This is our annual construction economic forecast presented to the American Society of Professional Estimators in Santa Clara on March 28, 2016.

1. Presented to
ASPE
March 28, 2016
2016 Construction
Forecast

2. 2
1. US Construction
2. California
3. Santa Clara County
4. Employment
Table of Contents

3. Self Portrait Working
on Presentation
3

4. Annual Rate of Construction
Spending US (Billions)1
Public ($) Private ($) Total ($)
2005 256.3 904.3 1160.6
2006 280.9 896.8 1177.7
2007 297.8 842.4 1140.2
2008 319.6 737.1 1053.7
2009 309.6 593.0 902.5
2010 301.0 486.9 787.9
2011 286.6 529.7 816.4
2012 270.1 614.9 885.0
2013 266.5 663.9 908.4
2014 283.5 698.6 982.1
2015 294.3 828.2 1122.5
4
1Numbers come from December Annual Construction Report for the US Census Bureau, except for 2015 numbers which came from
the November Report.

5. United States
Construction Starts ($ Billions)
(McGraw Hill)
In billons 2014
Actual
2015
Estimate
2016
Forecast
% change 14-15 % change
15-16
Total Construction 594,706 674,750 711,975 +13.5% +5.5%
Residential 231,613 272,475 316,000 +17.6% +15.9%
Single Family 163,750 187,400 224,750 +14.4% +19.9%
Multifamily 67,863 85,075 91,250 +25.4% +7.3%
Nonresidential 220,078 219,875 239,075 -0.1% +8.7%
Nonbuildings 143,015 182,400 156,900 +27.5% -14.0%
5
ENR Magazine, November 16, 2015, p 21

6. FMI Construction Put In Place
Forecast 2016 ($ Billions)
In billons 2014
Actual
2015
Estimate
2016
Forecast
% change 14-15 % change
15-16
Total Construction 964,303 1,025,941 1,093,490 +6.4% +6.6%
Total Residential 345,993 375,691 408,538 +8.6% +8.7%
Total
Nonresidential
388,896 423,964 452,247 +9.0% +6.7%
Non-buildings 229,414 226,286 232,705 -1.4% +2.8%
6
ENR Magazine, November 16, 2015, p 21

7. Dodge Construction
Growth Forecast
7
Annual % Change for $Volume of
Construction Starts
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
+12.0 +10.0 +6.0 +5.0 +2.0 +5.0 +12.0 +13.0 +3.0 -7.0
2008 2009 2010 2011 2012 2013 2014 2015 2016
-13.0 -24.0 +2.0 +1.0 +12.0 +11.0 +9.0 +13.0 +6.0
ENR Magazine, November 16, 2015, p 20

8. Dodge Construction
US Outlook-2016
• Total Construction up 6% in dollars to $712 Billion
• Multi Family Housing up 7% in dollars & 9% in units
• Single Family Housing up 20% in dollars & 17% in units
• Commercial Buildings up 11% in dollars
• Public Works flat in 2016.
• Electric Utilities down -43% in dollars
• Institutional Buildings up +9% in dollars
• Manufacturing Plant down -1% in dollars
Data is based on Construction Starts
8
Dodge and Data Analytics, Press Release Nov. 2, 2015

9. Pattern of US Construction
Starts 2016 (in billions $)
2011 2012 2013 2014 2015 2016
Total
Construction
441.3 492.5 545.2 594.7 674.7 712.0
Single Fam
Housing
97.3 125.8 159.2 163.8 187.4 224.8
Multi Fam
Housing
29.7 40.6 51.5 67.9 85.1 91.2
Commer. Build 48.3 55.1 67.3 81.2 84.3 93.7
Instit. Build 100.3 91.8 92.0 103.6 110.2 120.3
Manuf.Build 17.3 13.1 18.8 35.3 25.3 25.0
Pub. Works 106.9 112.3 126.7 119.8 122.4 122.9
Elec. Utilities 41.5 53.8 29.7 23.2 60.0 34.0
9
Dodge and Data Analytics, Press Release Nov. 2, 2015

10. California Building Permits
2015 through November
10
New Commercial New Industrial Alters/Additions
$7,342,509,409 $1,074,922,745 $10,880,234,291
New Other Total Non Residential Total All Construction
(including Res)
$3,909,705,070 $23,207,371,515 $49,882,506,068
Information from the California Building Industry Foundation. 2015 data is through November 2015
Single Family Valuation New Multi Family
Valuation
Residential Alterations
$13,029,225,070 $7,892,729,667 $5,753,178,956

11. California Housing
Starts-2004-2015
212960
208972
164280
113034
64962
36209
44762 47336
59638
85310
85846
107586
0
50000
100000
150000
200000
250000
New Housing Units
2004 2005 2006 2007 2008 2009
2010 2011 2012 2013 2014 2015
11Information from the California Building Industry Foundation. 2015 data is through November 2015

12. California New Housing
Starts Forecast (thousands)
78.9
99.8
132.5
148.3 153.1 158.5
0
50
100
150
200
Housing Starts
2014 2015 2016 2017 2018 2019
12
1Eberhard School of Business, Metro Forecast, September 2015

13. San Jose, Sunnyvale, Santa Clara
Construction Starts
In millions ($) 2011
Actual
2012
Actual
2013
Actual
2014
Actual
2015
Forecast
Total Construction 2,391 4,153 4,257 5,509 4,211
Residential 828 1,047 1,154 954 1,232
Non Residential 790 1,603 2,120 4,158 2,496
Comm/Manuf 259 475 692 3,684 1,944
Office/Bank 168 284 302 3,054 1,451
Institutional 531 1,128 1,427 474 552
Nonbuildings 773 1,503 983 397 482
13
ENR Magazine, November 23/30, 2015, pCA4

