Everyone speaking on the economics panel agreed that the recession is here. But the question asked by T.D. Gibson, chief economist, retired, California Department of Finance, was on the minds of everyone attending: was it over? Looking forward he saw positive signs in the government's current economic policy and its rising stream of spending post-9/11.
Jack Kyser, chief economist, Los Angeles Economic Development Corp., noted a series of transitions in the Southern California economy. The tech crash, a wind down of commercial aircraft production, weakening tourism and general manufacturing job loses were all cause for concern. However, increased defense spending, interest in better security technology and the motion picture industry ramping up after the treat of strike all point to recovery, he adds.
The advisors who spoke after the economists were not as optimistic. Sanford R. Goodkin, principal, Sanford R. Goodkin & Assoc., offered a skeptical opinion. He says the only certainty is the unknown and that when change comes it is sudden and great.
Edward C. Lubieniecki, senior vice-president, Grubb & Ellis Co., shared his concerns. His clients are worried about the economy remaining flat. He adds that significant growth is necessary to drive growth. The slow economy affects the demand on real estate, and he is cautious about the possibility of rising interest rates.
All the advisers, including Martin Griffiths, partner, Andersen, and Jay Leupp, managing director, Robertson Stephens, agreed that a down economy offers unique opportunities for real estate. One such opportunity is the corporate sector, which has an abundance of real estate on its balance sheets that often can be acquired during down times at bargain prices.
One voice that went against the general consensus was Sam Zell, chairman, Equity Group Investments. The crowd listened attentively as he said, "9/11 will not have much of an impact on real estate." The terrorist attack simply made the recession already in motion more pronounced, he added.
Zell advised those in attendance to be more professional and make better investments, as he predicted a Darwinian future of consolidation. "Fewer players, making better bets," he gave as the rally cry for the coming year.
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