Presented to the Construction
Community January 2023
2023 Economic Forecast

2
1. Nationwide 3. Local
2. California
Table of Contents

Annual Rate of Construction
Spending US (Billions)1
Public ($) Private ($) Total ($)
2011 286.6 529.7 816.4
2012 270.1 614.9 885.0
2013 266.5 663.9 908.4
2014 283.5 698.6 982.1
2015 294.3 828.2 1122.5
2016 284.5 897.0 1181.5
2017 294.8 967.9 1262.7
2018 301.5 991.2 1292.7
2019 338.6 991.2 1327.7
2020 361.2 1107.9 1469.2
2021 347.0 1292.9 1589.0
2022 381.1 1426.4 1807.5
3
1Numbers come from December Annual Construction Report for the US Census Bureau, except for 2022 numbers which came from
the November Report. Dollars are counted valued as construction put in place.

United States
Construction Starts ($ Billions)
(Dodge)
In billons 2021
Actual
2022
Estimate
2023
Forecast
% change
21-22
% change
22-23
Total Construction 928.2 1,085.9 1083.4 +17% -0.2%
Residential 425.3 425 426.9 -0.1% +0.4%
Single Family 306.1 273.7 273.5 -10.6% 0.1%
Multifamily 119.2 151.3 153.4 +26.9% +1.4%
Nonresidential 298.0 417.8 375.7 +40.2% -10.1%
Nonbuildings 204.8 243.1 281.1 +18.7% +15.6%
4
ENR Magazine, November 28/December 5 , p 49

FMI Construction Put In Place
Forecast 2023 ($ Billions)
In billons 2021
Actual
2022
Estimate
2023
Forecast
% change 21-22 % change
22-23
Total Construction 1,626,44 1,752,800 1,729,477 +7.8% -1.3%
Total Residential 802,933 908,866 848,048 +13.2% -6.7%
Total
Nonresidential
546,925 565,802 590,663 +3.5% +4.4%
Non-buildings 276,588 278,132 290,776 +0.6% +4.5%
5
ENR Magazine, November 28/December 5 , p 49

Construct Connect Construction Put
In Place Forecast 2023($ Billions)
In billons 2020
Actual
2021
Actuals
2022
Forecast
2023
Forecast
2024
Forecast
Total
Construction
1499.6 1626.5 1779.9 1820.5 1927.0
Total Residential 644.3 802.9 933.1 903.0 960.4
Total
Nonresidential
855.3 823.5 866.8 917.5 966.5
Total Comm.
(For Lease)
211.0 199.4 214.2 218.6 229.6
Total
Institutional
208.7 187.2 188.6 189.2 197.1
Total Eng/Civil 360.2 358.0 360.2 382.5 411.8
Total Ind/Manuf. 75.4 78.9 103.8 127.1 127.9
6
Alex Carrick, Winter 2022-2023 Forecasts, p. 2
(Non Residential=Commercial +Institutional+Eng/Civil+Industrial)

Dodge Construction
National Growth Forecast
7
Annual % Change for $Volume of
Construction Starts
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
+12.0 +10.0 +6.0 +5.0 +2.0 +5.0 +12.0 +13.0 +3.0 -7.0 -13.0 -24.0 +2
2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
+1.0 +1.0 +12.0 +11.0 +11.0 +14.0 +7.0 +7.0 +3.0 +5.0 -7.0 +12 +17 0
ENR Magazine, November 28/December 5, 2022, p 52

Annual Value of
Construction Put in Place
(in $millions)
8
2019 2020 2021 2022
Total Private 956,272 1,093,730 1,244,971 1,420,380
Residential 508,198 637,138 783,851 887,224
Nonresidential 448,073 456,592 814,169 533,156
Total Public 334,797 344,785 353,049 374,569
Residential 6,341 8,971 9,163 9,281
Non Residential 328,456 335,814 343,886 365,289
TOTAL
Construction
1,291,069 1,438,515 1,598,020 1,794,949
1 Construction Business Owner, Jan.2023 , p.48
US Census Bureau Numbers as of October 2022.

National Development
Profile
West Midwest Northeast South Nat. Average
49.6 50.8 50.3 50.6 47.7
9
The further the index is from 50, the larger the number of firms reporting the change
Index <50- Architectural Firms are reporting decrease in billings
Index=50 –Architectural Firms are reporting no change in billings
Index>50- Firms are reporting an increase in billings
Construction Business Owner, January 2023 p. 48
West Mid States Northeast South
Dec. 2022 7.2 8.1 8.9 11.5
Dec .2021 8.4 8.2 7.5 9.0
Construction Backlog Indicator (in months)
ABC Press Release, P. 2, 1/10/2023

