The U.S. economy is in the midst of a “U-shaped” recovery that will continue to be sluggish in 2010 but pick up steam by 2011 and beyond.
That was the consensus outlook of a national panel of experts speaking at the BizTimes Commercial Real Estate & Development Conference last week at Potawatomi Bingo Casino. More than 400 people attended the conference.
For the short term, the panelists expect a “jobless recovery.”
They are encouraged that the nation’s gross domestic product improved in the third quarter. Employment will be the next lagging indicator, followed by occupancy rates at properties.
The panelists are most bullish on the industrial space market, and they said that should bode well for the Milwaukee region, rather than the coasts.
“I think Milwaukee and the Midwest in general is the best-positioned region in the United States. I would be rather upbeat. It will be slow, but it will be steady,” said Rhyne Brown, executive vice president of client development at NAI Global.
Jack Durburg, executive managing director of the Chicago region for CB Richard Ellis, and Ross Moore, executive vice president and director of market and economic research at Colliers International, agreed that the industrial property market is better-positioned for recovery than office or retail.
As jobs are created, consumer spending will rise, followed by the need for additional manufacturing and distribution, which will benefit the Midwest, according to panelist Maria Sicola, executive managing director and head of research for the Americas at Cushman & Wakefield Inc. in San Francisco.
Robert Bach, senior vice president and chief economist of Grubb & Ellis Co., said the industrial market is challenged by a shortage of demand, rather than an “over-supply” problem.
The panelists said they are “doves” about worrying about the threat of inflation, and they said the credit markets are slowly loosening.
Banks are engaged in a practice of “extend and pretend” in addressing distressed real estate liabilities on their balance sheets.
Brown predicted a “managed tsunami” of bad commercial real estate debt coming due, and he said up to 200 more banks may need to be closed by the Federal Deposit Insurance Corp. (FDIC).