IF THERE IS A RECESSION, HOW WILL NEW JERSEY FARE?
Although the country is bracing itself for a possible recession, this week's poll respondents proved to be surprisingly optimistic. Nearly half (41%) believe that New Jersey will weather a recession without a problem. Slightly more than a third (32%) predict a bleak future, however. The rest (26%) are waiting to see what happens. Stephen Jenco, Grubb & Ellis' client services manager, was somewhat cautious in his response to the question, leaning towards the wait-and-see camp, although he doesn't seem to think that the state will sail through a recession with no problems at all. Here are his thoughts:
"If you're looking at the economy as a whole, New Jersey has been a little sluggish compared to the rest of the country. When you look at the number of jobs that have been created nationally and you compare that to New Jersey, New Jersey's been a little behind, and that's when the national economy was doing pretty well. If there's a recession and the national unemployment rate starts to rise, you're going to see even more employment challenges in New Jersey.
"At the same time, New Jersey is still a destination for retailers, for example. We have a strong consumer market. And if there is a recession, you could anticipate lower consumer spending, which would result in lower GDP, which would have a domino effect with lower corporate earnings, reduced corporate real estate requirements, etc. Consumers might spend less, but you still have the metro region here, which puts us on the radar screen for many retailers nationally and locally.
"One of New Jersey's advantages is its geography, which plays a powerful role in decisions, and that translates into the real estate market as well. From an industrial standpoint, we have the ports, and international trade through the ports also drives the industrial market, which is why New Jersey has transitioned from manufacturing into a warehouse and logistics market for many companies.
"We still have a skilled labor force, despite some reports I've been seeing, such as Rutgers' recent study on the net loss of population in the state. Although there may be cost savings and advantages on a tax basis by relocating to another part of the country, many companies realize there could be a challenge finding skilled workers elsewhere. New Jersey has always come through in terms of labor. Part of that is being provided and replenished by our schools and universities.
"You've seen that transition from a less skilled manufacturing labor force to a more skilled white-collar labor force, which plays well into where the economy and where the industry are going. There are so many different factors at play that suggest what impact the recession would have on New Jersey and the rest of the country."
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