Strategist: Outlook Bright For Real Estate

DENVER-Glenn Mueller, investment strategist for Legg Mason’s real estate securities, predicts the current real estate downturn will be short-lived. Mueller was keynote speaker at the recent Expo 2001 Rocky Mountain Commercial Real Estate and University of Denver Economic Forecast.

During the next decade, the real estate cycle will benefit from national population growth of 2.4 million people per year.

To put that into perspective, that is the equivalent of adding a new Denver metro area every year.

While much attention has been paid to Baby Boomers, he says there’s an even greater population explosion on the horizon — the so-called Echo Boom children. They are the children of Baby Boomers who were bornbetween 1965 and 1984.

Addition of Echo Boom children into the workforce means that housing demand and technology are here to stay. “Echo Boomers will continue to generate new job growth,” Mueller says.

In addition, real estate fundamentals are much better today than they were during the 1980s, when the liberal flow of funds fueled an oversupply of real estate.

The availability of data today and the increased scrutiny of the public markets have created more efficient supplies of capital, which will continue to keep new construction in balance with leasing demand, he says.

Once the economy starts to improve, Mueller says evidence suggests a sustained real estate expansion where demand and supply for commercial real estate will grow together, creating supply and demand equilibrium.