Turner Building Cost Index
10
Turner Building Cost Index, 2022 Q3
1967 base year at 100
Year Ave.
Index
% Change
Y to Y
2021 1199 1.9
2020 1177 1.8
2019 1156 5.5
2018 1096 5.6
2017 1038 5.0
2016 989 4.8
2015 943 4.5
2014 902 4.4
2013 864 4.1
2012 830 2.1
Quarter Index % Change
Q3 2022 1311 2.18
Q2 2022 1283 2.23
Q1 2022 1255 2.03
Q4 2021 1230 1.91

US National Construction
Optimism Quotient
103.0109.0
102.0
86.0
80.0
42.0
66.0
96.0
114.0
103.0
124.0
130.0
108.0
123.0
133.0
122.0
99.0
78.0
112.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
11
Wells Fargo 2022 Construction Industry Forecast, p. 11

Housing Production in CA
2006-2022
164280
113034
64962
36421
44762
47343
59225
8547285844
98233 100961
115670
117892
110218
105339
110913
106418
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
New Housing Units
2006 2007 2008 2009 2010 2011 2012 2013 2014
2015 2016 2017 2018 2019 2020 2021 2022
12
Information from US Fred Database 2022data is through November 2022

Last Word on 2023
Economy
“If the economy shrinks next year, no one should be surprised. We’re facing the most
widely forecast recession in history.”
Wall Street Journal, Dec 4, 2022
Of course, it is possible the nation could see a recession this year as there are
there are unknowns. If the Fed continues to push interest rates up in a largely futile
largely futile effort to constrain inflation, they may eventually create enough pain to
create enough pain to cause a recession. This remains the biggest short-run risk—albeit a
short-run risk—albeit a low one given the excessive focus on labor markets. As for longer
markets. As for longer term, there could be new imbalances forming within the economy
within the economy right now. For example, the U.S. consumer might start picking up
start picking up new debt to maintain spending at an excessively high level (note that
level (note that there has been a decline in the U.S. savings rate). But these types of
But these types of trends would have a relatively long runway before they become toxic
they become toxic to the current expansion.
So… all in all, in the year ahead, expect to be surprised largely by the lack of surprises.
the lack of surprises.
• Christopher Thornberg, PhD, Founding Partner at Beacon Economics, Blog Entry
Entry 1/13/2023
13

14
CAR 2023 Housing
Market Forecast
• Existing Single Family home sales are forecast to total 333,450 units in
2023, a decline of 7.2% from 2022 projected pace of 359,220
• California’s median home price is forecast to decline 8.8% to $758,000 in
2023 following a projected 5.7% increase to $831,460 in 2022.
• Housing affordability is expected to drop to 18% in 2023 from a projected
19% in 2021.
1 California Association of Realtors 2023 Housing Market Forecast Press Release

15
CAR 2023 Housing
Market Forecast
1 California Association of Realtors 2023 Housing Market Forecast Press Release, Oct 2022
2019 2020 2021 2022 (p) 2023 (f)
Sing.Fam
Home Resale
(000s)
398.0 411.9 444.5 359.2 333.4
Med Price
(000’s)
$592.4 $659.4 $786.7 $786.7 $758.6
Hous.Afford.
Index
31% 32% 26% 19% 18%
30 yr. Fixed
Rate Mortg.
3.9% 3.1% 3.0% 5.2% 6.6%

16
More California Notes
• CA finally recovered all the jobs that were lost during the pandemic in 10/22
• Since the outbreak of the pandemic there are more job openings than
unemployed.1
• The # of homes sold in California in 2022 is around half the level of 2021
• CA Inland communities have added jobs at three times the rate of Coastal
Communities. Since 2000, the # of housing units in Inland CA has grown at 3
times the rate of Coastal Communities
1 Beacon Outlook-California, Winter 2023 Taner Osman,

California Construction
Employment (In Thousands)
569.2
609.1
653.2
689.2
757.9
784.7
831.5
871.9
901.3
867.0
890.2
919.2
0.0
200.0
400.0
600.0
800.0
1000.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
17
BLS.Gov., State and Area Employment, Construction
Employment based on November Data since 2010

San Jose, Sunnyvale, Santa Clara
Construction Starts
($ millions)
In millions ($) 2019
Actual
2020
Actual
2021
Actual
2022
Forecast
2023
Forecast
Total Construction 5,236 3,887 5,236 5,764 5,817
Residential 1,646 1,363 1,498 1,789 1,993
Non Residential 3,164 1,983 2,832 3,334 2,878
-Comm/Manuf 2,515 1,227 1,804 2,528 1,791
Office/Bank 1,704 731 1,150 1,770 1,195
Institutional 649 756 1,028 816 1,086
Nonbuildings 426 542 907 630 946
18
ENR Magazine, December 12/19, p CANW12

San Jose, Santa Clara, Sunnyvale
Construction Starts 2011-2023
4153
4213
6127
3718
4985
6713
3830
5236
3887
6285
5764
5817
0
1000
2000
3000
4000
5000
6000
7000
8000
Total Construction
Total Construction, in Millions 2012
2013
2014
2015
2016
2017
2018
2019
2020
2021 (a)
2022 (f)
2023 (f)
19
Engineering News Record San Jose Reports-2011-2022
(2019 and 2020 are forecasted numbers) ENR Magazine, , p CANW4

