Until then, "Austin should be ready for a continuing slowdown of our economy through the first half of next year," Angelos Angelou of Angelou Economic Advisors tells GlobeSt.com. "There's just not a whole lot of momentum coming from anywhere." That's part of an update economic forecast he delivers this morning to a breakfast gathering of the Commercial Real Estate Brokers of Central Texas. It's the second time Angelou has updated his forecast this year. In better economic times, one forecast at the beginning of the year has sufficed.
"It's the same message, right now confirmed because we also have the Sept. 11 events that we have to consider," he says, relating his updated forecast to the one he made in summer.
For the past five years, job growth averaged 5.5% in Central Texas. More jobs meant more Austin space and developers jumped in to build it to house scores of technology companies, including dot-coms running on venture capital.
In 2002, Angelou says he expects the area to slow to a rate of 2% or less, much of it coming from Austin's strong government base. "As long as the projections for information technology spending from corporate America remain stagnant, we're not going to see an uptick in the computer or semiconductor sector," he says.
Companies have cut at least 20,000 jobs in Austin this year and more are on the way. "And we are not done with layoffs in this community," Angelou says. "Throughout the first quarter of next year, there will continue to be layoffs."
This means there won't be a stimulus for the real estate market. "Next year, the absorption is going to be less than half a million sf, based on the kind of job growth that we're seeing," Angelou says. "Given that we don't see the potential for a major uptick."
He says there is about 4 1/2 million sf on the market. About 2.3 million sf of that is sublease space. Construction coming to a close will add another 1 1/2 million sf by the end of the year with another two million sf in the next three years.
The office market should move into positive territory in 2003 and through 2004, he says. "For the time being, I think we should be ready to ride out the current situation as we have been and been doing it pretty well," Angelou says.
Still, he says, "By no means should anybody be panicked. We have enjoyed the fruits of vigorous growth and profitability and, hopefully, we have stored some cash to weather some of the bad times.
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