Real Estate Outlook for Remainder of 2011

Posted August 25, 2011

In California, Columbus, Commercial, investing, Ohio

Well, regarding the commercial real estate side of this business: we were clipping along pretty well and then month after month of anemic job growth numbers, downward revisions to GDP for the first couple of quarters of 2011, fiscal problems in Europe, the debt ceiling battle, S&P downgrade, stock market turbulence, and let’s see, what else do we need in the way of bad news?

The result of all of this is that GDP forecasts for the remainder of 2011 and 2012 have been revised sharply downward from 3.1% to 1.4% for all of 2011 and down to 2% for all of 2012.

With the economy unlikely to be a short-term catalyst, strategies based on more realistic expectations of a modest and gradual return to growth are key, said Bob O’Brien, Deloitte vice chairman and real estate sector leader.

“It’s important to remember that commercial real estate was the first sector to be hit hard by the downturn so it is further along in rebounding than other businesses,” O’Brien said. “At the same time, the wall of debt maturity that will come due between now and 2015 still may present short- and longer-term challenges for the remainder of this year and into 2012.”

Christopher Lee, president and CEO of real estate consulting firm CEL & Associates, wrote this week that the prospects for a real estate recovery could wait until 2013.

“Life isn’t about waiting for the storm to pass… it is about learning to dance in the rain,” Lee wrote this week in his Strategic Advantage newsletter. “We are in a perfect storm of financial and economic turmoil and chaos that continues to create challenges for the country and the real estate industry

Given the strong start to the year, Jones Lang LaSalle said it still expects market volumes to reach its full year forecast of $440 billion, so long as current market volatility and uncertainty abates and there are no further significant economic setbacks.

I’ll now turn it over to CoStar’s Mark Heschmeyer for addition detail and comment

CoStar News – Article – On Second Thought Analysts Rethink Real Estate Outlooks for Rest of Year

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