62, % YE % YOY YE % YOY YE % YOY YE 217 BPS YOY , 6, 3, * 218** 218 PREVIEW Amid rising payrolls, apartment demand is expected to elevate in the Phoenix metropolitan area during 218. Employers are forecast to accelerate hiring, as total nonfarm employment expands 2.5% this year, up from 2.4% growth in 217. Overall, payrolls will increase by 5,5 net jobs. Part of this year s additions will be by Bank of the West, which will add 1, employees at its new Tempe office. Also in the financial services sector, the first phase of the new 67-acre JPMorgan Chase & Co. campus in Tempe is scheduled to open this year. The campus will eventually hold more than 4, employees when completed. With the workforce rising, so will rental demand, as leasing activity is expected to exceed 8,5 net units over the next four quarters. Annual absorption will reach its highest level since 21. Multifamily developers will work to meet the demand, with 7,766 units scheduled to come online by year-end, up nearly 24% from additions in 217. Nearly one out of every four deliveries will be in the North Scottsdale submarket. With metrowide inventory growth trailing leasing activity over the next four quarters, apartment occupancy is expected to elevate 2 basis points to 94.4% by December. Simultaneously, effective rent is forecast to increase 3.2% to $1,21 per month by yearend. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 45

48 PORTLAND 217 REVIEW Solid economic expansion helped drive vigorous rental demand in Portland. Annual employment and population growth far exceeded the national averages: 2.4% versus 1.4%, and 1.8% versus.8%, respectively. Portland-area businesses added 27,4 net jobs to the workforce last year which also had a positive impact on Portland s median annual household income, which simultaneously rose 3.3%, reaching more than $71,5. expansion contributed to the 26% boost in total multifamily leasing activity, with 3,64 newly occupied apartments. Downtown s Northwest submarket remains the most popular among renters. Builders delivered 4,122 rental units marketwide. Approximately two out of every five apartments came online in the Northwest submarket, where brisk leasing activity resulted in a 9-basis-point rise in occupancy to 93.5% by year-end. The metrowide occupancy rate ticked down 1 basis points to 94.6% moderating to supplyside pressure, as effective rent reached $1,39 per month, up 2.9% annually. 27,4 2.4% YOY $1,39 2.9% YOY 7.% 6.5% 6.% 5.5% 5.% 4.5% $1, * UN RATE 3.7% 7 BPS YOY $225, $2, $175, $15, $125, Index Value (Base Year 21 = 1) 5, 25, *Estimate; **Forecast Source: Berkadia, $1,5 $1,25 $1, $75-25, $ * 218** 94.6% 1 BPS YOY 4,122 Units 22.6% YOY * *Estimate Source: Real Capital Analytics CHANGE -5, * 218** AND 217 PERFORMANCE HIGHLIGHTS 3,64 Units 2,497,1 978,9 $71, % YE % YOY YE % YOY YE % YOY YE BPS YOY % 96% 95% 94% 93% 6, 4, 2, * 218** 218 PREVIEW Steady employment expansion and population growth that are among the most robust in the nation will support healthy apartment fundamentals in 218. Elevated apartment demand will nearly offset the sustained supply wave of multifamily inventory. While Portland-area businesses add a projected 29,1 workers, multifamily builders will complete 5,129 apartments in 218. This year s completions are part of a massive apartment construction wave, expanding inventory by 12%, or more than 22,3 rentals in five years. Downtown s highly-desired Northwest submarket is flush with new projects, where 1,648 units are set to come online across 11 apartment communities. With Portland s UP not OUT strategy to address population growth, multifamily projects will likely be higher density. For example, currently underway is the 14-story, 385-unit apartment community in the Northwest submarket. Sturdy apartment absorption is anticipated and should help alleviate concerns about a severe supply imbalance. Occupancy is forecast to dip 1 basis points annually to a still-healthy 94.5%. Revenue gains will persist, although somewhat tempered from the prior five-year average of 6.6%. Greater Portland s monthly effective rent is predicted to reach $1,424 per month by December, up 2.4% year over year. 46 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

49 RICHMOND 217 REVIEW Robust job creation spurred rising occupancy across Greater Richmond in 217. Hiring surpassed the five-year average of 2.% by 1 basis points as employers added 13,9 positions in 217. Companies in the professional and business services sector expanded by a rousing 6.%, adding 6,9 new jobs, highlighted by the addition of Owens and Minor Inc. and the CoStar Group Inc. into Downtown Richmond. Developers capitalized on employmentdriven demand in the Downtown/The Fan submarket, adding 329 of the total 1,213 units in the submarket during 217. Furthermore, builders completed nine of 13 projects under construction last year. While metrowide demand for multifamily units was down 2.5% annually, the 1,643 net new leases signed surpassed new supply by 35%, boosting Richmond s overall occupancy rate 5 basis points year over year to 95.3%. An influx of high-paying jobs and increased occupancy were positive signs for apartment operators as effective rents jumped by a decade-high 4.9% to $1,34 per month in December. 13,9 2.1% YOY $1,34 4.9% YOY 8.5% 7.5% 6.5% 5.5% $25, * UN RATE 4.% 3 BPS YOY $1, $75, $5, Index Value (Base Year 21 = 1) 4, 2, *Estimate; **Forecast Source: Berkadia, $1,1 $1,5 $1, $95 $9-2, 95.3% 5 BPS YOY 1,213 Units 15.4% YOY * CHANGE -4, * 218** AND 95.5% 95.% 94.5% 94.% 93.5% $85 93.% * 218** 217 PERFORMANCE HIGHLIGHTS 1,643 Units 1,297,1 513,6 $66, % YE 217.8% YOY YE % YOY YE % YOY YE BPS YOY 2, 1,5 1, 5 2,5 2, 1,5 1, * 218** 218 PREVIEW A market that has maintained a tight balance between new supply and leasing activity over the past five years, the Richmond multifamily market is expected to see a demand shift in 218. Construction activity will be 5% above the market s five-year average in 218 as 1,453 new units are expected to come online by December, including 987 units in the first half of the year in the Near West End and the Southside/Westover Hills submarkets. Development activity will also be elevated in the Airport and the Goochland County submarkets, two areas that had limited multifamily construction activity in the past five years. After setting a 1-year high in occupancy in 217, the abundance of new units entering the market, combined with net leasing activity of 633 units, will push the occupancy rate back to the market s five-year average of 94.5%. Meanwhile, effective rent is expected to reach $1,66 per month in December, up 3.% annually. Positive apartment fundamentals will be supported by 1.7% employment expansion as employers add 11,6 new jobs in 218. Major developments underway bode well for near-term employment growth, including Dominion Energy s 2-story office tower, the 114-bed Sheltering Arms Rehab Institute, and Vastly s $2 billion Chesterfield County manufacturing facility. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 47

