Cliff Brewis Outlook 2012

Senior Director, OperationsMcGraw-Hill Construction  

Cliff Brewis

70

85

100

115

130

145

160

175

190

T T+2 T+4 T+6 T+8 T+10 T+12 T+14 T+16 T+18 T+20 T+22

1982-1991

1991- 2005

1975-1982

Cyclical Trough (T) = 100, Based on Constant 2000 Dollars

Years from Cyclical Trough

Total Construction Activity by Cycle

1991-2012

Where We Have Been

The Overall EconomyThe US Economy has upside limits and downside potential.

GDP Pattern:

History Forecast

2009 2010 2011 2012

-3.5% +3.0% +1.6% +2.0%

Major Inhibitors:– Intractable Housing

– Budget Deficit

– Unemployment/Demand

– Europe

-9

-7

-5

-3

-1

1

3

5

7

01 02 03 04 05 06 07 08 09 10 11 12

Real GDP Growth Quarterly “11Q2 +1.3%

Area of Concern: Public Construction Funding Pushing down on the economy

Federal Budget Surplus/DeficitBillions of Dollars, CBO Projections

-1,600

-1,400

-1,200

-1,000

-800

-600

-400

-200

0

200

400

90 92 94 96 98 00 02 04 06 08 10 12

State and Local Revenues

Significance Of Housing

100

120

140

160

180

200

220

01 02 03 04 05 06 07 08 09 10 11 12

S&P Case Shiller Home Price Index20-Metro Composite, Indexed: Jan. 2000 = 100

Best Indicator of Local Market Strength

Employment by State

California: Single Family

‘$000.00

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

California: Multi Family

‘$000.00

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

U.S. • Multifamily Housing Top 8 Metros – September YTD 2011 vs. 2010

0.0 0.5 1.0 1.5 2.0 2.5 3.0

Miami-Fort Lauderdale

Los Angeles

Seattle

Chicago

Dallas

Boston

Washington DC

New York

2010 2011

+32%

+183%

+32%

+270%

+36%

+170%

+66%

+57%

Value in Billions

California: Retail/Warehouses

‘$000.00

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Retail

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Warehouses

California: Offices

‘$000.00

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

U.S. Commercial Buildings • OfficesTop 8 Metros – September YTD 2011 vs. 2010

0.0 0.5 1.0 1.5 2.0 2.5 3.0

Seattle

Minneapolis-St. Paul

Chicago

Houston

Washington DC

Boston

Salt Lake City

New York

2010 2011

- 48%

+1200%

+134%

-52%

+143

+26%

+428%

+83%

Value in Billions

California: Healthcare

‘$000.00

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

California: Education

‘$000.00

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

U.S. Institutional • Educational BuildingsK-12 School Construction larger than Colleges/Universities/Community Colleges, particularly in sq. ft. terms, less so in dollar terms.

K-12 has typically shown steeper up-and-down swings.

• In 2010, dollars for K-12 school constructionwas 2.3 times the size of Colleges/Universities/Community Colleges

• In 2010, sq. ft for K-12 school construction was 3.6 times the size for Colleges/Universities/Community Colleges

Education Buildings - SegmentsBillions of Dollars

0

5

10

15

20

25

30

35

40

90 92 94 96 98 00 02 04 06 08 10 120

25

50

75

100

125

150

175

200

90 92 94 96 98 00 02 04 06 08 10 12

K-12 Schools

Colleges/Universities/

Community Colleges

Colleges/Universities/

Community Colleges

K-12 Schools

Education Buildings - SegmentsMillions of Sq. Ft.

U.S. Institutional • Educational BuildingsTop 5 States – September YTD 2011 vs. 2010

0.0 1.0 2.0 3.0 4.0 5.0

Ohio

Massachusetts

Texas

California

New York

2010 2011

-11%

-34%

-35%

+17%

-14%

Value in Billions

California: Public ex Schls

‘$000.00

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

California: Highways

‘$000.00

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

U.S. Public Works • Highways & BridgesTop 5 States – September YTD 2011 vs. 2010

0.0 1.0 2.0 3.0 4.0 5.0 6.0

Florida

Illinois

Washington

California

Texas

2010 2011

-35%

-29%

+112%

+2%

+24%

Value in Billions

California:

‘$000.00

Structure Type 2006 2007 2008 2009 2010 2011 2012EDUCATION $6,693,899 $5,624,163 $8,389,268 $4,243,638 $5,461,528 $3,652,842 $3,453,074

