JAMES REAL ESTATE SERVICES, INC.
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Free & Clear
Financed
Gross Revenue
Cost
Including Profit
11-15, Avg 12.6% 12-25, Avg 18.4%
Excluding Profit
8-20, Avg 12.6%
8-25, Avg 14.3%
8.5-30, Avg 19.8%
1-6, Avg 3.5%
Inflation/Rental and Expense Growth Rates
Inflation for the national economy decreased significantly from the levels of 1996 to 1997. The
Denver metro area's inflation rate decreased from those levels, particularly in 1998. Based in part on
increased oil prices, the annualized inflation rate increased significantly in the 2
nd
Q 2000. The most
widely accepted measure of inflation in the United States is the Consumer Price Index (CPI) for All Urban
Consumers.
Historic Inflation Rate CPI (%)
1997
1998
1999
2000
1Q 2Q 3Q 4Q
Nat Den Nat Den Nat Den Nat Den Nat Den Nat Den Nat Den
1.7
3.4
1.6
2.6
2.6
1.2
5.9
Of course, the CPI is considered by some experts to be a poor indicator of inflation. More pertinent
to real estate investment analysis are the growth rates experienced and expected by investors, outlined
below. The surveys interview national, institutional investors and advisors. The surveys' results are
pertinent to large, well-located, investment-grade, real estate assets. Local markets and individual
properties could warrant considerable variation from national surveys' results.
National Income/Expense Escalation Rates Industrial (%)
1997
1998
1999
2000
1Q 2Q 3Q 4Q
Inc Exp Inc Exp Inc Exp Inc Exp Inc Exp Inc Exp Inc Exp
Warehouse
RERC
3.4
3.3
3.0
3.1
3.2
3.1
3.0
3.0
C&W
2.9
3.0
KORP
3.5
3.6
3.5
3.4
3.3
3.3
3.2
3.1
3.1
3.1
JF (Denver)
3.5 3.5
3.0
3.0
R&D/Other
RERC
3.6
3.3
3.1
3.1
2.9
3.1
2.8
3.0
C&W
3.3
3.4
Data Sources:
RERC
Real Estate Research Corp
KORP
Korpacz R E Investor Survey C&W
Cushman
&Wakefield
NREI
National Real Estate Index
NREIM
Nat'l R E Investor Magazine
IJF
Integra/Joseph Farber