50 SACRAMENTO 217 REVIEW After years of limited market-rate apartment units coming online across the Sacramento metropolitan area, multifamily developers set a five-year high for deliveries in 217. Builders added 994 new units to outpace leasing activity and push occupancy levels down 2 basis points to 95.8%. Even with the decline, Sacramento still has one of the highest occupancy rates in the nation. Effective rent advanced 6.6% to end 217 at $1,433 per month. Sacramento employers expanded payrolls by 2.3% in 217, adding 22,4 new jobs. Job growth was well distributed with six sectors reporting growth of 1,5 or more new workers over the last 12 months. The Sacramento economy became increasingly diversified with the addition of over 4, jobs each in the trade, transportation, and utilities, the leisure and hospitality, and the education and health services sectors. The growth was highlighted by expansions at Amazon.com Inc. s Metro Air Park facility and recruiting by Sutter Health and Kaiser Permanente for new health care facilities in Roseville. 22,4 2.3% YOY $1, % YOY 6.3% 6.1% 5.9% 5.7% 5.5% 5.3% $4, * UN RATE 4.4% 6 BPS YOY $14, $12, $1, $8, $6, Index Value (Base Year 21 = 1) 5, 25, *Estimate; **Forecast Source: Berkadia, $1,6 $1,4 $1,2 $1, $8-25, 95.8% 2 BPS YOY 994 Units 4.% YOY * CHANGE -5, * 218** AND 96.5% 96.% 95.5% 95.% 94.5% $6 94.% * 218** 217 PERFORMANCE HIGHLIGHTS 628 Units 2,316,7 852,4 $69, % YE 217.5% YOY YE % YOY YE % YOY YE BPS YOY ,5 2, 1,5 1, * 218** 218 PREVIEW The success of the Golden 1 Center and Delta Shores has encouraged multifamily developers to continue to invest heavily into the Sacramento market in 218. The expected 2,287 new multifamily units will be over double the number added in 217 and three times the market s five-year average. Leasing activity is also expected to be elevated in 218. The abundance of deliveries will be a key contributing factor in year-end occupancy rates dropping 4 basis points to 95.4%. Sliding occupancy rates will limit operators ability for rent growth, as effective rent will increase by its smallest amount in five years, 1.9%, to $1,46 per month. Six-consecutive years of job growth averaging 2.7% has moved the Sacramento economy to near full employment levels. Demand for skilled construction laborers will remain elevated as large-scale projects, including the Riverfront Streetcar and Trackside Center mixed-use development in Davis, get underway. Limited opportunities in other sectors will slow job additions in 218 to a still healthy 2.2%, as employers add 21,4 new positions, pushing the total number of employed residents over 1 million. 48 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

51 SALT LAKE CITY 217 REVIEW New apartment inventory was heavily concentrated in the northeast and southeast portions of the Salt Lake City metro area in 217. Multifamily completions in the Central Salt Lake City and Midvale/Sandy submarkets accounted for more than three quarters of metrowide deliveries. Apartment demand followed a similar pattern, with both submarkets taking on the vast majority of new renters. Across the metro, 3,777 apartments came online in 217, compared with the net absorption of 3,332 units. Consequently, average occupancy decreased 3 basis points to 95.6% in December. During the same period, average effective rent rose 2.9% to $1,91 per month. Occupancy in the lowest-rent submarket, Northwest Salt Lake/ Airport, rose 3 basis points year over year, while effective rent appreciated 6.1%, the greatest increase among all submarkets in the metro. rose 2.5% annually with the addition of 17,9 workers to local payrolls. The professional and business services sector led growth with 5,6 new hires, a 4.2% increase. 17,9 2.5% YOY $1,91 2.9% YOY 7.% 6.5% 6.% 5.5% 5.% * UN RATE 3.2% 2 BPS YOY $18, $15, $12, $9, $6, Index Value (Base Year 21 = 1) 3, 15, *Estimate; **Forecast Source: Berkadia, $1,15 $1,1 $1,5 $1, $95 $9-15, * 218** 95.6% 3 BPS YOY 3,777 Units 73.3% YOY CHANGE -3, * 218** AND 217 PERFORMANCE HIGHLIGHTS 3,332 Units 96.5% 96.% 95.5% 95.% 94.5% 94.% * 1,215,3 412,9 $74, % YE % YOY YE % YOY YE % YOY YE BPS YOY 1, , 3, 2, 1, * 218** 218 PREVIEW More than 2 multifamily communities are scheduled for completion in the metro area in 218. This activity will result in 3,89 apartments coming online. Nearly onethird of this new stock will be in the Central Salt Lake City submarket. The heightened apartment demand last year is expected to trend downward toward the historical norm as operators record net absorption of 2,45 units this year. The supply imbalance will fuel a 1-basis-point reduction in occupancy to 94.6%. Rent will continue to increase, albeit at a slower annual pace of 2.3%. By year-end, effective rent in the metro area will average $1,117 per month. Local businesses and institutions are forecast to hire an additional 19, workers this year, a 2.6% annual gain. Expansion at established and up-and-coming high-tech companies in Silicon Slopes is expected to contribute significantly to this increase. The trade, transportation, and utilities sector will also be boosted as United Parcel Service Inc. begins hiring the first of 1,5 workers following completion of its 84,-squarefoot distribution center in northwest Salt Lake City this year. The subsequent opening of an Amazon.com Inc. fulfillment center in northwest Salt Lake City will also result in approximately 1,5 new jobs. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 49

