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Recovery Could Look Like a 'U'

NEW YORK CITY-Fundamentals will continue declining nationwide through 2010, followed by a period of slow, sustained growth, Grubb & Ellis executives said here Wednesday.

By Paul Bubny | Updated on November 19, 2009

NEW YORK CITY-Somewhere between the bullish V-shaped recovery and the dreaded “double dip” of a W-shaped one is where Bob Bach, SVP and chief economist at Grubb & Ellis, thinks the US economy will end up. Speaking here Wednesday at the company’s annual Real Estate Forecast preview for media, Bach predicted a U-shaped recovery, with fundamentals continuing to decline well into 2010, after which there will be a long, slow period of sustained growth. “Two-thousand-ten won’t feel like a classic recovery, but it will certainly feel better than 2009,” he said.

While Bach noted that “we’re light years ahead” compared to the fear and paralysis that gripped the industry a year ago, he said he anticipates little economic growth through next year. He cited a W-shaped recovery–which once again loomed as a possibility Wednesday after reports that housing starts unexpectedly fell in October–and long-term debt growth as potential risks to the national economy.

Regardless of whether October’s construction slump was a fluke after months of gains, Bach said all indications point to home ownership continuing to trend downward to historical averages. That bodes well for the rental market, which is why Bach believes the apartment sector will be the first to reach bottom and to begin gradually recovering thereafter.

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