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DALLAS-Amid the daily bloodbath of Wall Street, a Texas-based leading economist yesterday advised investors, developers and brokers to view the rash of federal bailouts as “investments” predestined to yield a higher return down the road. And foremost, be glad to be doing business in Texas or the state of Washington, where jobs, rents and population are bucking US trends.

“No matter what the government economists tell you, we’re in a recession. But, don’t be too discouraged. You’re in a different state,” Dr. Ted C. Jones, senior vice president and chief economist for Houston-based Stewart Title Guaranty Co., told 100 professionals in two sessions at Dallas Country Club at 4100 Beverly Dr. in North Dallas. Among Jones’ concerns for the near term, though, is the ability of owners of performing existing buildings to refinance when notes come due.

Jones, like other economists, predicts the road back is going to take several years, perhaps without any measurable pickup until 2011 if a Credit Suisse analysis is on target. Commercial real estate values are forecast to drop 15% to 25% in the next several years, he said, citing New York City-based Keefe, Bruyette & Woods’ research.

Still, Jones said that government’s plan to take 80% interest in Fannie Mae and Freddie Mac and bail out American International Group isn’t as dismal as some would believe. AIG’s $85-billion bailout is predicted to reap $110 billion on the tail end of the deal, he said. As for Freddie and Fannie, a profit most likely will be turned when the lion’s share of the assets are sold again.

“This bailout is more like an investment,” Jones said. “I don’t have a problem with the US making a good investment.” As for Goldman Sachs, he said the government’s measures most likely saved many banks from going under due to their cross-over ties.

Where the Dallas/Fort Worth-Arlington MSA has an advantage is it’s picked up 68,000 jobs in the past year while most other regions lost significant ground and unemployment climbed to 6.1%. Just last month, the nation lost 84,000 jobs.

“You’re different in Texas and Washington state,” Jones said. From the jobs’ perspective, the D/FW-Arlington MSA is perking along at 50% above its 10-year norm.

From the housing market’s perspective, Jones pointed out that rents are climbing and overbuilding isn’t a problem. Typical markets produce 1.25 to 1.5 net new jobs per new dwelling unit and the North Texas core is producing 1.71 net new jobs per unit. If there is a concern in the marketplace, he said it’s embedded in the 12.8 million sf of under-construction retail.

From the capital market’s viewpoint, Jones said the region has been able to buck cap rate trends because many investors recalled the 1980s and shied away from the turf. He said that advantage eventually could disappear as younger investors climb to the top of their companies. But for now, the region has higher cap rates due to investors’ long-term memories of Texas in the late 1980s.

Jones acknowledged that the US deficit isn’t without its concerns. “A deficit isn’t bad by definition,” he said, adding the defining point is whether or not the capital is used to create jobs and improve income levels.

Jones pointed the finger of blame for today’s financial turmoil on Alan Greenspan when he lowered the interest rate to 1% and the government’s push to increase the number of homeowners, which went from 65% to 72%. “That’s not sustainable,” he said, adding today’s quick fixes are aimed at “trying to avoid recession more than trying to avoid inflation.”

According to Stewart Title, commercial lending dropped 63% in the past year. Hotel loans took the biggest hit, plunging 87% followed by healthcare at 66%. Office loans dropped 65%; retail, 63%; industrial, 57%; and multifamily, 42%. The Stewart analysis shows CMBS is 98% dried up, with commercial banks down 29% on their loans and life insurance companies off 27% from one year ago.

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