52 SAN ANTONIO 217 REVIEW expansion, heightened apartment absorption, and elevated deliveries present in 216 persisted last year in the San Antonio metro area. Payrolls expanded 2.3% during 217 as companies created 23,4 jobs. in the construction sector surged 6.2% as 3,2 specialty trade and general labor positions were filled, many at the $142 million, 23-story Frost Bank Tower in Downtown San Antonio. Elevated multifamily development also kept construction payrolls full. Builders delivered 7,236 apartments in 217 among 39 multifamily developments. More than 4% of new stock was located in the neighboring North Bexar County and Northwest Bexar County submarkets. While apartment demand outpaced the five-year average by a wide margin, leasing activity still trailed deliveries. Consequently, metrowide occupancy decreased 3 basis points year over year to 93.1% in December. The supply excess prompted a pronounced deceleration in annual effective rent growth a 1.% increase to $938 per month by year-end. 23,4 2.3% YOY $938 1.% YOY 6.6% 6.3% 6.% 5.7% 5.4% $25, * UN RATE 3.5% 4 BPS YOY $125, $1, $75, $5, Index Value (Base Year 21 = 1) 45, 3, 15, *Estimate; **Forecast Source: Berkadia, $1, $95 $9 $85 $8 $ * 218** 93.1% 3 BPS YOY 7,236 Units 23.4% YOY CHANGE -15, * 218** AND 217 PERFORMANCE HIGHLIGHTS 6,235 Units 94.5% 94.% 93.5% 93.% 92.5% 92.% * 2,491, 896,9 $58, % YE % YOY YE % YOY YE % YOY YE BPS YOY , 6, 4, 2, * 218** 218 PREVIEW Accelerating job growth and improving apartment fundamentals are anticipated this year in the San Antonio metro area. Employers are projected to hire 25,3 additional workers, equating to 2.4% annual growth. The construction industry will continue to benefit from major projects including the Frost Bank Tower development downtown, plus scores of other projects in the city of San Antonio, initiated by the voter-approved 217 Municipal Bond which allocates $85 million for a wide range of developments. Continued job growth in other sectors is also anticipated. According to Moody s, residents age 5 and older are forecast to comprise an increasingly larger share of the metro area s population, and their additional medical demands bode well for sustained hiring in the local health care industry. In the apartment market, approximately 4% of the 4,696 new units in the metro area will come online among the neighboring Far West and Far Northwest submarkets. Metrowide absorption is projected to rise 3% above last year s elevated level. Leasing activity is expected to eclipse deliveries in 218, driving occupancy up 11 basis points to 94.2% by year-end. The healthy apartment demand will foster a 3.6% annual increase in effective rent to $972 per month. 5 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

53 SAN DIEGO 217 REVIEW After five-consecutive years of job growth exceeding 3, new positions, hiring slowed in 217 as employers added 23,9 new jobs over the last 12 months. The 1.7% expansion was 3 basis points above the national rate and reflected an economy approaching full employment. Growth was highlighted by the addition of 6, jobs in the construction sector and 4,4 new education and health services positions. Like the employment market, the multifamily market was operating near full capacity even as the occupancy rate dropped 2 basis points to 95.9%. The drop in occupancy was attributed to a third-consecutive year of declining absorption totals that slipped to 3,279 units in 217 and new supply exceeding demand by 23%. Even with declining absorption totals, limited new supply and barriers to entry into the single-family market facilitated a 4.4% increase in effective rent to $1,947 per month in December 217. In contrast to the overall metro, vigorous rental demand in the Downtown San Diego submarket exceeded the metro-leading units coming online, pushing up occupancy 3 basis points to 94.5% by year-end. 23,9 1.7% YOY $1, % YOY 6.% 5.5% 5.% 4.5% 4.% 3.5% $5, * UN RATE 4.1% 3 BPS YOY $3, $25, $2, $15, $1, Index Value (Base Year 21 = 1) 5, 25, -25, -5, *Estimate; **Forecast Source: Berkadia, $2,25 $2, $1,75 $1,5 $1, % 2 BPS YOY 4,24 Units 23.7% YOY * CHANGE -75, * 218** AND 96.2% 96.% 95.8% 95.6% 95.4% $1, 95.2% * 218** 217 PERFORMANCE HIGHLIGHTS 3,279 Units 3,349, 1,193,7 $73, % YE 217.6% YOY YE % YOY YE % YOY YE BPS YOY ,5 6, 4,5 3, 1, * 218** 218 PREVIEW Occupancy rates are anticipated to remain elevated to end 218 at 95.9% as local employers add 22,9 jobs this year, equating to a 1.6% annual increase. Construction jobs will be in high demand as several large-scale projects are set to get underway in Chula Vista, in Otay Mesa, in Downtown, and at the San Diego International Airport. Government payrolls will continue to expand as the U.S. Navy continues to transition ships to the Pacific Fleet area of operation. By 223, 6% of the Navy s surface fleet will be based in the Pacific, up from the current 5-5 Atlantic- Pacific split. Additional military, support personnel, and high barriers of entry for first-time home buyers will continue to drive demand for multifamily units which is expected to increase 68% year over year. A 43% annual increase in apartment deliveries is forecast for 218, as the 5,737 units added are a five-year high. More than half of the new inventory will come online in the Downtown San Diego submarket, including the second 45-story tower at Pinnacle on the Park set to include a total of 481 residential units and slated for lease-up in the second quarter. Healthy occupancy rates and sustained job growth will support metrowide effective rent reaching $2,8 per month by yearend, a 3.1% annual increase. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 51

