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Breaking a Realestate Purchase Agreement

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					                                                                                H. Taylor Peery Institute of Financial Services


                                                                              Real Estate Research
                                                                                    Report
                                                             May   2007  Volume 5  No. 1 

                      MBA Student ShineS in ReAl eStAte
T        he Marriott School continues to
         gain attention from recruiters for
         attracting and producing qualified
real estate students in its graduate and un-
dergraduate programs. Dave Hansen, a
                                                         After finishing his undergraduate educa-
                                                         tion, Hansen wanted to apply his knowl-
                                                         edge in a professional setting and was
                                                         contracted to take a position with CRA
                                                         International, an antitrust, litigation, com-
                                                                                                         tion, Hansen was a project manager over a
                                                                                                         30,000-square foot office complex, which
                                                                                                         included responsibilities such as tenant
                                                                                                         management, leasing negotiations, and
                                                                                                         feasibility analysis. While reflecting upon
first-year MBA student from Pleasantview,                petition, intellectual property, and real       his family real estate background, Hansen
Utah is one such student quickly gaining                 estate consulting firm headquartered in         notes that the exposure he received to real
recognition from BYU faculty, students,                  Boston, Massachusetts. However, while           estate throughout his life and while work-
and employers. Hansen comes from a                       waiting to begin his tenure with CRA,           ing in the company has been priceless.
broad family real estate back-
ground and has established                                                                                          With a firm foundation in
himself as one of the leaders                                                                                       real estate, Hansen moved
in real estate knowledge and                                                                                        to Boston, where he started
analysis among his colleagues                                                                                       his employment with CRA
in the MBA program.                                                                                                 International. For three years
                                                                                                                    he worked on mergers and
Before returning for an MBA,                                                                                        acquisitions and fine tuned
Hansen earned a bachelor’s de-                                                                                      his quantitative and qualitative
gree from BYU in economics                                                                                          skills through data analysis.
in 2001, after returning from                                                                                       His analyses were eventually
an LDS mission in Germany.                                                                                          presented by expert witnesses
Hansen explains that when                                                                                           in court cases.
planning his educational path
he decided on economics                                                                                              After a successful tenure with
because “it helps you under-                                                                                         CRA, he recognized the de-
stand the world globally.” To                                                                                        sire to cultivate his passion
elaborate, Hansen notes that                                                                                         for real estate and applied for
economics gave him a thor-                                                                                           acceptance to the real estate
ough understanding of the                                                                                            development master’s degree
reasoning processes and think-                                                                                       program (MSRED) offered
ing patterns of individuals and societies in                             David Hansen                    at the Massachusetts Institute of Tech-
all facets of business decisions.                                                                        nology (MIT). As a student at MIT,
                                                         Hansen was hired to work for his father’s       Hansen expanded his financial analysis,
                                                          real estate firm, John W. Hansen and           real estate development, and property
                                                          Associates Real Estate, a company spe-         evaluation skills. As an MSRED gradu-
                                                          cializing in residential and commercial        ate, he is noted for his unmatched ability
 Contents                                                 development, brokerage, and property           to methodically and accurately analyze
 From the Director’s Desk ......................2         management. As a recent graduate,              real estate properties and markets. Han-
 Marriott School is Top Ten Material.....3                Hansen took on various responsibilities        sen credits his analytical skills not only to
 The Real Estate Club Corner................3
                                                          including the valuation of large office        superior educational atmospheres at BYU
 4Q Economic & Residential Outlook ... 4
 4Q Office Outlook ..................................6    buildings and properties for proposed          and MIT but also to a research report he
 4Q Industrial & Retail Outlook ............6             acquisition, reorganizing the company’s        was involved in through the Fiji Distance
                                                          marketing strategy, and developing a           Learning Program.
                                                          ranking system for sales agents. In addi-
                                                                                                                            Continued on pg. 8
             May 2007  Research Report                                                                                                       
                                R e a l         E s t a t e           R e s e a r c h              R e p o r t            


                                  From the Director’s Desk
             Special Thanks                                 New Opportunities                     Finally, the 2006 real estate market was



