EAST RUTHERFORD, NJ-Last week was an adventure-park ride for New Jersey, fiscally speaking–dangling on the federal “cliff,” staring into the yawning gap of a state-revenue shortfall, plus the bungee cord bounce provided by U.S. House Republicans on superstorm-Sandy recovery aid. Perhaps it’s not surprising that commercial real estate experts’ predictions about how 2013 will go leave room for shaky ground ahead.
Cushman & Wakefield’s Gualberto (Gil) Medina tells GlobeSt.com his prognosis is equivocal: “There is a lot to be concerned about and a lot to hope for in the coming year.”
He was moved to reach for literary allusions to describe the sorely mixed outlook: “I think 2013 could be a combination of ‘A Tale of Two Cities’ and ‘Great Expectations.’ It could be the best of times, the worst of times,” he paraphrased from the Charles Dickens work. “In terms of fiscal policy,” he says, “it could be the age of wisdom, the age of foolishness.”
Medina, a former state director of Commerce, said “great expectations” arise from resolution of some of the widespread uncertainties affecting the global, national, and state economies in 2012, especially the presidential election and the crossing of the “fiscal cliff.”
“On the national level, business profits were the highest in 2012 that they have been in decades,” says Medina whose company is based in East Rutherford. “Strong balance sheets should spur economic growth this year for the country.” But New Jersey – as he and other real estate professionals have pointed out – had consistently lagged the nation in economic recovery, even before the Oct. 29 hurricane tore new multi-billion-dollar holes in its landscape.
Last week, new unemployment figures were released, showing the state’s jobless rate has dropped for three months in a row, but is still 9.6%, whereas the national average is down to 7.7%
Also last week – midway through the fiscal year - the state’s budget analyst reported a $705 million shortfall in revenue collections, meaning promised property and income tax cuts could have to be scrapped.
Then, there was the week’s wildest ride: Congressional Republicans sent a $60 billion storm aid bill into the abyss by failing to vote on it before the term ended. Gov. Christopher J. Christie, along with New York state officials, responded with superstorm force, demanding some action. And newly sworn-in House members were called to vote, but only on an initial $9.7 million to replenish an expiring storm-aid program.
Afterward, NAIOP New Jersey’s Michael McGuinness called the glass half-full. “All in all, I’d say it was a good week compared to what might have been,” he told GlobeSt.com after the storm-aid approval vote Friday.
He cited the extension of depreciation and capital gains provisions in the new federal tax bill passed to avert the so-called cliff as being crucial to commercial real estate interests in the state.
And he said the start of reconstruction work to repair storm damage will provide a boost in revenue and jobs in at least some parts of the state economy.
“We’re not where we thought we would be, that’s for sure,” said McGuinness, whose organization will host a representative of the federal U.S. Department of Housing and Urban Development at a Jan. 29 seminar on post-Sandy recovery.
“The year ahead is going to be a tough one, in terms of generating revenues, bringing in ratables and jobs,” he said. “We know that, but we don’t know too much yet about what the extent of Sandy’s impact will be on the economy.
“I have confidence the administration and the industry will be working very hard on it,” McGuinness said, “and that’s all we can do, really.”