54 SEATTLE-TACOMA 217 REVIEW After a postrecession high of new apartments came online in 216 across the Seattle- Tacoma metropolitan area, multifamily developers tapered inventory growth to help keep occupancy elevated last year. Builders brought 9,48 units online in 217, approximately 16% fewer than deliveries the year before. Nearly half of all the additions during the last year were in the Downtown/ Capitol Hill/Queen Anne submarket. Multifamily development as well as several large-scale projects contributed to the 4.5% annual job growth in the construction industry. Overall, metro employment expanded 2.4%, or by 48,2 jobs, in 217. The local increase outpaced the 1.4% national increase at the same time. Rising payrolls underpinned healthy absorption as metrowide occupancy finished 217 at 95.4%, the same rate as one year prior. With high occupancy, average effective rent advanced 5.1% year over year to $1,731 per month by December 217. At the same time, rent advanced 6.5% in the Downtown/ Capitol Hill/Queen Anne submarket. 48,2 2.4% YOY $1, % YOY 6.5% 6.% 5.5% 5.% 4.5% 4.% $1, * UN RATE 3.9% 3 BPS YOY $225, $2, $175, $15, $125, Index Value (Base Year 21 = 1) 1, 5, *Estimate; **Forecast Source: Berkadia, $2, $1,75 $1,5 $1,25-5, 95.4% BPS YOY 9,48 Units 16.4% YOY * CHANGE -1, * 218** AND 96.% 95.5% 95.% 94.5% $1, 94.% * 218** 217 PERFORMANCE HIGHLIGHTS 9,68 Units 3,99,6 1,533,9 $83,26 25.% YE % YOY YE % YOY YE % YOY YE BPS YOY , 1, 5, * 218** 218 PREVIEW With elevated apartment occupancy in recent years in the Seattle-Tacoma metropolitan area, multifamily developers expanded the construction pipeline to lead to an influx of new inventory over the next four quarters. Construction is scheduled to complete on 13,75 units by year-end, the highest annual deliveries in more than 15 years. Additions again will be focused around the major employment hubs with more than half of new inventory coming online in the Downtown/Capitol Hill/Queen Anne submarket. Boosting demand in the area will be the opening of the first phases of the new Google Cloud buildings. Encompassing four, six-story buildings, the project is expected to finish in early 219. Metrowide, 53,7 jobs are forecast to be created to raise head counts 2.6% by year-end. Accelerated hiring will boost apartment demand, though leasing activity will trail inventory growth to lower apartment occupancy 4 basis points to 95.% by December 218. Operators will respond by slowing rent growth. At $1,78 per month in December, effective rent will be 2.8% higher year over year. The metrowide trend will be reflected in the Downtown/Capitol Hill/Queen Anne area where occupancy is expected to lower to 95.3% as rent advances 3.%. 52 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

55 SOUTH FLORIDA 217 REVIEW South Florida apartment absorption and deliveries ramped up in 217. Supporting the rising absorption was a 1.6% annual increase in payrolls as 4,9 workers were hired. The education and health services sector added a metro-leading 1,7 net jobs to expand 2.8% in 217. Despite the effects of Hurricane Irma, builders brought 14,26 units online last year, the highest annual deliveries since 27. While additions were spread throughout the Tri-County region, a metro-leading 2,332 units were delivered in the Miami submarket. Even with the influx of new inventory, deliveries trailed demand as absorption in the submarket lifted apartment occupancy to 96.3%. Conversely, metrowide apartment occupancy decreased even as leasing activity soared because of abundant new apartment stock. At 95.% in December, occupancy was down 4 basis points from the close of 216. Apartment operators responded to lowering occupancy by decelerating rent growth. After rising 2.% in 216, monthly effective rent advanced 1.1% during the last year to close at $1,579. 4,9 1.6% YOY $1, % YOY 6.5% 6.% 5.5% 5.% $5, * UN RATE 4.3% 8 BPS YOY $2, $15, $1, Index Value (Base Year 21 = 1) 1, 5, *Estimate; **Forecast Source: Berkadia, $1,7 $1,6 $1,5 $1,4-5, -1, $1, * 218** 95.% 4 BPS YOY 14,26 Units 21.% YOY * CHANGE -15, * 218** AND 217 PERFORMANCE HIGHLIGHTS 9,399 Units 6,234,1 2,363,4 $55, % YE % YOY YE % YOY YE % YOY YE BPS YOY % 96% 95% 94% 93% 2, 15, 1, 5, * 218** 218 PREVIEW A slowdown in apartment inventory growth amid rising rental demand will push occupancy up across the Tri-County region this year. Construction is scheduled to complete on 11,761 units by year-end, down more than 17% from deliveries in 217. After years of limited inventory growth, developers will bring a metro-leading 1,86 units online over the next four quarters in the N Miami Beach/Bal Harbour/Golden Beach submarket. Deliveries will also be concentrated in the neighboring South Beach/Miami Bayshore and Miami submarkets with nearly 2,1 additions combined. With new inventory available in these highly sought areas, pent-up demand will boost metrowide leasing activity this year. Annual absorption is expected to nearly double 217 leasing, with move-ins outpacing new inventory at the highest rate in the South Beach/Miami Bayshore area. Also boosting metrowide demand will be the rising labor force. Employers are expected to accelerate hiring as total nonfarm employment expands 2.% over the next four quarters, up from 1.6% in 217. Part of the 53,4 net jobs added metrowide will come with the start of construction of the new Major League Soccer stadium in the Miami submarket. With occupancy and payrolls up, metrowide effective rent is forecast to increase 3.1% to $1,627 per month by December. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 53

