2010 Southern Nevada Economic Briefing

Legislative Subcommittee on Logistics January 25th, 2010

www.rcg1.com EXHIBIT N - LOGISTICS Meeting Date: January 25, 2010 Document consists of 26 slides. Entire Exhibit Provided. The National Economy Some Important National Indicators

¾ Recession started 12/07: 25 months ago (through 01/10)

¾ National GDP Growth (Q2, 2009 – Q3,2009): +2.2%

¾ ISM Manufacturing Index (12/08 – 12/09): +70% (55.9)

¾ Consumer Conf. Index (12/08 - 12/09): +37% (52.9)

¾ Personal Savings Rate (11/08 - 11/09): +24% (4.7%)

3 NevadaNevada && ClarkClark CountyCounty

EconomiesEconomies

4 THE DRIVER: RESORT INDUSTRY Resort Industry Investment: Will They Come? Projects’ Cost ($B) by Scheduled Completion Year: 2009 – 2010, Initiated & Undetermined

$14.5 B (currently under construction) Sample Projects: $20 12,200 additional rooms aloft Las Vegas Charlie Palmer Plaza Hotel $15 Las Palmas Sample Projects: Sands Expo* City Center Sample Projects: $10 So. Highlands Planet Hollywood* Echelon Casino Hard Rock* Caesars Palace* Viva Golden Nugget* Fontainebleau Symphony Park $5 Sample Project: Wynn Resorts* Cosmopolitan

Projects' Cost ($ in Billions) in ($ Cost Projects' $11.61$3.93 $9.89 $20.55 $0 Partial Partial Partial Partial 2009 (15 projects) 2010 (8 projects) Initiated** (5 Undetermined** projects) (36 projects)

6 *Expansion/Redevelopment **Initiated or proposed projects with opening dates to be determined. Source: Las Vegas Convention and Visitors Authority (as of 11/4/2009). Las Vegas Valley Visitor Volume: 11/2008 –11/2009

3,300,000 6% Visitor Volume Nov. 2008 – Nov. 2009: +2.9% 3,200,000 % Ch. Y-o-Y 4% 2% 3,100,000 0% 3,000,000 -2% 2,900,000 -4%

Visitors 2,800,000 -6% -8% 2,700,000

-10% Growth Year-over-Year 2,600,000 -12% 2,500,000 -14%

8 8 9 -0 -09 -09 -09 -0 r'-09 '-09 ' l'-09 ' n' a n v'-09 ec' eb'-09 pr Ju ep o Nov'0 D Ja F M A May' Ju Aug'-09S Oct'-09N

Sources: Las Vegas Convention and Visitors Authority. McCarran Annual Passengers: 1990 – 2008, & 2009 YTD (Nov)

55 Sustainable Capacity (post expansion): 53 Million 50 8.9M above the 44.1M passengers recorded in 2008) 45 Ivanpah has been delayed from 2017 to 2019 47.7

40 46.2 44.3 44.1

35 41.4 37.4 36.9 36.3 35.2 30 35.0 33.7 30.5 30.3 25 30.2 28.0 20 26.9 22.5 20.9

15 20.2 19.1 10 Passengers (in Millions) 5 0

90 92 93 94 95 96 98 99 00 01 02 04 05 06 07 08 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 1 1991 1 1 1 1 1 1997 1 1 2 2 2 2003 2 2 2 2 2

2009 YTD 8

Source: McCarran International Airport; Deutsche Bank. Clark County Gross Gaming Revenue: 11/2008 –11/2009

$1,000,000,000 GGR Nov. 2008 – Nov. 2009: +6.9% 10% % Ch. Y-o-Y First increase since June 2008 5% $800,000,000

0% $600,000,000 -5% $400,000,000 -10%

$200,000,000 Growth Year-over-Year Gross Gaming Revenue Gaming Gross -15%

$0 -20%

8 -0 -09 ' r'-09 a y'-09 n'-09 g'-09 ec' eb'-09 a Jul'-09 u Nov'08D Jan F M Apr'-09M Ju A Sep'-09Oct'-09Nov'-09

Sources: Las Vegas Convention and Visitors Authority. THE JOB MARKET Clark County, Nevada & U.S. Job Growth: 11/1991 – 11/2009

16% Clark County 14% Nevada 12% U.S. The Storm 10% Starts-12/07 8% 6% 4% 2% 0% -2% Year-over-Year Growth -4% -6% -8%

4 5 6 7 1 2 3 7 8 9 -93 -9 9 9 9 -98 -99 -00 -0 -0 0 -06 -0 0 0 v v v v v v v ov ov- ov- ov- ov ov- ov- Nov-91Nov-92No N N N N No No No No N Nov- Nov-04Nov-05No No N N

Source: Bureau of Labor Statistics. Southern Nevada Index of Leading Economic Indicators: 12/1995 – 12/2009

135 Dec. 2009 = 125.5 (Jan 1980 = 100) 130

125 Value

120

115 Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Source: UNLV Center for Business and Economic Research. Clark County Job Growth: Total Nonfarm & Industrial-Related* 11/1991 – 11/2009

20%

15%

10%

-5%

-10% Total Nonfarm Year-over-Year Growth Industrial-related -15%

-20%

4 5 6 7 1 2 3 7 8 9 -93 -9 9 9 9 -98 -99 -00 -0 -0 0 -06 -0 0 0 v v v v v v v ov ov- ov- ov- ov ov- ov- Nov-91Nov-92No N N N N No No No No N Nov- Nov-04Nov-05No No N N

