WASHINGTON, DC-The economy--and by extension, the commercialreal estate industry--is in the very beginning stages of a newcycle of expansion, according to the Mid-Year NationalForecast by Cassidy Turley. To be sure, it is not going tofeel like a new beginning for the commercial real estateindustry for several more months, Kevin Thorpe, chiefeconomist at Cassidy Turley, tells GlobeSt.com. "Real estateis a lagging indicator of six to nine months."

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But given the progress the economy has made, he is projectingpositive office absorption nationwide by Q3 and vacanciesbeginning to stabilize in 2011. By the end of 2011, rents willstart to push up in certain top tier markets--something thatis already beginning to happen in some Washington, DCsubmarkets. "I would even argue that we could see rent growthnationwide by the end of 2011," Thorpe says. By 2012, he adds,the recovery will have spread to secondary andtertiary markets. Also in 2011, he predicts, value addproperties will start to trade. "Up until now the money hasbeen chasing core, but we are already seeing signs ofinvestors becoming interested in value add."

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One factor behind Thorpe’s positive assessment is that theeconomic recovery is increasingly shaping up to be ajob-creating one--as opposed to the dreaded specter of ajobless recovery. In April, for instance, the economy created 290,000jobs.

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The one metric Thorpe is keeping an eye on, though, is theConsumer Confidence Index, which has posted persistently lowconfidence. The possibility of a double-dip recession cannotbe completely ruled out, until the Index is greater than 80,he says. As of May 2010, it registered at 63.3.

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Through April 2010, national office sales volume has totaledjust $5.1 billion and industrial volume totaled $2.9 billion,compared to $55.4 billion and $15.5 billion, respectively,which occurred from the January to April period during thepeak year of 2007, the report also said.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.