14. Santa Clara County
Residential Permits
14
Year 2006 2007 2008 2009 2010
Buildings 2,260 2,060 1,067 643 851
Units 6,075 4,123 3,462 1,054 4,011
Con.Cost($) 1,221,896,290 988.906,795 649,043,037 305,153,891 715,846,355
Year 2011 2012 2013 2014 2015
Buildings 1,028 1,554 1,994 1,860 1,630
Units 3,064 5,479 7,621 9,424 4,826
Con.Cost($) 700,203,207 1,045,660,437 1,613,258,474 1,766,267,674 1,168,495,961
Census Bureau Statistics

15. Santa Clara County
Real Estate Trends-Retail
• By the end of 2015, vacancy to decline to 3.5%
• Dvlpmnt. pipeline-2.3 Million sq. ft. (263,000 underway)
• 2015 will bring roughly 500,000 sq. ft. to market
• Almaden Ranch and Bass Pro Shops highlight 2015
Deliveries
• Demand for retail space will surpass growth for 5th straight
year, making average asking rent to $32.30 per sq. ft.
15
Marcus & Millichap San Jose Metro Area Retail Research Report
3rd Quarter 2015

16. Santa Clara County
Real Estate Trends-Commercial
• 4.5 million sq. ft. will be completed in 2015.
• 1.6 million sq. ft completed in 2014
• Asking rents will rise to $39.11 per sq. ft
• Vacancy down to 9.7% in 2015
16
Marcus & Millichap San Jose Metro Area Commercial Research
Report 2nd Quarter 2015

17. Santa Clara County
Real Estate Trends-Apartments
• 2,700 units are being finished in 2015.
• Vacancy at 3%
• Effect rents will climb 9.1% to $2500 per
month.
• 6,800 units to be completed into 2016
17
Marcus & Millichap San Jose Metro Area Apartment Research Report
4th Quarter 2015

18. Santa Clara County
Trends-Commercial pt. 2
• 15% increase in office rents in 2015
• 10% increase in office rents in 2016
• 3.11 million sq. ft. under construction or to be
completed in 2016
• 2015 was the best recorded year in history for
commercial real estate leasing in Silicon Valley.
No repeat performance in 2016.
18
“Valley Party Isn’t Over,” Feb. 19, San Jose Mercury News, p. B7

19. Santa Clara County
Housing Market
19
$890,000
$800,000
$640,000
$600,000
$0 $200,000 $400,000 $600,000 $800,000 $1,000,000
2015
2014
Bay Area
Santa Clara
Median Sale Price for Single Family Homes
Total Sales of Single Family Homes
13030
12354
63563
59099
0 10000 20000 30000 40000 50000 60000 70000
2015
2014
Bay Area
Santa Clara
“Housing” Mercury News, Jan. 21, 2016 p.1

20. 20
Santa Clara County-Construction
Employment Statistics by Month-
Jan.07-Nov.15
Peak Employment- September 2000, 52,200 November 2015 Employment 45,000
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Employment

21. Santa Clara County Construction
Employment-Annual Average
In Thousands
44.4
41.6 43.0 44.5
46.8 47.2
44.2
34.4
32.2 31.4
34.7
37.5 39.2
43.2
0.0
10.0
20.0
30.0
40.0
50.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
21
Bureau of Labor Statistics-San Jose, Santa Clara, Sunnyvale Statistical Area

22. Estimated California Construction
Unemployment Rates %
7.2
5.2
6.9 7.8
16.9
24.2
25.2
17.4
13.8
9.1 8.5
6.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
22
Bureau of Labor Statistics

23. Bay Area Forecast-
Unemployment (%)
Metro Area 2014 2015 2016 2017 2018
San Francisco 4.3 3.5 3.1 2.9 2.7
San Jose 5.3 4.2 3.9 3.5 3.4
Oakland 6.0 4.9 4.5 4.1 3.9
California 7.5 6.3 5.7 5.3 5.1
23
Eberhardt School of Business, September 2015, Metro Forecast

24. Largest Metro Private
Economies 2015
4.8
4.4 4.1 4 4 3.8 3.6 3.6 3.5 3.5
2.3
0
1
2
3
4
5
6
1 Year Employment Growth (%)
24

25. 25
Other Trends
•An average of 40,000 new Construction jobs will be created each year over the next five year
forecast. By 2020, Construction jobs will still remain 30,000 jobs shy of the peak in the mid 2000’s.1
•Construction material prices fell for the sixth consecutive month in December, losing 1.2 percent on
a monthly basis and 4 percent on a yearly basis. Construction input prices have fallen 7.2 percent
since peaking in August 2014, and have fallen in eleven of the previous sixteen months. industry has
recovered just 30% of the 2.2 million jobs it lost during the sub-prime mortgage crisis from 2006 to
2010. In 2015, however, it gained jobs at more than twice the rate of the overall labor market. 3
•According to the Wall Street Journal, Santa Clara County fully recovered from the recession in 2015
based on four metrics-GDP, Jobs Recovered, Unemployment Rate and Home Prices
•Wells Fargo Construction Optimism Quotient for 2016 is 108, down from a high of 130 in 2015.
Lowest number was 42 in 2009.4
•Total available space in the Silicon Valley now measures 23.8 million square feet, translating into an
overall availability rate of 7.2% for all product types throughout the Valley.5
1 Eberhardt Economic Forecast, Sept. 30, 2015
2 ABC Press Release, Jan. 15, 2016
3 Wall Street Journal Economics Blog, Jan. 12, 2016
4 Wells Fargo Construction Industry Forecast 2016.
5“Valley Party Isn’t Over,” Feb. 19, San Jose Mercury News, p. B7