Private Housing Units Authorized by
Building Permits San
Jose/Sunnyvale/Santa Clara MSA
20
1Census Bureau Statistics, through November 2022
995
4116
2645
5665
7628
9599
7262
6344
7193
8955
7118
5925
5049
5702
0
2000
4000
6000
8000
10000
12000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
# of Units
# of Units

Santa Clara County
Retail Market Breakdown (SF)
21
Kidder Mathews, 2022 3Q Market Breakdown
3Q2022 2Q2022 3Q2021
New Construction 0 13,394 5,399
Under
Construction
204,122 195,312 145,034
Vacancy Rate 4.3% 4.5% 4.2%
Net Absorption 107,193 -35,609 96,180

Santa Clara County
Office Market Breakdown (SF)
22
Kidder Mathews, 2022 3Q Market Breakdown
3Q2022 2Q2022 3Q2021
Vacancy Rate 12.38% 12.70% 13..50%
Availability Rate 18.41% 16.8% 16.2%
Sale Transactions 308,991 812,970 2,423,403
Net Absorption 461,430 1,388,322 472,616
Total Inventory 2020 (SF) 121,709,076 Under Construction 2020 (SF) 9,451,115
Total Inventory 2021 (SF) 124,807,669 Under Construction 2021 (SF) 6,700,000
Total Inventory 2022 (SF) 128,906,198 Under Construction 2022 (SF)7,417,945

Santa Clara County
RD Market Breakdown (SF)
23
Kidder Mathews, 2022 3Q Market Breakdown
3Q2021 2Q2022 3Q2022
Vacancy Rate 10.6% 9.7% 8.13%
Availability Rate 12.8% 9.7% 10.26%
Sale Transactions 2,648,398 999,691 674,583
Net Absorption 11,396 819,269 1,020,379
Total Inventory(SF) 118,649,471 Under Construction (SF) 2,544,995

Santa Clara County
Industrial Market Breakdown (SF)
24
Kidder Mathews, 2022 3Q Market Breakdown
3Q2022 2Q2022 3Q2021
Vacancy Rate 1.8% 2.1% 2.3%
Availability Rate 3.2% 2.5% 3.3%
Sale Transactions 95,329 346,267 219,777
Net Absorption 144,255 151,114 427,203
Total Inventory(SF) 49,864,206 Under Construction (SF) 309,777

Santa Clara County
Warehouse Market Breakdown (SF)
25
Kidder Mathews, 2022 3Q Market Breakdown
3Q2022 2Q2022 3Q2021
Vacancy Rate 2.85% 3.1% 4.9%
Availability Rate 3.36% 3.8% 4.2%
Sale Transactions 215.491 372,795 637,266
Net Absorption 145,947 (278,423) 710,661
Total Inventory(SF) 65,963,830 Under Construction (SF) 260,643

More Real Estate News
• 63% of the total transactions sq. ft. in 4Q22 was under
10,000 sq.ft. in Silicon Valley
• No deals were signed in 4Q22 over 100,000 sq.ft in SV
• City of Santa Clara vacancy rate 26.2%
• Downtown San Jose vacancy rate 17.4%
• There are 200 Million Sq. Ft of Office Leases set to expire
across the US in 2023.2
26
1
”CBRE Silicon Valley Commercial Real Estate Report, 4Q 2022
2
”Future of the Office” Silicon Valley Business Journal, Jan. 6, p 14

Santa Clara County Construction
Employment-Annual Average
In Thousands 2007-2022
47.5
44.5
34.6 32.431.8
34.8
37.5 39.7
43.9
48.349.349.9
53.0
50.1
51.7
54.9
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2007200820092010201120122013201420152016201720182019202020212022
27
Bureau of Labor Statistics-San Jose, Santa Clara, Sunnyvale Statistical Area
November 2022 is 57,400

Santa Clara County Construction
Employment-By Month 2022
(in thousands)
51.0
52.7
53.2
54.0 54.3
55.0
55.5 55.9
57.1
57.9
57.4
48.0
49.0
50.0
51.0
52.0
53.0
54.0
55.0
56.0
57.0
58.0
59.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
28
Bureau of Labor Statistics-San Jose, Santa Clara, Sunnyvale Statistical Area

29
Santa Clara
County Data
• Largest GDP Growth in country from 2019-2021 $307 billion to
$382 billion 1
• Grew 13.3% in 2021
• The county's growth over that total period left it with the third
largest county economy in the nation, trailing only Los Angeles and
New York, which includes just Manhattan. 2
1 Gabriel Greschler, “Silicon Valley Economy during COVID’s first 2 Years,” Dec. 16, 2022 Mercury News
2 Olivia Peterkin, “Santa Clara County GDP Growth-3rd Highest in the US” Dec. 12, 2022 Business Journal