T
                                                                                                  marked with excitement and opportunity
        he 2006 year officially closes with      Just a few weeks ago final approval was          and the fourth quarter was no different.
        this issue of the RERR and we            given to delegate funding toward purchas-        Please refer to the data and analysis
        would like to thank Brandon Perry        ing access to several prominent real estate      enclosed for greater detail. As noted
for his dedication and successful steward-       databases for academic use. These data-          above, the RERR is looking to expand
ship as the ‘06–‘07 director. Throughout         bases will enhance the RERR’s quality            its methods of gathering, recording, and
the year, Perry displayed a candid ability       and quantity of informationin the future.        analyzing real estate statistics; however, in
to establish lasting relationships with real     It is the hope of the RERR team to utilize       this edition of the report all data sources
estate professionals at various firms as         these databases for research and tracking        remain the same since our previous issue.
he strove to enhance the                                                                                           We appreciate the willing
quality of the report. For                                                                                          attitude from each of
everyone involved with the                                                                                          our sources to provide
RERR, we are especially                                                                                             us with the data needed
grateful for his charismatic                                                                                        to produce this report.
character, problem-solving                                                                                          If you have questions
capabilities, and dedication                                                                                        regarding specific data
to enhancing the quality of                                                                                         points presented in this
research and structure of                                                                                           edition, the RERR team
the RERR; it’s with a heavy                                                                                         will be happy to direct
heart that we say goodbye to                                                                                        you to the original data
Perry. At the same time the                                                                                         provider for specific data
entire RERR team extends                                                                                            collection and reporting
their thanks and best wishes                                                                                        techniques.
to Perry as he takes the next
step in his career as a real es-                                                                                    Please enjoy this edition
tate analyst in the merchant                                                                                        of the RERR. Your
banking division with the                                                                                           comments,      feedback,
Wells Fargo Corporation in                                                                                          and suggestions for fu-
Orange County, California.                                                                                          ture content are appreci-
                                                                                                                    ated. Please direct any
 Metropolitan Top Tens                                                                                              correspondence to:
                                                 data. Furthermore, it is anticipated that
Several western metropolitan regions             this information will enhance the quality        Tony Allred, Director
were cited in the December 2006 Office           of education students will receive in their      Real Estate Research Report
of Federal Housing Enterprise Over-              Business Management 413, 414, and 490            Brigham Young University
sight (OFHEO) report as part of the top          courses.                                         338 TNRB
twenty metropolitan statistical areas and                   Spring Cleaning                       Provo, UT 84602
divisions in the nation with the highest                                                          Phone: (801) 422-4164
rates of house price appreciation. In a          The ground breaking for the new expan-           Fax: (801) 422-0108
national ranking system of year-over-year        sion of the Tanner Building took place           Email: RealEstate@byu.edu
appreciation (2005–2006), Provo-Orem             Wednesday, April 25. In a recent state-
ranked second, Salt Lake City third, Boise       ment, Ned Hill, dean of the Marriott             If you would like to view past reports on-
City–Nampa fourth, Seattle–Bellevue              School, explained, “The new addition is          line, please visit our web site at:
eighteenth, and Albuquerque nineteenth.          almost entirely student focused - with
For additional yearly appreciation statis-       12 new classrooms, many open study ar-           marriottschool.byu.edu/rerr
tics for all the western metropolitan areas,     eas, two student lounges, 37 team study
please refer to the residential tables.          rooms, and a New York style deli.”
The opinions, commentaries, and data provided in this document are for informational use only. While it has been compiled from sources be-
lieved to be reliable, no guarantee, representation, or warranty can be made as to its accuracy, either expressed or implied. This document, and
any opinions expressed herein, are not intended as professional investment advice, and cannot be construed as such. Please consult an industry
professional before pursuing action based upon the information contained in this document and to verify the accuracy of the data contained
herein. Thank you.
                                                                                       May 2007  Research Report
                              R e a l        E s t a t e          R e s e a r c h            R e p o r t           


      marriott school is once again top ten material

B
        usinessWeek magazine ranked           for the second year in a row,” says Ned C.    “We’re grateful that our faculty is so com-
        Brigham Young University’s un-        Hill, Marriott School dean. “This is tough    mitted to the success of our students,”
        dergraduate management program        competition. I’m thrilled that our students   says Joan Young, director of the BYU
eighth overall and second among recruit-      and faculty are being recognized for their    undergraduate management program.
ers in the most comprehensive ranking of      tremendous efforts.”                          “But our secret weapon is the great stu-
U.S. undergraduate business programs to                                                     dents that come to BYU—they’re mature,
date. The school was also ranked first in     The University of Pennsylvania’s Wharton      bright, and eager to work hard.”
return on tuition for private colleges. The   School ranked No. 1 followed by No. 2
magazine cited the program’s ethics-based     University of Virginia, No. 3 UC—Berke-       Only 123 colleges met BusinessWeek’s
education and high-caliber recruiters as      ley, No. 4 Emory, No. 5 Michigan—Ann          stringent criteria to be considered for the
strengths.                                    Arbor, No. 6 MIT, No. 7 Notre Dame,           undergraduate business rankings. Schools
                                              No. 8 BYU, No. 9 NYU, and No. 10 Cor-         had to offer an undergraduate business
“We are very honored to be listed among       nell.                                         program, be accredited by AACSB and
the top 10 undergraduate business schools                                                   exceed cutoffs for at least two of the fol-
                                                                                                              Continued on pg. 8
                             the real estate club corner

