MINNEAPOLIS—As reported in GlobeSt.com, US Bank has just hired industry veteran Rex Rudy to head its commercial real estate division. Although the Charlotte-based Rudy says it's too early for him to sketch out the bank's strategic direction, like many top people in the industry he, with a few notes of caution, exudes confidence about the future.
Rudy tells GlobeSt.com that he expects that the economy will continue on its path of relatively measured growth, around 2% to 3% annual growth in GDP and the Fed will continue its policy of fostering a low interest environment. “This bodes well for us in the long-term.”
And so far, the sectors that have led the way in the recovery still look good. The multifamily and industrial markets, of course, have been on fire. And although some people have voiced concerns that in at least some markets, especially the top gateways, multifamily developers have overbuilt, “we've not seen any evidence of that yet,” Rudy says, since those units do get absorbed.
Still, there are some serious concerns. “Single-family homebuilding is still a little bit depressed compared to long-term trends,” Rudy says. And he does not expect to see a true revival in that sector “until we see more of a breakout from the economy.”
Job creation has been relatively solid. In April, the economy added 223,000 jobs, the Labor Department reported, and the unemployment rate sank to 5.4%. But the March numbers, first reported as 126,000, were revised down to an anemic 85,000. And wage gains once again failed to materialize.
“There is still a lot of global weakness,” Rudy says, especially in many European countries, and many in the US worry that this sluggishness could have an impact here in the US. “It's tough for many companies to have more conviction about hiring.”
However, the economy has improved enough that Rudy says “we will probably get a move from the Fed sometime in 2015,” he says, to “get us out of this zero rate environment. I think most of us expect a 25 bps increase,” probably in the third quarter. But he also believes that the economy is strong enough that such an interest boost won't have a big impact.
The division he now heads has 350 employees in 24 commercial real estate offices across the US, and how they respond to this and other developments is something Rudy is not yet prepared to discuss. “In thirty to sixty days we will have more things to talk about as I get my feet wet.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
