Rental Housing:New American Dreamor Classic BubbleULI Fall MeetingOctober 23, 201410:30 am – 12:00 pmCharlie Hewlett, Managing Director

DEMOGRAPHIC TRENDSTwo key demographic trends:1.Cyclical Millennial Household Formation Rate2.Secular Millennial Marriage RateMore than any other factors, these two trendswill have an outsized impact on MF demandULI OCTOBER 23, 20142

MILLENNIAL HOUSEHOLD (HEADSHIP) RATESKey Questions: When will Millennialsdecouple, leave yourbasement, and begin tocontribute to newhousehold formations likeprevious generations? Is this a temporary falloutfrom the Great Recession,or a more permanentchange in Millennialheadship rates?ULI OCTOBER 23, 20143

MILLENNIAL HEADSHIP RATES18-34Unemployment:Peak (2010): 14%Historical (2001-2007):7%U6 Measure:Peak (2010): 22%Historical (2001-2007):12%Student Debt:2013: 1.1 T2005: 500 BLiving with Parents:2012: 32%2005: 25%ULI OCTOBER 23, 20144

MILLENNIAL HEADSHIP RATES CYCLICAL TREND Decline in Millennial headship rateshas resulted in over 1 million fewerhouseholds cumulatively over lastdecadeoCyclical factors account for the lion’sshare of this decline in headship ratesduring the recessionoThis relationship suggests that as theeconomy and labor markets recover,headship rates among Millennialsshould rebound and provide a boost tohousehold formation Bodes well for overall housing demand,in general, and multifamily rental, inparticularULI OCTOBER 23, 20145

MILLENNIAL MARRIAGE RATE SECULAR TREND Marital status historically bestpredictor of product preferences Married couples single-family Declining Millennial marriage rate ispre-existing condition:Declines in line with a strong trendthat has preceded the Great RecessionDelayed marriage is also consistentwith increases in educationalattainment18-34 year old homeownership:2013: 37%2005: 43%ULI OCTOBER 23, 20146

MULTIFAMILY DEMAND THROUGH 2017Key Assumptions: Census population growth by ageHeadship rates return to 2007 levelsMarriage rate continues to decline at2000-2011 rateTwo Scenarios: Cyclical – households revert to singlefamily as economy improvesSecular – recent uptick in MF preferenceis a more permanent changeYTD 2014 (Annualized through August): MF Starts: 371,000 MF Permits: 394,000ULI OCTOBER 23, escence45,0001,203,045,000 71,335,00

Rental Housing:New American Dreamor Classic BubbleULI Fall MeetingOctober 23, 201410:30 am – 12:00 pmULI OCTOBER2014CharlieHewlett,23,ManagingDirector

sReal& Resort&LitigationEstateFIRM OVERVIEWLeading National Real Estate Consulting Firm Market & Financial Feasibility at Asset, Portfolio & CompanyLevelsMarketing and Design StrategiesFiscal Impact AnalysesStrategic PlanningFive Practice Group Areas Urban Real Estate AdvisoryCommunity and Resort AdvisoryPublic StrategiesInstitutional AdvisoryStrategic Planning & Litigation SupportYear Opened1967Office LocationsWashington, D.C. (HQ)Los Angeles, CAOrlando, FLAustin, TXAffiliationsUrban Land InstitutePension Real Estate AssociationInternational Economic DevelopmentCouncilNational Multifamily Housing CouncilSociety for College and UniversityPlanningAmerican Planning AssociationCore ValuesAdding Value to Our ClientsAchieving Excellence and InnovationEnjoying Our WorkPromote Economic, Social, &Environmental SustainabilityAdvisory GroupsCommunity and Resort AdvisoryInstitutional AdvisoryStrategic Planning & Litigation SupportPublic StrategiesUrban Real Estate AdvisoryULI OCTOBER 23, 20149

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