      T       he Real Estate Club has been busy these past few months concluding its second-annual Analyst Training
              Series. It has been the goal of TREC leadership and its supporters to help TREC members be more educated
              and equipped to enter the real estate profession. To meet this goal, an analyst training series was developed
      featuring real estate professionals and trainers. Through this series, students are given the opportunity to enhance their
      analytical skills utilizing industry standards and tools.

      As a main supporter and organizer of the training series, SVN Securities analyst Mary Carlston kicked off the training
      8 February before a record TREC audience. Carlston shared insights into evaluating office, multifamily, retail, and
      industrial properties. Following her lead, Jeremy Newman—also of SVN Securities—spent 15 February teaching the
      club how to manage and create value with a portfolio of properties and how to add value to an individual property.

      In addition, Newman stayed an additional two weeks to give students an introductory course in the industry-standard
      software, Argus. Case studies were used to teach students how to form their own conclusion on property valuation
      and purchase decisions. Expertise in Argus is a must in today’s technology-driven world; an expertise so valuable that
      business professionals regularly pay thousands to attend Argus training seminars. TREC members received an enor-
      mous benefit through this training and express their thanks to Realm Business Solution’s agreement to supply student
      licenses for the software, Jeremy Newman for training, and TREC’s various financial supporters for subsidizing the
      purchase of the student licenses. Club members are grateful to finally have this type of specific training available to
      them before they enter the industry.

      To conclude the series, Key Bank representative Rob Likes addressed TREC on the topic of real estate finance and
      its associated components. Likes provided valuable insights into the lending decision from both the borrower’s and
      the lender’s point of view; his insights helped students better understand the importance of construction costs, equity
      requirements, and expected market returns.

      Finally, as the academic year nears its end and graduation approaches, many TREC members, along with its leadership,
      are preparing to leave BYU. With the thanks of its grateful members, TREC says goodbye to outgoing presidents
      Justin Anderson and Ted Cox as well as numerous vice presidents. TREC wishes its graduating members the best of
      luck as they pursue their careers in real estate and other interests. TREC welcomes incoming 2007–2008 presidents
      David Hansen and Nathan Beck as they continue to grow the club.

      For more information about TREC, visit trec.byu.edu or contact us via email at therealestateclub@gmail.com



          May 2007  Research Report                                                                                               
                                        R e a l          E s t a t e          R e s e a r c h               R e p o r t              

      W e s t e r n                 S t a t e s          M e t r o p o l i t a n              R e a l         E s t a t e          I n d e x             


                     4Q economic & resiDential outlook
T       he big story in the residential sec-
        tor is the continual softening of
        recently high appreciation levels
in several major western metropolitan ar-
eas including many regions in California,
                                                          The apparent trend of a slowing housing
                                                          market in many areas is supported by the
                                                          decrease in the amount of permits issued
                                                          this past quarter when compared to fourth
                                                          quarter 2005. All sectors recorded fewer
                                                                                                          while the surrounding metropolitan areas
                                                                                                          posted their first decline in years from
                                                                                                          $271,120 to $268,240, which is good news
                                                                                                          for first-time home buyers.

