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Spent

Consumers are no longer living on debt and have begun the long march to the recovery of savings and security. This does not bode well for commercial real estate.

By Tony LoPinto | Updated on July 19, 2011

Spent I am a photography buff and have always been a photo gadget junkie, rushing out to pick up the latest model Canon camera with 18 billion pixels (when my current camera’s 10 million will do just fine). This weekend I saw an ad for a super slick new model, but alas, I rationalized that my current camera will be more than adequate for years to come. Coincidentally, on Sunday I picked up a copy of the New York Times and read David Leonhardt’s article: “We’re Spent.” Leonhardt argues that the economy’s inability to shake the Great Recession is due largely to the burst of the consumer bubble. We are in an era when the consumer will make do with less and not purchase the new car or stove (or camera) every few years–and forget about impulse purchases. Consumers are no longer living on debt and have begun the long march to the recovery of savings and security. If this holds true, and as I reflect on the domino effect of the end of the consumer economy, I can’t help but feel that the impact on real estate will be profound. Eventually we’ll need less of everything, and that translates to smaller retail stores, fewer warehouse distribution centers, fewer new homes–and who will need self storage facilities? And so on and so forth. On reflection, maybe I should go out and buy that camera.

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