SCOTTSDALE, AZ—More than 900 industry professionals gathered at the Fairmont Princess here yesterday for the opening day of “Development ’11,” NAIOP’s annual meeting for commercial real estate. After NAIOP president and CEO Thomas J. Bisacquino welcomed attendees to the three-day event, he handed the podium over to Scottsdale mayor Jim Lane, who gave the opening remarks.

“Scottsdale is open for business,” Lane proclaimed. According to the mayor, Scottsdale has evolved into one of the nation’s premier headquarter locations. He noted that the Scottsdale airport has over two million square feet of commercial space and city officials are “working hard” to make it easier for businesses to locate here.

Scottsdale is already the second largest employer in Arizona. The market has gained thousands of jobs in the past few years, thanks to companies such as Western Pharmaceuticals, Global Bioscience and ICE Reservations, among others, that have moved here.

“The business sector in Scottsdale is not only surviving, but thriving,” and there’s a good balance between Scottsdale’s “Wild West” desert history/mentality and the modern, business-friendly atmosphere that would attract corporations, Lane said of the market.  “We’re a community of contrasts.”

The conversation then shifted to a less positive topic: Economic uncertainty. Hessam Nadji, senior vice president and managing director of research and advisory services with Marcus & Millichap, indicated that there’s a “tug of war” going on in the economy between the positive and negative factors. Nadji moderated the opening session, “Economic Outlook: The Great Debate” with panelists Glenn Mueller, professor at the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver; and Brian Nottage, executive director with JP Morgan Asset Management.

Among the negative factors, said Nadji, are unemployment, the U.S. debt downgrade, the poor housing market and weak consumer credit. Those are being counterbalanced by retail sales, which have exceeded the previous peak; a rise in corporate profits, exports and job growth; the energy crisis, which has receded and the U.S. GDP, which is at 2006 levels.

Still, there’s been a pause in economy activity and job hiring in recent months. Nadji asked, “How much of what took place in the past four to five months has to do with the economy and how much has to do with the uncertainty and fear of the unknown?”

It’s a bit of both, said Nottage. “Historically, the US has had sharp downturns followed by sharp recoveries,” he explained. “This time that’s not the case. The cyclical trends aren’t helping, but we’re in for fundamental slow growth.”

Mueller agreed that it’s going to be a slow recovery, adding that stock market volatility isn’t doing much to boost confidence.

“I see a low possibility of a double-dip recession, and that’s partially due to increasingly global economy,” he said. Whereas US was 50% of the world’s GDP in past recessions, today it’s 19% of global GDP. “That’s been a positive.” But what’s depressing, he noted, is that the GDP of developed countries is growing at a much slower rate than the GDP of emerging markets. “The developed world clearly has problems.”

Mueller also pointed out that unemployment isn’t a good indicator of economic recovery. Employment trends are a better indicator because they’re actually growing; companies are hiring young people right out of college, and those new workers tend to spend money.

Still, we likely won’t ever see the 60-mph-type recovery like we’ve seen in the past. Now, the recovery is more like 10 to 20 mph, and even after the US gets back on its feet, “I don’t see us going past 40 mph.”

“It’s very hard to maintain a ‘muddle through’ pace,” Nottage countered. “Our economists say there’s a 40% chance that we’ll end up in another recession. We’re very susceptible to shocks to our system,” such as what’s going on in Greece and the rest of Europe.

Though the Federal Reserve lowered interest rates to help spur activity, people aren’t being enticed to buy, Nadji said. Is there anything more the Fed could do, such as lower the overnight interest rate to zero?

“Interest rates aren’t the issue. The problem in this cycle is the availability of credit,” Mueller said. “Lower interest rates are great, but if banks don’t lend to you, they don’t mean anything.”