Phoenix, Nevada, and Colorado. Despite                    permits pulled when compared to a year          Economic factors also indicate mounting
decreases in some markets, Salt Lake City,                ago with the exception of San Jose and          strength for first-time home buyers. The
Provo–Orem, and Boise have maintained                     the L.A.–Long Beach area.                       housing affordibility index (HAI) began
abnormally high appreciation levels when                                                                  to rise after two years of continual decline
compared to 2005.                          As a result of a softening market, the                         to an average rate of 78.8, which indicates
                                           average median home price dropped for                          greater affordability in the housing mar-
                                                              the second straight                         ket. This upward change was fueled by
                                                              quarter in Califor-                         both lowering interst rates and median
              California Median Home Price History
                                                              nia from $595,586                           family home prices, with the majority of
     $605,000                                                 to $588,843 (see                            the influence attributed to declining inter-
                                $598,857                      trend graph below),                         est rates. n
     $600,000
                                                             $595,586
     $595,000
                          $589,057
     $590,000
                                                                $588,843                               Residential Summary, Q
     $585,000
     $580,000                                                                             CA Median Price............................. $588,8
                    $580,357
     $575,000
                                                                                          CA Avg. Change............................ -.%
     $570,000
                     Q4 '05     Q1 '06     Q2 '06     Q3 '06      Q4 '06                  Non-CA Median Price.................... $68,0
                                  CA Home Price Trend Line                                Non-CA Avg. Change....................... -.06%


                                                    4Q 2006 economic
                               Metropolitan Statistical      2005 Population   Pop. Growth      Unemployment          2005 Median           Composite
                                         Area1                   (MSA)1        (2004-2005)1        Rate2             Family Income3           HAI4
                                   Phoenix - Mesa               3,865,077          4.1%             3.3%                $60,100                94.0
          Arizona
                                        Tucson                   924,786           2.0%             3.7%                $52,400                89.8
                                 L.A. - Long Beach             12,923,547          0.2%             3.9%                $61,300                42.9
                                    Orange County               2,988,072          0.2%              ***                $61,300                36.4
                                Riverside - San Brndno.         3,909,954          3.3%             3.9%                $57,500                58.1
                                      San Diego                 2,933,462         -0.1%             3.7%                $64,900                45.9
        California
                                        Oakland                 2,466,692          0.3%             3.8%                $86,300                ***
                                      Sacramento                2,042,283          1.4%             4.3%                $65,400                73.5
                                     San Francisco              1,685,996         -0.1%             3.8%                $86,300                48.3
                                        San Jose                1,754,988          1.0%             4.2%                $97,100                52.4
                                   Denver - Boulder             2,359,994          1.4%             4.0%                $71,700               119.8
          Colorado
                                   Colorado Springs              587,500           1.4%             4.2%                $63,550               118.8
           Idaho                       Boise City                544,201           3.7%             2.6%                $56,400                ***
                                      Las Vegas                 1,710,551          3.8%             4.2%                $59,050                77.3
          Nevada
                                         Reno                    393,946           2.5%             3.9%                $63,750                78.6
      New Mexico                     Albuquerque                 797,940           2.1%             3.2%                $53,500               117.1
        Oregon                  Portland - Vancouver            2,095,861          1.6%             4.7%                $66,900                96.2
                                   Salt Lake City               1,034,484          1.6%             2.3%                $61,550               112.9
           Utah
                                    Provo - Orem                 452,851           2.2%             2.0%                $56,150                ***
       Washington                  Seattle - Bellevue           3,203,314          1.1%             4.3%                $70,800                77.9
 1 - U.S. Census Bureau 2 - Dept. of Labor - Bureau of Labor Statistics Data 3 - Dept. of Housing and Urban Development 4 - NAR Housing Affordability Index

                                                                                              May 2007  Research Report
                               R e a l            E s t a t e                 R e s e a r c h                       R e p o r t            

    W e s t e r n           S t a t e s           M e t r o p o l i t a n                            R e a l          E s t a t e         I n d e x             

                                           4Q 2006 resiDential
                    Metropolitan Statistical          Median Exist.             4Q SFR           4Q SFR Permit 4Q Dup, Tri, 4Q DTQ Permit
                            Area                       SFR Price1               Permits2          Values (000s)2 Quad Permits2 Values (000s)2
                         Phoenix - Mesa                 $262,200                 5,943             $1,134,415        363          $42,725
      Arizona
                              Tucson                    $239,400                 1,211              $207,362          66           $5,443
                       L.A. - Long Beach                $586,500                 2,207              $534,307         363          $44,673
                          Orange County                 $690,700                  355               $136,489           8           $8,909
                      Riverside - San Brndno.           $406,400                 4,357              $935,359         101          $11,893
                            San Diego                   $579,800                  822               $224,510         115          $15,702
     California
                             Oakland                       ***                   1,015              $328,202         104          $21,459
                            Sacramento                  $365,100                 1,506              $350,738          39           $4,367
                           San Francisco                $733,400                 1,218              $396,861         150          $28,252
                             San Jose                   $760,000                  433               $154,167          29           $4,941
                         Denver - Boulder               $245,600                 2,258              $552,645          80          $12,068
     Colorado
                         Colorado Springs               $219,400                  589               $119,773          26           $4,012
       Idaho                Boise City                     ***                   1,173              $238,296         110           $9,241
                            Las Vegas                   $313,500                 2,823              $364,965         121           $9,313
      Nevada
                               Reno                     $332,900                  183                $55,139          32           $3,952
    New Mexico             Albuquerque                  $187,500                  899               $150,675           3            $88
      Oregon          Portland - Vancouver              $285,400                 1,820              $400,390         105          $10,805
                         Salt Lake City                 $223,600                 1,333              $266,781          45           $4,598
       Utah
                         Provo - Orem 4                 $274,286                 1,181              $274,286          35           $4,836
    Washington           Seattle - Bellevue             $372,900                 2,900              $664,491         457          $48,697