13 *Industrial-related industries include Construction, Manufacturing, Transport. & Warehousing and Wholesale Trade Sources: Bureau of Labor Statistics. Clark County Employment: Total Nonfarm & Industrial-Related* 1990 – 2009 Estimates

2009E Total Nonfarm: 865,433 Industrial-related: 157,692 1,000,000 30% % Share of Industrial-related to Total: 18% 900,000 25% 800,000 700,000 20% 600,000 500,000 15% 400,000

Employment 10% 300,000 200,000 5% 100,000 0 0% % share of Induststrial-related to Total to Induststrial-related of share %

90 91 97 03 05 06 9 9 992 993 994 995 996 9 998 000 001 002 0 004 0 0 007 008 9E 1 1 1 1 1 1 1 1 1 1999 2 2 2 2 2 2 2 2 2 00 2

14 *Industrial-related industries include Construction, Manufacturing, Transport. & Warehousing and Wholesale Trade Sources: Nevada DETR. Clark County, Nevada & U.S. Unemployment Rates: 11/2000 – 11/2009

14% Nov. 2009 Clark County = 12.1% Nevada = 12.3% 12% U.S. = 10.0%

10%

6% Unemployment Rate (%) Rate Unemployment 4%

2% Nov'-00 Nov'-01 Nov'-02 Nov'-03 Nov'-04 Nov'-05 Nov'-06 Nov'-07 Nov'-08 Nov'-09

Source: Nevada Department of Employment, Training and Rehabilitation. TAXABLE RETAIL SALES Clark County & Nevada Taxable Sales 10/2005 – 10/2009

$5.5 Oct. 2009 growth over Oct. 2008 Nevada Nevada = -17.8% Clark County $5.0 Clark County = -19.0%

$4.5

$4.0

$3.5

$3.0

Taxable Sales ($ in Billions) $2.5

$2.0 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09

Sources: Nevada Department of Taxation. THE DEMOGRAPHICS Clark County Population: 1990 – 2008 Estimates & 2009 – 2013 Projections

2,500,000 2009 – 2013 CAGR: 1.2% 2,000,000 1990 – 2008 CAGR: 5.3% 2,081,700 2,055,900 2,031,700 2,008,951

1,500,000 1,987,337 1,967,700 1,954,300 1,874,800 1,796,400 1,715,300 1,620,700 1,549,700

1,000,000 1,485,900 1,394,400 1,327,100 1,261,200 1,193,400 1,119,100 990,600 1,055,400

500,000 916,800 873,700 835,100 770,300

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009P 2010P 2011P 2012P 2013P

Note: Clark County Comprehensive Planning Department 2009 prelim. estimate = 2,006,347. Source: Nevada State Demographer. Clark County Median Family Income Reported vs. Inflation-Adjusted (in 1995 $): Q3, 1995 – Q3, 2009

$70,000 Reported $65,400 $65,000 Adjusted (in 1995 $) $60,000

$55,000

$50,000

$45,000

$40,000 $46,300 $41,100 The look of wage stagnation Median Family Income Family Median $35,000

$30,000

'96 '98 '00 '04 '06 '08 3 3 3 3 3 3 Q3'95 Q Q3'97 Q Q3'99 Q Q3'01 Q3'02 Q3'03 Q Q3'05 Q Q3'07 Q Q3'09

Source: National Association of Home Builders. COMMERCIALCOMMERCIAL MARKETMARKET

21 Las Vegas Valley Industrial Market Vacancy, Absorption & Completion Trends: Q4, 06 – Q4, 09

2.5 Absorption 18% Completions 16% 2.0 Vacancy ) 14% 1.5 12% 1.0 10% 0.5 8% 0.0 % Vacant 6% -0.5

Square FeetSquare (in Millions 4%

-1.0 2%

-1.5 0% Q4, Q1, Q2, Q3, Q4, Q1, Q2, Q3, Q4, Q1, Q2, Q3, Q4, 06 07 07 07 07 08 08 08 08 09 09 09 09

Source: Restrepo Consulting Group. Years of Industrial Supply until Stabilized Rate (Based on Existing Vacant & Under-Construction space, & 10-year Average Absorption)

17,500,000 16,399,900 Years of supply will 15,000,000 constrain lending on 12,500,000 new projects

10,000,000 Vacant Space Under Construction 7,500,000 10-Yr Avg. Absorp. Square Feet Square 5,000,000

2,500,000 370,600 736,900 0 Industrial Market (2.1 Years of Supply)

Source: Restrepo Consulting Group. CONCLUSIONCONCLUSION

24 In Conclusion

THE NEW REALITY ¾ Really bad, but NOT a depression ¾ Southern Nevada recovery will lag national recovery ¾ Flat will be the new “up” cycle once recovery start ¾ The other dropping shoes: commercial r.e. & personal credit cards, impact on Southern Nevada?

WHAT KIND OF RECESSION? ¾ Consumer weakness to continue into 2011 ¾ Start of sustained economic recovery sometime in 2011? ¾ Start of sustained local housing recovery in 2012?

Source: Adapted from Chris Thornberg. Contact: John Restrepo 702-967-3188 [email protected] www.rcg1.com