Not surprisingly, respondents to GlobeSt.com's most recent Quick Survey say the truth lies somewhere in between. Also of note, the added economic weight imposed by the terrorist attacks of Sept. 11 at last seems to be lifting.
Some 29.5% of our participants report that Q2 will bring about the upturn, while a close 27.7% believe it will happen in the third quarter. A total of 25.9% of our participants side with the optimistic pundits, while 16.9% throw their dour support in with Zell.
Make no mistake: the issues we face now are strictly fiscal. The impact of Sept. 11 on the industry is proving itself to be short-term at best.
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"Sept. 11 was tragic, but it was not a significant impetus to the economic recession," another writer agrees. "The hotel industry was most impacted by Sept. 11 and probably won't come back until late 2003. All other sectors should see a turnaround toward year-end 2002."
Of course, not everyone passes off the industry impact of the attacks as easily. "Sept. 11 will deepen and lengthen the recession," counters a survey participant. "Its impact was dampened in the short run by the combination of lowered interest rates, domestic auto financing and the Fed policy starting to work. However, the long-run impact will be to attenuate the recovery bounce due to induced inefficiencies in airline travel, cross-border commerce, security costs and redirected resources."
Whenever the recovery begins, there will be work to get done, with 64.2% of our respondents reporting that CBD vacancies in their local markets are higher than 10%. By contrast, only 13.1% report that their local downtowns have vacancies below 10%, and 22.7% say 10%'s the number.
It's important here to discuss the geographic breakdown of the respondents to this week's Quick Survey. Almost a quarter (24.5%) work on the West Coast, followed closely by the 23.5% who ply their trade in the Northeast. This is followed by the Southeast, Southwest and Midwest, making up 17.4%, 16.9% and 15.9% of the aggregate respondent profile. Only 1.8% of our participants work in Europe.
Just as with predictions for recovery, the expected lag time between the general economy and real estate's rebound is all over the map. Our surveyed executives aren't buying into theories that the lag is shrinking, since 59.7% express their opinion that it will take longer than six months, and 31.1% say it will be at least three months. Only 9.2% believe that there is no longer any lag time.
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John Salustri
John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.