-16.0% 49.2% -49.4% 28.7% -33.1% -5.5%GOVT x schls $917,450 $901,991 $941,567 $1,651,554 $589,838 $1,109,676 $1,003,439

-1.7% 4.4% 75.4% -64.3% 88.1% -9.6%HEALTH $2,105,817 $3,128,049 $2,325,602 $2,953,438 $2,940,200 $3,164,533 $3,144,388

48.5% -25.7% 27.0% -0.4% 7.6% -0.6%HIGHWAY $3,586,689 $3,584,021 $4,135,368 $3,617,681 $3,578,835 $3,692,858 $3,639,106

-0.1% 15.4% -12.5% -1.1% 3.2% -1.5%HOTEL $1,268,243 $1,132,320 $544,434 $556,980 $114,601 $147,377 $220,710

-10.7% -51.9% 2.3% -79.4% 28.6% 49.8%MFG $694,380 $516,590 $512,135 $568,810 $257,108 $355,898 $420,674

-25.6% -0.9% 11.1% -54.8% 38.4% 18.2%MULTI RES $7,286,060 $5,458,202 $3,741,078 $963,068 $1,541,216 $1,523,600 $2,077,791

-25.1% -31.5% -74.3% 60.0% -1.1% 36.4%OFFICE $3,509,386 $3,359,340 $1,862,668 $1,462,696 $948,541 $780,430 $838,371

-4.3% -44.6% -21.5% -35.2% -17.7% 7.4%ONE FAMILY $25,689,625 $16,847,205 $8,882,785 $6,889,277 $7,167,967 $6,332,685 $6,686,356

-34.4% -47.3% -22.4% 4.0% -11.7% 5.6%RETAIL $2,185,000 $2,782,949 $2,013,468 $998,577 $936,040 $910,142 $1,022,755

27.4% -27.6% -50.4% -6.3% -2.8% 12.4%WAREHOUSE $1,409,346 $1,363,134 $1,214,879 $448,252 $217,810 $298,518 $408,937

-3.3% -10.9% -63.1% -51.4% 37.1% 37.0%WATER $1,716,305 $2,049,777 $2,004,652 $1,582,216 $1,684,722 $1,141,553 $1,155,952

19.4% -2.2% -21.1% 6.5% -32.2% 1.3%TOTAL $67,998,286 $59,244,698 $48,043,677 $35,672,178 $40,892,129 $42,431,483 $42,217,077

-12.9% -18.9% -25.8% 14.6% 3.8% -0.5%

Questions?

Cliff BrewisSenior Director OperationsMcGraw-Hill Construction/Dodge510-566-0913cliff_brewis@mcgraw-hill.com

Appendix

National numbers

Billions of Dollars 2007 2008 2009 2010 2011 2012

Total Construction 641.0-7%

556.8-13%

425.9-24%

428.6+1%

409.8-4%

411.8-0-

Commercial Bldgs. 100.8+9%

81.4-19%

47.1-42%

41.3-12%

43.9+6%

47.4+8%

Institutional Bldgs. 117.7+6%

130.6+11%

112.0-14%

109.7-2%

93.6-15%

92.1-2%

Manufacturing Bldgs. 20.8+51%

31.0+49%

9.7-69%

9.2-5%

12.4+35%

12.9+4%

Single Family Housing 201.2-26%

122.4-39%

94.3-23%

100.0+6%

94.7-5%

104.6+10%

Multifamily Housing 60.3-13%

38.2-37%

17.9-53%

21.0+17%

23.6+13%

28.0+18%

Public Works 121.3+8%

121.1-0-

123.6+2%

119.0-4%

99.6-16%

94.8-5%

Electric Utilities 19.0+7%

31.9+68%

21.2-34%

28.5+34%

42.0+48%

32.0-24%

U.S. Total Construction Starts for 2012

Baseline Forecast Recession Forecast

2011 2012 2011 2012

Total Construction -4% -0- -5% -7%

Commercial Bldgs. +6% +8% +5% -6%

Institutional Bldgs. -15% -2% -15% -3%

Manufacturing Bldgs. +35% +4% +30% -5%

Single Family Housing -5% +10% -6% -2%

Multifamily Housing +13% +18% +12% -5%

Public Works -16% -5% -17% -7%

Electric Utilities +48% -24% +45% -35%

Risks to the Forecast