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OUR COMPANY AFFILIATES

CBRE GROUP

CBRE Group, Inc. is the world’s largest commercial real estate services and investment firm, with 2017 revenues of $14.2 billion and more than 80,000 employees (excluding affiliate offices). CBRE has been included in the Fortune 500 since 2008, ranking #207 in 2018. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.

INVESTMENT SERVICES

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers with $102 billion in assets under management.

Built up over more than 40 years, our unparalleled platform is focused on real assets, giving our institutional clients access to real estate and infrastructure in the Americas, Europe and Asia Pacific. Our clients benefit from a complete range of investment solutions including equity and debt, direct and indirect, and listed and unlisted strategies.

Trammell Crow Company, founded in Dallas, Texas in 1948, is one of the nation’s oldest and most prolific developers of, and investors in, commercial real estate.The CBRE Global Investors and Trammell Crow Company platforms make up the Real Estate Investments division of CBRE Group.

The Real Estate Investments division is led by
Danny Queenan, Global CEO, Real Estate Investments.

BLOGS

Regularly released content on the state of the real estate and infrastructure industry are produced by our subject matter experts and shared on their blogs. A selection of them can be found below.

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AMERICAS WATCH

The U.S. economy and consumer activity look to be unfazed by the trade rhetoric seen over the last few months and continue to hum along. The latest national GDP figures were robust, employment gains keep rolling in with unemployment at long-term lows, consumer confidence hasn’t been this good in 18 years and business confidence remains above average. What could go wrong? Even though new imposed tariffs between the U.S. and China are projected to modestly dampen U.S. economic growth, in the near-term consumers should be able to offset this dent. Households are heading into the highest spending period of the year with buying power and confidence not seen in several years, which should boost expenditures in the last quarter of 2018. Given the all-around positive indications, the Fed raised rates another 25 bps to a range of 2-2.25% in September and is projected to execute one more rate hike this year as economic momentum remains high regardless of ongoing trade issues.

LABOR MARKET STRONG BY MOST ACCOUNTS

The employment situation continues to improve, although some key labor indicators are lagging. The U.S. economy added 201,000 new jobs in August and the unemployment rate held steady at 3.9%. The professional and business services and healthcare sectors have seen the largest gains over the last year adding an aggregate of 820,000 jobs. Although August readings are in line with the current cycle average, June and July saw downward revisions by an aggregate of 50,000 jobs. Additionally, the labor participation rate and employment-population ratio remain stagnant as the long-term unemployed and marginally attached workers have seen no improvement over the last twelve months. As the holiday season approaches in a high consumer confidence environment expect employment and retail sales to receive a near term boost.

OCTOBER 2018

2,914.0

0.4%

S&P 500

2-2.25%

25 bps

Fed Funds Rate

3.06%

21 bps

10-yr. T-Note

$73.25

4.9%

Oil*

*WTI Crude Oil Spot Price. Data points through end of September 2018. Change represents month-over-month change.

NON-FARM EMPLOYMENT & UNEMPLOYMENT

Source: U.S. Bureau of Labor Statistics

PRINCIPAL CONTRIBUTORS:
Shubhra Jha
Jeremiah Lee
Rene Moreira
ITS BEEN A WHILE SINCE IT LOOKED THIS GOOD

The economy continues to build on the momentum set last quarter as the economy witnessed the first above 4% annual growth rate since Q3 2014. Net exports were the bright spot after showing the largest uptick in nearly five years despite the volatility in trade talks. Personal consumption continued to be robust with goods and services growing at nearly double their long-term averages as consumer confidence continues to set new highs. Despite the positives, gross private investment came in flat as private inventories and residential investment declines outweighed gains in non-residential investment. In the near term, personal consumption should remain robust, but new rounds of tariffs and the uptick in interest rates could put a dent on exports and other activity.

CONTRIBUTIONS TO REAL GDP
U.S. Bureau of Economic Analysis
NO LACK OF CONFIDENCE AMONG CONSUMERS

Despite trade and rising late-cycle risks, consumer confidence continues to breach new cyclical highs. Wage growth has improved, while job creation remains healthy. Through September 2018, the six-month average consumer confidence index rose to 130.4 from 119.2 one year ago – an 18-year high. As a result of sustained economic growth, supported by recent tax cuts, consumers remain optimistic.span>

CONSUMER CONFIDENCE
Source: The Conference Board
RETAIL SALES REMAIN HEALTHY

Following several months of robust growth, the pace of retail sales has moderated. Despite this recent deceleration, retail sales still rose by more than 7% y-o-y% in September 2018 – an indication of the health of U.S. consumers. In addition to recent fiscal stimulus, consumers have benefitted from stronger wage growth, sustained home price appreciation, and stock market prices continually testing new highs. Expanding at a double-digit rate, e-commerce retail sales continue to grow and now account for close to 10% of total U.S. retail sales.

RETAIL SALES
Source: U.S. Census Bureau
INVENTORY LEVELS FINALLY RISING

The U.S. housing sector continues to firm up, though it is hitting capacity constraints relative to labor availability, wages, and rising materials costs. Starts for single-family homes so far this year are up from a year ago despite some monthly volatility. However, weakness in household formation and rising interest rates could put a damper on demand going forward. Some of that drag on demand is evident in the pickup in months’ supply of for-sale housing units. At 6.1 months of supply, this is the most inventory in the market since 2011. Homebuilder sentiment is holding steady and although 5 points below December 2017’s high of 72, is indicating that positive momentum for building conditions will continue short term.

HOUSING MARKET
Source: U.S. Census Bureau
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This information is for our clients and investors only. Please note that the content of this report is for informational purposes only and should not be viewed as investment advice or an offer or solicitation. Any opinions are solely those of the Strategy & Research Team of CBRE Global Investors and are subject to change without notice, and may not be consistent with market trends or future events. This research is based on current public information that we consider reliable, but we do not represent it as accurate, updated or complete, and it should not be relied on as such.

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