56 ST. LOUIS 217 REVIEW Following several years of elevated apartment occupancy and persistent hiring by companies in St. Louis, multifamily developers ramped up construction activity. For the second-consecutive year, annual deliveries increased in St. Louis, as construction completed on 1,716 units during the last year, the most annual additions in more than 15 years. While the latest deliveries were spread throughout the metropolitan area, nearly half of the new supply came online in the Clayton/Mid-County submarket, an area with metro-leading absorption, supported by top employers such as Mercy Health and Washington University in St. Louis. Supplyside pressure caused metrowide occupancy to tick down 2 basis points annually to a stillhealthy 93.6% at year-end. Overall effective rent ended the fourth quarter at $97 per month, appreciating 1.7% during 217. At the same time, local head counts grew by 9,1 positions. Hiring was brisk among companies in the professional and business services and the financial activities sectors, which collectively added 5,7 employees. 9,1.7% YOY $97 1.7% YOY 9% 8% 7% 6% 5% 4% * UN RATE 3.5% 9 BPS YOY $12, $1, $8, $6, $4, $2, Index Value (Base Year 21 = 1) 5, 25, *Estimate; **Forecast Source: Berkadia, $96 $92 $88 $84-25, 93.6% 2 BPS YOY 1,716 Units 6.5% YOY * CHANGE -5, * 218** AND 94.5% 94.2% 93.9% 93.6% $8 93.3% * 218** 217 PERFORMANCE HIGHLIGHTS 1,28 Units 2,812, 1,166,8 $62, % YE 217.1% YOY YE 217.6% YOY YE % YOY YE BPS YOY , 2, 1, * 218** 218 PREVIEW An expansion in hiring will foster positive apartment fundamentals as multifamily developers work to meet heightened rental demand in the St. Louis metropolitan area this year. Effective rent will increase an average of 3.% to $934 per month over 218, supported in part by 1.1% employment growth at the same time. With payrolls advancing by 14,8 positions, growth will be up from.7% during the year before. The construction industry will be bolstered by ongoing development at the National Geospatial-Intelligence Agency in north St. Louis, City Arch River and Ballpark Village in downtown, and Centene Corp s Clayton expansion project. Similarly, apartment construction across the metro will remain elevated as builders add 1,642 units this year, a 1.% supply expansion, and 32% above the prior 5-year average. Nestlé USA will be bringing up to 3 technology jobs as it moves its information technology operations this year from California to Downtown St. Louis, where about 3, employees already work. As job growth accelerates, so will rental demand. The 2,554 newly occupied units metrowide will outpace deliveries over the next four quarters, elevating occupancy 6 basis points to 94.2% by December. 54 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

57 TAMPA-ST. PETERSBURG 217 REVIEW Rental demand surged in the Tampa-St. Petersburg metropolitan area amid steady job growth in 217. Annual absorption last year was more than double the leasing activity in 216, with demand highest in the Central Tampa submarket. Home to the metro s central business district, residents newly occupied 2,4 units in the submarket during the last four quarters. Facilitating the influx of renters was the metro-leading 2,337 units delivered in the Central Tampa area in 217. A total of 4,544 units came online across the metropolitan area last year. With leasing activity nearly keeping pace with inventory growth, Tampa- St. Petersburg apartment occupancy was 94.7% in December. Occupancy was on par with the rate one year prior. Underpinning apartment demand was the 2.2% annual rise in households and the 1.6% annual employment increase, with 2,5 net jobs added in 217. With payrolls rising and healthy occupancy, average effective rent advanced 2.5% year over year to $1,138 per month by December. 2,5 1.6% YOY $1, % YOY 217 PERFORMANCE HIGHLIGHTS 7.5% 7.% 6.5% 6.% 5.5% $4, * UN RATE 3.9% 8 BPS YOY $12, $1, $8, $6, Index Value (Base Year 21 = 1) 8, 4, *Estimate; **Forecast Source: Berkadia, $1,2 $1,15 $1,1 $1,5 $1, -4, 4,222 Units 94.7% BPS YOY 4,544 Units 3.4% YOY * CHANGE -8, * 218** AND 96.% 95.5% 95.% 94.5% 94.% $ % * 218** 3,112, 1,28,1 $54, % YE % YOY YE % YOY YE % YOY YE 217 BPS YOY , 6, 4, 2, * 218** 218 PREVIEW Tampa-St. Petersburg employers will accelerate hiring this year, in turn helping to sustain apartment demand. Total nonfarm employment is forecast to expand 2.8%, or by 37,4 jobs, by December, up from 1.6% growth in 217. Part of the additions will come with the opening of the St. Petersburg s Municipal Pier in late-218. The tourist attraction will create 1,8 new jobs and is expected to bring $79.5 million in new dining, retail, and hotel sales. Also scheduled to open in the fourth quarter is the $139 million Advanced Airfoil Components manufacturing facility in Hillsborough County that will create 35 jobs. With higher payrolls, leasing activity is forecast to remain positive, though decelerate from last s year pace. With the slowdown, apartment absorption will trail the 4,746 units scheduled to come online by year-end to shift down average occupancy 2 basis points annually to 94.5%. With the dip in apartment occupancy, effective rent is forecast to advance 2.% to $1,161 per month by December, down from 2.5% annual growth in 217. Conversely, rental demand in the Central Tampa submarket should exceed inventory growth to shift occupancy up to 94.9% by year-end. At the same time, effective rent is forecast to rise 2.4% year over year in the area. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 55

