It's the year of consolidation, which will increase vacancy rates and bring down rent rates, Littmann said. However, he said improvements will start to happen again in mid-2002.
"Not many owners and developers are completely backing off of projects, but there's degrees of caution all the way," Littmann said.
The economic cycle has swung back down again, he said. Years of exhubarance are winding down. Littmann said commercial lenders are especially cautious now, but have already been in that mode for the last year or so. "If anyone is just now getting cautious, it's too late," he said.
Inflation never caught up to the level of correction necessary with interest rates, he said. Rates need to be adjusted to restore the equilibrium.
The hardest hit areas are the Midwest, especially Detroit, with the recentgas crisis and competition with the automakers by the foreign markets, Littmann said. Production has been cut back and activity has declined by 4%, 1 % more than last year.
"Toyota is expanding in Alabama, and Nissan in Mississippi, but I think the industrial commercial real estate market in Michigan is going to have projects delayed. Every market will be hit in the Detroit area, even the retail sector. I was just talking to shopping mall owners who have seen a slowdown," Littmann said.
The only other area really hit hard is California, he said, which also suffers heavily from the energy crisis and dot-com deaths. However, he said the Detroit is used to cyclical fluctuations in the economy, and should break out of it.
"The last time we had a recession, we had activity decline by 10%, and as much as 19% in one year; we're not quite in that magnitude," Littmann said. "This is a mild slump for the Metro Detroit area, that's not being felt nationally."
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