Speaking at the MIPIM property show in Cannes, France, Dr Jim Smith said that employment in the USA should increase by more than 2 million jobs in 2003, which will generate demand for office space and enhance overall economic activity. He says that the conflict in Iraq is a short-term phenomenon and, by the end of 2003, the USA economy should be growing fast. Dr Smith said: 'We plan on 4.2% real GDP growth in 2003, and 3.8% growth in 2004. President George Bush's tax proposals and investment incentives, as set out in the January State of the Union address, sends a clear signal to the economy.'

Dr Smith spoke along side Dr Angus McIntosh, head of research and partner at King Sturge, who remained more cautious in is outlook. Dr McIntosh pointed to the 60% fall in office rents in San Francisco over the last two years and the 40% fall in New York. 'If the American economy grows by 3% or more over the next few years, an office rental growth revival can be expected. However, many cities contain grey vacancy space with empty buildings, which corporations are not openly marketing,' he said. 'With relatively low unemployment in many cities and very high vacancy rates in the office markets the challenge will be to produce high quality work environments to attract knowledge workers. Urban congestion, improving urban transport and creating good quality housing will be the challenges for urban governance in the 21st century.'

Dr McIntosh added that other overlapping themes for the property world in the 21st Century will be China and Asia-Pacific's faster growth compared to North America or Europe; and office rental fluctuations in London, Frankfurt and Madrid.