58 TUCSON 217 REVIEW While rent growth decelerated in many metro areas in 217, effective rent in the Tucson metro area advanced 4.9% year over year to $732 per month, accelerating from 4.6% appreciation in 216. Average rent increased in all seven submarkets in the metro. Much of this growth was attributed to leasing activity that eclipsed completions by a three-to-one margin. Renters occupied 441 additional apartments last year, with demand greatest in the North/Northwest Tucson submarket. Metrowide occupancy rose 4 basis points to 94.1% in the fourth quarter, the highest yearend occupancy rate since 26. Favorable apartment fundamentals were supported by continued job growth. The.6% annual increase in employment marked the seventhconsecutive annual gain. Employers in the metro area hired 2,2 workers during 217, with seven of the 11 job sectors expanding. Institutions in the second-largest sector, education and health services, led hiring with 2.2% expansion as 1,4 jobs were created. In the financial activities segment, employment grew 3.5% as 6 positions were filled. 2,2.6% YOY $ % YOY 7.4% 7.2% 7.% 6.8% 6.6% 6.4% * UN RATE 4.1% 5 BPS YOY $7, $6, $5, $4, $3, $2, Index Value (Base Year 21 = 1) 5, *Estimate; **Forecast Source: Berkadia, $8 $7 $6 $5-5, -1, -15, $ * 218** 94.1% 4 BPS YOY 134 Units 82.6% YOY CHANGE -2, * 218** AND 217 PERFORMANCE HIGHLIGHTS 441 Units 95% 94% 93% 92% 91% * 1,39, 416,7 $51, % YE % YOY YE % YOY YE % YOY YE BPS YOY ,6 1, * 218** 218 PREVIEW Approximately 2,6 newly created jobs are anticipated metrowide in 218, a.7% yearover-year gain. The near-term employment outlook is quite promising for the area. The Raytheon Company is in the process of hiring 2, workers through 221. Other companies in various stages of expansion include Caterpillar Inc. and ADP LLC. Additionally, high-tech companies including Vector Space Systems and World View Enterprises Inc. will augment the area with hundreds of high-paying jobs in the coming years. A substantial portion of the new jobs will be filled by workers relocating from other parts of the country. This migration will support continued apartment demand. Approximately 33 additional apartments are expected to be filled in 218. Builders will begin completing apartments in the last half of the year after a lull in deliveries over the last few quarters. Approximately 44 units are expected to come online by yearend. The slight supply excess will result in occupancy dipping 1 basis points during 218 to 94.% in December, still greater than the five-year average. Meanwhile, effective rent is forecast to rise 3.1% to $755 per month. Developers are expected to scale back planning activity this year, requesting permits for 127 units compared to 32 units in Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

59 TULSA 217 REVIEW Tulsa apartment fundamentals improved in 217 as the local economy rebounded from a trough in 216. Despite continued sluggishness in the energy and manufacturing industries, employment expanded in six job sectors in 217, resulting in a net increase of 1,3 jobs in the Tulsa metro area, a.3% year-over-year gain. Comparatively, employment contracted 1.% in 216. Companies in the construction industry led hiring in 217, with 1,3 new jobs, a 5.9% annual increase. Professional and business services employers also created 1,1 net jobs for a 1.9% growth. Additionally, the median household income rose 2.9% to $57,17 in 217, helping push effective rent down to an average of just 14.3% of household income. Effective rent that declined 3.1% in 216 bounced back to.5% annual growth last year, reaching $681 per month in December. In the Central Tulsa submarket, effective rent increased at a faster rate, a 1.3% gain to $85 per month. At the same time, occupancy in the submarket increased 1 basis points to 9.%. Metrowide, occupancy reached 92.2%, a 5-basis-point rise over ,3.3% YOY $681.5% YOY 9.5% 8.5% 7.5% 6.5% 5.5% * UN RATE 4.7% 3 BPS YOY $6, $5, $4, $3, $2, Index Value (Base Year 21 = 1) 15, *Estimate; **Forecast Source: Berkadia, $725 $7 $675 $65 $625-15, 92.2% 5 BPS YOY 1,742 Units 98.9% YOY * CHANGE -3, * 218** AND 95% 94% 93% 92% 91% $6 9% * 218** 217 PERFORMANCE HIGHLIGHTS 1,946 Units 996,4 396, $57, % YE 217.6% YOY YE 217.7% YOY YE % YOY YE BPS YOY , 2, 1, -1, * 218** 218 PREVIEW The modest recovery in the local economy and multifamily market in 217 is expected to persist in 218. Domestic oil production is projected to remain elevated, at least for the first half of 218, keeping oil price growth minimal to nonexistent, and possibly limiting new hires in the energy industry and closely affiliated manufacturing companies. The outlook for the overall local economy is positive, with employment forecast to expand.2% in 218 as 9 net jobs are created in the metro area. Multifamily builders will continue working through projects underway in Tulsa, Bixby, and Broken Arrow, delivering 1,18 units metrowide in 218. The new inventory will help accommodate 1.3% anticipated annual household growth, an acceleration from a.7% increase last year. Renters are projected to nearly match 217 leasing activity. Net absorption will exceed completions by 9%, spurring a 15-basispoint surge in occupancy to 93.7% by year-end. Operators will take advantage of elevated apartment demand, increasing effective rent 2.8%. By year-end, monthly effective rent is forecast to reach $7. Multifamily developers are expected to request permits for 593 apartments this year, up 21% from issuance in 217. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 57

