Thursday, January 5, 2012

2012: Better? More of the Same? or Total Economic Chaos?

CoStar News Readers Give Us Their Best Bets for What's Coming in the New Year By Mark Heschmeyer
January 4, 2012

Summary: The industry leaders predict growth, stagnation and collapse of the commercial real estate market place in the United States in 2012. The leaders with positive outlooks focus on particular cities. The leaders with moderate outlooks focus on sector performance. For example, Grubb and Ellis project a 25% increase in CRE sales, assuming that the GDP grows by 2.5% and 125,000 new jobs are added each month. Dismal outlooks are based on the broad U.S. economy.

Each person backs their position with strong arugments, leaving CoStar to split the difference and posit that 2012 will be just like 2011- modest, timid growth. Because Savannah relies on its port, and because the logistics CRE market is projected to see growth, I think Savannah will be fine. I personally think the most dismal outlooks will come to fruition not all once in 2012, but most likely further down the road.  It seems that all of us "Debbie Downers" recently read "When Giants Fall" and expecting the worst.

Key Quotes:
Among the top expectations: Banks and servicers will continue to jettison the worst performing assets and seek to workout recapitalization opportunities on the better-quality assets. Similarly, institutional property investors will also continue to reposition their portfolios away from secondary markets in favor of core stable assets in primary metropolitan markets.

Multifamily properties will continue their hot streak as pent up and new demand will keep vacancies low and spur continued new construction and property retrofitting of older other property type buildings.

And, both U.S. political inaction/posturing in an election year and world economic uncertainty will continue to weigh down true recovery.

Read the full article at 2012: Better? More of the Same? or Total Economic Chaos?

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

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