More of the Same
We put way too much stock in the passing of the old year and the coming of the new. I’ve always felt that other than an excuse to party (never a bad thing) New Year’s celebrations are much ado about nothing. Just the rolling of days, one after the other. Only this and nothing more.
Such is true in our field. Expect more of the same in 2013. We’ve gotten over the uncertainty expressed prior to the election and launched almost immediately into the uncertainty of the so-called fiscal cliff. Most pundits believe that whatever happens with the issue inside the Beltway (let’s see how long this promise of cross-aisle cooperation lasts. We’ve heard that before) it will be but a blip on the CRE radar.
Short of those expectations missing the mark, we’ll just continue our long, slow slog to economic stability. Jobs will continue to inch along, beefing up the leasing market and so values. Or, as CBRE economist Arthur Jones said just this morning with the release of the firm’s most recent economic forecast: “Although concerns remain about the recovery in the face of headwinds both at home and abroad, we have seen consistent improvement in broader markets and believe that the economy is slowly gaining traction. Businesses remain healthy and continue to hire and we have seen significant improvement in the housing market, which should provide the impetus for stronger growth by the middle of 2013. As a result, we expect office fundamentals to continue their slow, but steady, recovery throughout the next year.”
On the capital-markets side, Emerging Trends , the annual opus from PwC and the Urban Land Institute (authored principally by our blogger Jonathan Miller), predicts that “mixed signals” will pervade, with “a moderate oversupply of equity capital and a moderate undersupply of debt.” Despite improving fundamentals and low interest rates, the report notes, “lenders continue to hold on to a slew of underperforming loans in a glacial deleveraging and hundreds of billions of commercial mortgages reach maturities. Four years after the cyclical bottom, prices have not been reset.”
My takeaway is the word moderate. There’s your 2013.