                                        Leaders of the Pack — totaL Permits 4Q 2006
                                                       1. L.A. – Long Beach: 7,675     2. Phoenix: 7,083
                                     3. Las Vegas: 4,961   4. Riverside – San Brndno: 4,928      5. Seattle – Bellevue: 4,870




                       Metropolitan Statistical       1-yr. Change in         4Q 5+ Unit           4Q 5+ Permit                 4Q Total   4Q Tot. Permit
                               Area                    House Prices1           Permits2            Values (000s)2               Permits2    Values (000s)2
                            Phoenix - Mesa                  -2.3%                777                  $58,894                    7,083       $1,236,034
       Arizona
                                 Tucson                     -2.8%                 23                   $1,323                    1,300        $214,128
                          L.A. - Long Beach                 3.2.%               5,105                $690,073                    7,675       $1,269,053
                             Orange County                  -1.3%                 41                 $174,666                     404         $320,064
                         Riverside - San Brndno.             4.2%                470                  $38,240                    4,928        $985,492
                               San Diego                    -4.5%                803                  $79,851                    1,740        $320,063
      California
                                Oakland                    1.71%3                518                  109,236                    1,637        $458,896
                               Sacramento                   -4.1%                801                  $62,381                    2,346        $417,486
                              San Francisco                  2.0%               1,147                $192,506                    2,515        $617,619
                                San Jose                     2.7%               1,083                $134,527                    1,545        $293,635
                            Denver - Boulder                -0.8%                945                 $104,438                    3,283        $669,151
       Colorado
                            Colorado Springs                 4.9%                 10                   $1,074                     625         $124,859
        Idaho                  Boise City                 17.94%3                   20                      $2,400               1,303          $249,937
                              Las Vegas                     -0.8%                 2,017                   $233,682               4,961          $607,960
       Nevada
                                 Reno                       -8.9%                  ***                        ***                 ***              ***
     New Mexico              Albuquerque                     7.7%                  424                     $40,624               1,326          $191,387
       Oregon            Portland - Vancouver               11.2%                  917                     $88,424               2,842          $499,619
                            Salt Lake City                  22.7%                  484                     $72,037               1,862          $343,416
         Utah
                            Provo - Orem                  19.92%3                  199                     $27,183               1,415          $306,305
     Washington            Seattle - Bellevue               11.3%                 1,513                   $169,548               4,870          $882,736
1 - National Association of Realtors and its constituents            2 - U. S . C e n s u s B u r e a u     3 - OFHEO 4. Utah County Assoc. of Realtors
          May 2007  Research Report                                                                                                                         5
                                          R e a l               E s t a t e                   R e s e a r c h                       R e p o r t                   

        W e s t e r n                 S t a t e s               M e t r o p o l i t a n                              R e a l          E s t a t e              I n d e x                


                                                       4Q oFFice outlook
     F       ourth quarter office trends indicate mixed signals as over-
             all vacancy rates dropped for the ninth straight quarter.
             Yet absorption decreased during the quarter indicating
     a softening demand. New construction, while still increasing,
     only boasted a 3% increase from third to fourth quarter. Never-
                                                                                                               Office Comparison, 3Q-4Q