60 VENTURA COUNTY CA 217 REVIEW Metro employers created 9,2 net jobs last year, representing annual employment growth of 3.%. Hiring heightened from the previous year when employment expanded 1.3%. The largest contributor to employment expansion was the education and health services sector, where 3,9 workers were hired, an 8.5% surge, as the Midtown Wellness District expanded its footprint. The leisure and hospitality and the construction sectors followed with 1,4 and 1,1 new jobs, respectively. In addition to employment growth, the local economy was buoyed with a 2.4% annual increase in household income. The rise in household earnings helped push up single-family home sales 16%, suggesting a portion of renters converted to homeownership last year. With overall absorption down from the prior 12-month period, the metro s occupancy rate dipped 3 basis points annually to 95.8% by year-end. Effective rent continued to climb, reaching $1,973 per month, up 4.6% year over year, on par with the fiveyear average of rent growth. 9,2 3.% YOY $1, % YOY 7.% 5.5% 4.% 2.5% * UN RATE 4.5% 4 BPS YOY $3, $25, $2, $15, Index Value (Base Year 21 = 1) 1, 5, -5, -1, *Estimate; **Forecast Source: Berkadia, $2,2 $2, $1,8 $1,6 95.8% 3 BPS YOY 162 Units 19.4% YOY * CHANGE -15, * 218** AND 96.2% 96.% 95.8% 95.6% $1,4 95.4% * 218** 217 PERFORMANCE HIGHLIGHTS 31 Units 855, 279,4 $88, % YE 217.4% YOY YE % YOY YE % YOY YE BPS YOY , * 218** 218 PREVIEW Above-average job growth is projected to persist in 218 as businesses add 7,3 workers to local payrolls, a 2.3% year-overyear gain. The health services subsector will be supported when Kaiser Permanente opens and staffs its 57,-square-foot Market Street Medical Offices. Construction is also bustling among multifamily builders, with several projects underway and more on the horizon. Developers will add 716 units to metrowide inventory in 218, more than the prior three years combined. The largest project is the 45-unit Andorra, expected to come online in Camarillo with an initial 7 apartments in the first quarter. At the same time, construction is progressing on the 26-acre Portside Ventura Harbor, the first new major development at Ventura Harbor in three decades. Lease-up is anticipated midyear, and when fully completed in 219, will include 27 waterfront apartments, commercial and retail space, a waterfront park, and marina. Sustained job growth will help spur rental activity, assisting in a 2-basis-point uptick in the metro occupancy rate to 96.% by December. Overall effective rent will continue to appreciate, albeit at a slower pace, ascending 3.5% year over year to $2,42 per month. 58 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

61 VIRGINIA BEACH 217 REVIEW Annual household growth of 1.% outpaced the.4% population increase in the Virginia Beach-Norfolk-Newport News metro area in 217. Approximately 6,8 households formed, and coupled with a 21% annual decrease in multifamily deliveries, enabled a 4-basis-point rise in apartment occupancy. By December, occupancy averaged 94.5%, the highest year-end rate since 21. Builders delivered 2,22 apartments in 217, nearly two-thirds of which came online in the adjoining Norfolk, Hampton/ York, and Portsmouth/Suffolk submarkets. While rent growth slowed in many metro areas in 217, effective rent in Hampton Roads grew 2.2%, accelerating from 2.1% appreciation in 216. Year-end average effective rent reached $1,53 per month. Favorable apartment fundamentals belied contracting employment. Payrolls shrank.1% during 217 as a net 7 jobs were lost. Terminations among multiple employment sectors offset a 3.5% increase in jobs in the professional and business services sector, where 3,8 workers were added. -7.1% YOY $1,53 2.2% YOY 7.5% 7.% 6.5% 6.% 5.5% * UN RATE 4.4% 2 BPS YOY $11, $9, $7, $5, $3, Index Value (Base Year 21 = 1) 2, 1, *Estimate; **Forecast Source: Berkadia, $1,1 $1,5 $1, $95-1, $ * 218** 94.5% 4 BPS YOY 2,22 Units 21.3% YOY CHANGE -2, * 218** AND 217 PERFORMANCE HIGHLIGHTS 2,45 Units 96% 95% 94% 93% 92% * 1,736,2 672,9 $66, % YE 217.4% YOY YE % YOY YE % YOY YE BPS YOY 1, ,6 3, 2,4 1,8 1, * 218** 218 PREVIEW The local employment environment in 218 is projected to be similar to that of 217. Annual contraction of.1% is forecast as employment lowers by 8 net jobs. The apartment market is expected to fare better. Builders will conservatively add to apartment stock as 1,595 units come online this year. The apartments will be distributed among six multifamily communities scheduled for completion in 218 and two properties due in early 219. The Kempsville/Bayside submarket will have the most new inventory this year. Like 217, deliberate multifamily development and accelerating household formation in 218 will boost apartment occupancy. Moody s is forecasting a 1.1% annual increase in household formation, resulting in approximately 7,3 additional households in the metro area. Net apartment absorption of 2,629 units is anticipated. By year-end, metrowide occupancy of 95.3% is projected, an 8-basis-point increase over 217. Operators will capitalize on favorable supply-demand conditions by raising rent an average of 3.4% over the course of the year. Monthly effective rent will average $1,89 by the end of the fourth quarter. Planning for continued apartment demand in the near term, developers are expected to request permits for 2,14 apartments this year, in line with issuance last year. Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market. 59

