At a client meeting last week, a top broker asked me when wewould see "some good news." Come to think of it, I´ve been writingthis blog since November 2007, and it´s been all downhill sincethen. I asked him what he thought---he helps oversee a 1500-plusnationwide network trying to source deals. He said he didn´t know,but except for a few isolated markets-like San Francisco and maybeWashington DC, most places are still bottoming. He added untilplayers are comfortable about a turnaround, the transaction marketswill remain compromised. Well, that´s certainly the conventionaltake and makes sense.


So what does that mean for timing a recovery? Well, it´s still agood bet that commercial markets will stop falling during 2010. Thebig pension fund accounts have taken huge write downs, approaching40%, on their institutional quality portfolios. They may loseanother 5-10% before they´re done, but most of the depreciation isalready out of the way.


Now keep in mind, the commercial real estate markets trailedhousing and the stock market into the tank by a good 18 months totwo years. Housing arguably hit bottom about a year ago andstruggles for any lift. The stock market began a bull run lastspring reversing part of its steep fall. The lag suggestscommercial properties will bottom out during the second half of theyear-higher quality properties before B and C. The bigger 24-hourhour gateway markets will recover more quickly-that´s why San Franand DC appear ahead of the curve. New York will be an earlyconvalescent too.


But crashing out is one thing, what about the rebound? Willcommercial markets mimic housing´s trough of pain and stay down foran extended period? The jobs situation will be the key, as I´vebeen saying repeatedly. You´ve got to believe that hiring will pickup by summer. The first half of stimulus has been spent and thatbasically cut the losses. The next half will flow through thesystem over the next year and that should start to push down theunemployment rate. Tempering some jobs gains will be cutbacks bystate and local governments, who need to balance budgets-morepublic sector jobs and jobs that rely on public sector funding willget slashed over the next nine months. That just won´t be helpful.In effect, one government hand (the states) reduce jobs, whileanother (the Feds) will need to increase payments for unemployment.Either way that´s not going to fill buildings or prompt a majoruptick in consumer spending.


The stimulus funding has bought time, but hides the fact thatthe private sector shows few signs of ramping up hiring. Financialsector regulation likely will clamp down on practices, which hadcreated lots of jobs for mortgage brokers, traders, and dealmakersin the go-go days.

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Jonathan D. Miller

A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.