                                                                                                                Vacancy Rate............................
                                                                                                                Net Absorption.........................
                                                                                                                                                                    0.56% - Dn
                                                                                                                                                                    5.7mm - Dn
     theless, annual statistics indicate increased market strength with                                         Construction..............................          .0mm - Up
     vacancy rates moving down 11% since fourth quarter 2005, while
                                                                                                                Lease Rates...............................          $.69 - Up
     new construction and lease rates are up 64% and 8% respectively
     during the past year.
                                                                 4Q 2006 oFFice
                                         Metropolitan Statistical         Rentable SqFt             Vacancy             SqFt Net           SqFt Under           Avg. Lease Rate
                                                 Area                                                Rate              Absorbtion          Construction           $/SqFt/YR
                                               Phoenix - Mesa 1                 64,061,116           11.10%              606,634              4,079,365                 $24.16
              Arizona
                                                   Tucson 1                     7,941,415            11.90%              135,866               388,386                  $21.83
                                             L.A. - Long Beach 1                188,444,411          8.90%               527,939              3,295,401                 $28.92
                                               Orange County 1                  93,984,943           6.60%               354,209              4,453,220                 $29.52
                                           Riverside - San Brndno. 1            19,762,376           7.99%               333,855              1,610,925                 $22.56
                                                  San Diego 1                   52,103,256           10.60%              -31,502              3,627,867                 $27.96
             California
                                                  Oakland 1                     27,043,386           10.40%              428,020               460,000                  $23.08
                                                 Sacramento 1                   47,240,906           12.39%              155,473              1,361,841                 $21.36
                                                San Francisco 1                 122,003,638          9.90%              1,318,237              799,474                  $31.24
                                                   San Jose 1                   56,988,490           10.30%              398,730                  0                     $28.92
                                              Denver - Boulder 1                101,877,346          13.70%              481,427               889,890                  $18.21
              Colorado
                                              Colorado Springs 5                25,504,439           10.26%              177,925                 ***                    $10.35
                Idaho                             Boise City 2                  17,656,642           10.47%              113,000               468,400                  $15.78
                                                             1
                                                 Las Vegas                      25,241,786            9.32%              160,938              4,181,029                 $22.92
              Nevada
                                                   Reno 1                           ***                 ***                ***                   ***                      ***
           New Mexico                           Albuquerque 6                   12,662,613           13.40%              24,101                126,363                  $18.04
               Oregon                       Portland - Vancouver 1              40,382,570           11.23%              235,396               420,598                  $19.61
                                               Salt Lake City 1                 27,130,373           11.30%             -550,000              1,400,000                 $17.39
                Utah
                                                Provo - Orem 4                  7,583,984            7.04%                 ***                   ***                      ***
            Washington                        Seattle - Bellevue 1              84,133,691           11.59%             1,030,697             3,555,024                 $25.67
     1 - CB Richard Ellis   2 - Thornton Oliver Keller Commercial Real Estate     3 - Colliers International    4 - Commerce CRG    5 - Sierra Commercial Real Estate    6 - Grubb & Ellis


                              4Q inDustrial & retail outlook
T      he industrial sector exhibited
       comparable trends to those of
       the office sector with decreasing
vacancy rates and increasing lease rates.
Since fourth quarter 2005, industrial va-
                                                                 from 7.0% to its current rate of 5.92%.
                                                                 As part of that trend, vacancy rates de-
                                                                 creased from third to fourth quarter with
                                                                 the largest quarterly decrease in Boise.
                                                                                                                                   57.5 million sq ft.- a 10% decrease fueled
                                                                                                                                   largely in part to reduced new construc-
                                                                                                                                   tion activity in the majority of California’s
                                                                                                                                   metropolitan areas. Nevertheless, new
                                                                                                                                   construction remains nearly 2% ahead of
cancy has continually crept downward                  Lease rates continued to strengthen from                                     the fourth quarter mark in 2005. n



                                                                                                                                   D
                                                      $0.568 a year ago to $0.644 this quarter;
     Industrial Comparison, Q-Q                     all in all a 13% increase. Yet, even with                                              ata continues to be difficult to
                                                                      decreasing vacancy rates                                               collect in the retail sector, mak-
     Vacancy Rate...................................5.9% - Dn        absorption continues to                                                ing the identification of trends
                                                                      soften.                                                      challenging in this area. When adjusted
     Net Absorption............................7.mm - Dn                                                                         for variability, however, it appears that va-
     Construction................................57.5mm - Dn                             New construction de-                      cancy and absorption conditions strength-
     Lease Rates.....................................$0.6 - Up                          creased from 64 million                   ened from last quarter, while leasing and
                                                                                         sq. ft. last quarter to                   new construction weakened. . n