62 WASHINGTON, D.C. 217 REVIEW Apartment demand surged in the Washington, D.C., metropolitan area as employers accelerated hiring in 217. Last year s leasing activity was more than 32% higher than absorption during 216. Rental demand was highest in the Capitol Hill/Southwest submarket, in the heart of Washington, D.C. Boosting leasing activity in the area and across the metro was the 1.6% expansion in employment, up from 1.4% growth in 216. The labor force increased by 52,7 net jobs over the last four quarters. Also, facilitating the influx of renters was the metro-leading 3,387 units coming online in the Capitol Hill/Southwest area in 217. Metrowide, 12,452 units came online last year, up nearly 32% from additions in 216. Even with the rise in inventory, builders could not keep up with demand as occupancy elevated 3 basis points year over year to 95.6% by December. At the same time, effective rent advanced 1.5% to $1,72 per month. In the Capitol Hill/Southwest submarket, effective rent advanced 3.2% to $2,214 per month as occupancy rose 9 basis points to 95.5%. 52,7 1.6% YOY $1,72 1.5% YOY 6.5% 6.% 5.5% 5.% 4.5% 4.% $1, * UN RATE 3.5% 3 BPS YOY $225, $2, $175, $15, $125, Index Value (Base Year 21 = 1) 1, 5, *Estimate; **Forecast Source: Berkadia, $1,8 $1,7 $1,6 $1,5 $1, * 218** 95.6% 3 BPS YOY 12,452 Units 31.9% YOY * CHANGE -5, * 218** AND 217 PERFORMANCE HIGHLIGHTS 13,762 Units 6,25, 2,345,2 $11, % YE 217.8% YOY YE % YOY YE % YOY YE BPS YOY % 96% 95% 94% 93% 15, 1, 5, * 218** 218 PREVIEW Apartment occupancy is expected to reach a postrecession high by the end of 218 as multifamily developers work to meet the rental demand. Construction is scheduled to complete on 1,219 units over the next four quarters. While additions will be down from 217, this year s deliveries will be 8% higher than the preceding five-year average. Multifamily development as well as several large-scale projects will boost the construction industry. Overall, the workforce is forecast to grow 1.7% with 54,9 new jobs by year-end. Builders will add new apartment inventory throughout Greater D.C., with the metro-leading additions in the Western Fairfax County submarket. Even with the influx of deliveries, robust demand will outpace inventory growth to elevate the submarket occupancy 4 basis points to 96.3% by year-end. The imbalance favoring absorption will be reflected across the metro as average apartment occupancy elevates 4 basis points over the next four quarters to 96.%. With the increase, occupancy would reach the highest year-end level since 25. Boosted by rising occupancy, effective rent is forecast to increase 4.% year over year to $1,789 per month by December. In the Western Fairfax County submarket, monthly rent is expected to advance 3.7% to $1,8 by year-end. 6 Data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals. Numbers for 217 are estimated values, while 218 figures are forecast projections. Apartment market data criteria and methodologies vary by market.

63 DISCLAIMER AND SOURCES SOURCES: Berkadia Research; Axiometrics Inc.; California Homebuilding Foundation; CoStar Group Inc.; Real Capital Analytics, Inc.; Inc.; National Association of Realtors; Tetrad; U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; U.S. Census Bureau; U.S. Department of Commerce; U.S. Department of Housing & Urban Development; U.S. Department of the Treasury. Cover photo provided by Jonathan Segal, photo by Michael Andrew. Inside cover photo by Steve Halama. DISCLAIMER: The information contained within Berkadia research publications have been obtained from sources believed to be reliable; however, we make no guarantee, warranty, or representation regarding the accuracy of the information presented. Stated projections, assumptions, opinions, and estimates may not represent actual, current, or future performance and are subject to revision. The information provided is intended as a supplement for readers and clients. Readers and clients are responsible for conducting a careful, independent investigation of specific markets, properties, and trends in order to determine their specific needs and use of the information. Unless noted otherwise, data and images pertaining to employment, income, permits, population, rents, single-family housing, and occupancy are year-end figures. Absorption, construction, and apartment sales figures are full-year totals, unless noted otherwise. Current-quarter and current-year numbers are estimated values, while figures for future years are forecast projections. The apartment sales information represents transactions of apartment properties with a sales price of $2.5 million or more, unless otherwise indicated. Apartment market data criteria and methodologies vary by market. a Berkshire Hathaway and Leucadia National company