We do not see the market recovering until a few major indicators begin to rise such as jobs, port traffic and more jobs. The economy is going to have a very difficult time recovering without a rise in employment. The latest figure is pointing unemployment around 12% however we feel it is closer to 20%.
To Keep it Simple
Jobs = spending
Jobs = vacancy absorption
Jobs = a recovery in the economy
A recent article from By Wanfeng Zhou at ABC, NEW YORK (Reuters) – “Consumer confidence rebounded in March, while home prices rose in January for the eighth straight month according to a closely watched housing index, bolstering hopes for a sustainable economic recovery.
Another recent article by Deloitte was just published. ” Although there are indications the economy is improving, most executives are pessimistic about the outlook for the commercial real estate market in 2010. While many expect commercial property values and rents to continue to decline over the near term, some companies see this as an opportunity to buy properties at bargain prices
Deloittle found that roughly three-quarters of executives expect both commercial property values (76 percent) and asking rents (73 percent) to continue to fall in 2010, according to a recent online survey of more than 325 executives. In fact, 63 percent of executives predict that a full recovery of the market will require two to three years, while 29 percent believe it will take four years or longer. Only 8 percent anticipate a full recovery within the next year.”
Articles like the above offer positive figures and we feel we are in the 3rd inning of this ballgame. Today is not time to get back into the game but rather build stronger realtionships with your brokers and tenants. When the market begins to turn around, companies with strong relationships will be at the forefront of the recovery.
Here are our Key Points to the Market
-High Unemployment = High Vacancy Rates
-1.5 Trillion Of Debt Maturing
-“Extend And Pretend” Will End in 2011
-Price PSF is Great! (But There Aren’t Any Tenants)