       6                                                                                                              May 2007  Research Report
                                         R e a l                      E s t a t e           R e s e a r c h                     R e p o r t                  

     W e s t e r n                  S t a t e s                       M e t r o p o l i t a n                    R e a l          E s t a t e             I n d e x                

                                                       4Q 2006 inDustrial
                                    Metropolitan Statistical                Rentable       Vacancy Rate           SqFt Net          SqFt Under             Avg. Lease Rate
                                            Area                             SqFt                                Absorbtion         Construction            $/SqFt/MO
                                          Phoenix - Mesa 1                 237,525,102          6.65%             3,077,256           8,458,819                    $0.73
          Arizona
                                              Tucson 1                     33,889,378           5.85%             1,115,436            416,521                     $0.58
                                        L.A. - Long Beach 1                923,316,329          1.30%              301,037            6,267,424                    $0.64
                                          Orange County 1                  246,840,999          2.80%             (427,875)            569,456                     $0.70
                                      Riverside - San Brndno. 1            337,429,898          4.30%             4,005,005           17,050,451                   $0.43
                                             San Diego 1                   192,506,514          5.80%             1,092,035           2,666,621                    $1.09
         California
                                             Oakland 1                     188,928,304          7.70%              693,541             238,425                     $0.57
                                            Sacramento 1                   165,206,262          8.40%              670,590             859,144                     $0.58
                                           San Francisco 1                 72,588,193           4.80%              100,136            1,042,873                    $1.32
                                           San Jose 1 wt avg               261,770,075          12.23%             554,699             127,986                     $0.86
                                          Denver - Boulder 1               226,818,867          7.00%             1,102,335           1,590,586                    $0.48
         Colorado
                                          Colorado Springs 5               29,107,286           8.95%              405,965               ***                       $0.62
           Idaho                             Boise City 2                  26,787,137           4.67%                ***               188,500                       ***
                                                           1
                                             Las Vegas                     87,202,467           3.43%             1,573,959           5,028,450                    $0.75
          Nevada
                                               Reno 1                      62,711,183           4.32%              671,147            2,927,698                    $0.34
       New Mexico                           Albuquerque 6                  34,027,079           6.50%             1,208,186           1,083,941                    $0.63
          Oregon                        Portland - Vancouver 1             185,756,928          5.56%             1,144,302           1,381,568                    $0.34
                                                                   1
                                          Salt Lake City                   118,824,713          5.91%                ***              3,264,636                    $0.35
            Utah
                                           Provo - Orem 4                  14,502,466           2.11%                ***                 ***                        ***
       Washington                         Seattle - Bellevue 1             223,138,022          6.19%              741,001            4,943,918                    $0.53
1 - CB Richard Ellis   2 - Thornton Oliver Keller Commercial Real Estate       3 - Colliers International   4 - Commerce CRG   5 - Sierra Commercial Real Estate    6 - Grubb & Ellis
                                                        Western states Vacancy rates 4Q 2006
                                                      Average                               High                                               Low
                               Office                  10.56%                           13.7% - Denver                                .6% - Orange County
                             Industrial                 5.92%                        12.23% - San Jose                         1.30% - Los Angeles - Long Beach
                               Retail                   5.35%                   8.94% - Colorado Springs                               2.20% - San Diego


