J. Andrew Hansz. Ph.D., CFA, MAI Gazarian Real Estate Center Craig School of Business California State University, Fresno

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1 Education

2 J. Andrew Hansz Ph.D., CFA, MAI Gazarian Real Estate Center Craig School of Business California State University, Fresno

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4 100 GAZARIAN CENTER REAL ESTATE SENTIMENT INDEX TOTAL INDEX 75 I N D E X PRESENT 6 MO. PROJECTED 0 FALL 2011 SPRING 2012

5 GAZARIAN CENTER REAL ESTATE SENTIMENT INDEX SPRING 2012 TOTAL AVERAGE AGRICULTURAL INDUSTRIAL LAND MULTI-FAMILY RESIDENTIAL PRESENT 6 MO. PROJECTED OFFICE RETAIL SINGLE-FAMILY RESIDENTIAL

6 Gazarian Real Estate Center (REE) Research Education Events Founded by Dr. Arnold & Mrs. Dianne Gazarian

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8 Present Situation: Good News Fresno blessed with two gifts 1. Agriculture 2. Central location Connect people, products, water Los Angeles Bay Area/Sacramento We excel at the first but have not capitalized on the second.

9 Centralized Location Fresno blessed with two gifts 1. Agriculture 2. Central location Los Angeles Bay Area and Sacramento We excel at the first but have not capitalized on the second.

10 Centralized Location Fresno blessed with two gifts 1. Agriculture 2. Central location Los Angeles Bay Area and Sacramento We excel at the first but have not capitalized on the second.

11 Educate, Connect, & Innovate (ECI): Agenda Part 1 Present Situation: Why we must ECI Part 2 Our Economic Base Part 3 Forecast (2025)

12 Present Situation: Education Why does Fresno have thousands of job openings - and high unemployment? The Washing Post headline (February 2, 2011) Fresno s high school graduate % is half the US average Adult education % (2-year degree or higher) Lumina Foundation sets goal of 60% by 2025 Currently: United States 38% California 39% Marin County 62% Fresno County 28% Colusa County 18%

13 Present Situation: Economy Unemployment forecast - UP, Stockton 10%+ state unemployment until 2015 Fresno unemployment: 17.6% (2012) projected 16.9% (2011) 16.8% (2010) 50-60% of MLS sales distressed 45% of mortgages underwater (negative equity) 26.8% poverty (250,000 people); highest in CA Local housing market impact being compared to Detroit s manufacturing base loss.

14 Present Situation: Conclusion Falling behind the State & Country Mismatch skills possessed skills required Goal: A skilled & educated workforce Today, business locates near skilled workers. Challenges: Economic conditions Existing workforce perceptions Business environment/regulations National, state, & local budgets

15 Our Economic Base: Introduction Healthy economic base = healthy real estate markets particularly in a recovery Business and industry composition of our community. Our most valuable asset. Basic (export) industry job growth is primary!

16 Location Quotients California 2001, 2009, and 2010 Source: Bureau of Labor Statistics 2001, 2009, 2010 Benchmark is the United States Leisure and hospitality Education and health services Professional and business services Financial activities Information Trade, transportation, and utilities CA LQ 2001 CA LQ 2009 CA LQ 2010 Manufacturing Construction Natural resources and mining

17 Location Quotients Fresno 2001, 2009, and 2010 Source: Bureau of Labor Statistics 2001, 2009, 2010 Benchmark is the United States Leisure and hospitality Education and health services Professional and business services Financial activities Information Trade, transportation, and utilities Fresno LQ 2001 Fresno LQ 2009 Fresno LQ 2010 Manufacturing Construction Natural resources and mining

18 Location Quotients Fresno 2001, 2009, and 2010 (minus natural resources and mining) Source: Bureau of Labor Statistics 2001, 2009, 2010 Benchmark is the United States Leisure and hospitality Education and health services Professional and business services Financial activities Information Trade, transportation, and utilities Fresno LQ 2001 Fresno LQ 2009 Fresno LQ 2010 Manufacturing Construction

19 Our Economic Base: Conclusion How do we create stronger/stable economic base and real estate markets? (1) Keep agriculture dominant Agri-business (water/ag. tech, renewables, processing) Alternative (Water) Conveyance System (2) take greater advantage of central location expand economic base (LQ>1): Trade, transportation, & utilities Centralized location & highway/freight rail San Joaquin Valley rail project Professional & business services Centralized location & educated workforce High Speed Rail

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22 Our Economic Base: Potential

23 Our Economic Base: Potential Fresno s Economic Base in 2025: 1. Agriculture (LQ > 1) dominant and primary Vertical integration to maintain jobs water/agriculture technology renewable energy food processing Alternative Conveyance System 2. Centralized location (2 dimensions) Trade, transportation & utilities (LQ > 1) Highways & freight rail (SJVR) Professional & business services (LQ>1) Skilled/education workforce & HSR

24 For our economic base and real estate markets, we must have an educated workforce, physical linkages, and creative innovation to fully exploit our gift of a centralized location.

25 Gazarian Real Estate Center (REE) Research Education Events Founded by Dr. Arnold & Mrs. Dianne Gazarian