                                                                       4Q 2006 retail
                                    Metropolitan Statistical               Rentable          Vacancy             SqFt Net          SqFt Under              Avg. Lease Rate
                                            Area                            SqFt              Rate              Absorbtion         Construction              $/SqFt/YR
                                         Phoenix - Mesa 1                  126,325,173         5.14%              927,977            9,996,355                       ***
         Arizona
                                             Tucson 1                      18,981,980          7.52%              856,558             788,547                      $18.08
                                       L.A. - Long Beach 6                     ***              ***                  ***             2,200,000                     $27.84
                                         Orange County 1                   77,306,101          3.50%               68,814            3,570,741                     $30.12
                                     Riverside - San Brndno. 1             92,273,421          5.32%             2,158,950           14,139,498                    $21.96
        California                          San Diego 1                    57,538,913          2.20%             1,364,025           2,255,725                     $25.32
                                            Oakland 6                          ***             2.40%                 ***             1,100,000                     $27.66
                                           Sacramento 1                    34,851,604          6.20%              642,094            2,766,779                       ***
                                          San Francisco 6                      ***             5.50%                 ***             1,500,000                     $33.36
                                             San Jose                          ***              ***                  ***                 ***                         ***
                                         Denver - Boulder 1                72,637,719          5.40%             1,565,267           4,120,238                     $16.62
         Colorado
                                         Colorado Springs 5                17,066,131          8.94%              138,281               ***                        $12.91
           Idaho                            Boise City 2                   15,129,985          7.90%              800,000             798,200                      $15.48
                                            Las Vegas 1                    48,726,578          3.71%              294,067            7,368,427                     $23.04
         Nevada
                                              Reno 3                           ***              ***                 ***                 ***                          ***
      New Mexico                           Albuquerque 7                   26,736,962          8.40%              591,621             325,350                      $15.91
          Oregon                      Portland - Vancouver 1               41,542,950          5.12%              179,046            1,142,181                     $17.37
                                                               1
                                          Salt Lake City                      ***               ***                 ***                  ***                        ***
           Utah
                                           Provo - Orem 4                  9,035,347           6.44%                ***                  ***                        ***
       Washington                        Seattle - Bellevue 1              41,667,904          3.37%              718,251            1,800,000                     $22.56
1 - CB Richard Ellis 2 - Thornton Oliver Keller Comm. RE 3 - Colliers Int. 4 - Commerce CRG 5 - Sierra Comm.Real Estate 6 - Marcus & Millichap Ann. Frecst. 7 - Grubb & Ellis
           May 2007  Research Report                                                                                                                                         7
                             R e a l         E s t a t e         R e s e a r c h            R e p o r t          


       Continued from pg. 1                   ior, and strategy. With that goal in mind,          Continued from pg. 3
                                              Hansen will complete his first year of the
As an undergraduate student, Hansen           MBA program this April and is due to          lowing: SAT and ACT scores, percent-
traveled to Fiji as the program administra-   graduate in April 2008. In the upcom-         age of applicants accepted, and percent-
tor for a research project to be conducted    ing 2007–2008 school year, Hansen has         age of students coming from the top 10
in the area. While avoiding the details of    been chosen to be the president of The        percent of their high school class.
the assignment, Hansen noted that the         Real Estate Club and is already working
experience was life altering and ultimately   in conjunction with faculty, students, and    Young also attributes part of BYU’s
influenced the way he would carry out his     business associates to plan a fun and ex-     success to the constant attention given
research, support his results, and conduct    citing year for club members.                 to curriculum and ethics. “Our faculty
himself in professional settings.                                                           is continually coming up with new and
                                              After completing his MBA degree, Han-         innovative ways to teach,” Young says.
With such a broad variety of experi-          sen plans to return to John W. Hansen         “We have also integrated ethics as a key
ences and knowledge, many fully ex-           and Associates, where he hopes to take        component in the undergraduate core
pected Hansen to immediately make             his family’s company to the next level. In    and in case discussions.”
his impact in the real estate industry;       addition, he is planning on starting a real
however, he felt that one piece of the        estate consulting business to service the     BYU’s Marriott School was included
puzzle still remained. After completing       Wasatch Front and its surrounding areas.      as one of the top five hardest working
his education at MIT, Hansen returned                                                       colleges where students spend an aver-
to Brigham Young University to earn an        Hansen is married to his wife, Heather, a     age of more than 18 hours per week
MBA degree. While many of his family          long-time high school friend and practic-     on class work. This is the second year
and friends questioned the need for an        ing dentist in the Ogden area. In his free    BusinessWeek has ranked undergraduate
additional postgraduate degree, Hansen        moments, Hansen enjoys spending time          business schools. Complete rankings
explained that although he had a clear        with his wife and fly fishing on local riv-   of the Best Undergraduate Business
understanding of the analytical side of       ers. The Marriott School and the RERR         Schools are available in the 19 March,
business, he felt it necessary to augment     look forward to tracking the progress of      2007 issue of BusinessWeek.
his previously acquired knowledge with a      this highly talented student, and we wish
greater understanding of topics such as       David the best of luck on his MBA edu-
human resources, organizational behav-        cation and future endeavors.



  Real Estate Research Report                                                                                     NONPROFIT
                                                                                                                  ORGANIZATION
  H. Taylor Peery Institute of                                                                                    U. S . P O S TA G E
  Financial Services
  Marriott School
                                                                                                                  PA I D
                                                                                                                  PROVO,   UT
                                                                                                                  PERMIT NO. 49
  Brigham Young University
  338 Tanner Building
  Provo, UT 84602-3104




   8                                                                              May 2007  Research Report

				
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