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Emerging Trends and the View in LA

I’m out in Los Angeles presenting Emerging Trends in Real Estate 2012, which I author for PricewaterhouseCoopers and the Urban Land Institute, at the ULI Fall Meeting. The headline for the annual forecast is next year and the year after for that matter will be a “long grind” for the real estate industry. Jobs growth will not spur enough demand for space to push fundamentals into a healthy recovery.

By Jonathan D. Miller | Updated on October 28, 2011

I’m out in Los Angeles presenting Emerging Trends in Real Estate 2012, which I author for PricewaterhouseCoopers and the Urban Land Institute, at the ULI Fall Meeting. The headline for the annual forecast is next year and the year after for that matter will be a “long grind” for the real estate industry. Jobs growth will not spur enough demand for space to push fundamentals into a healthy recovery. And although commercial markets have stabilized and we’ve seen cap rate compression in the top 24-hour gateways, rent growth isn’t in the cards to provide much in the way of future gains. In addition, most secondary and tertiary markets will remain in a limbo state of non-recovery as we wait out an economic rebound. Well, don’t hold your breath.

The top Emerging Trends market is again “recession proof” Washington DC, but ironically it’s the only market among the 51 surveyed that showed a rating decline-albeit small–from last year’s report. Survey respondents still believe DC and New York (#4 in the survey) are the best places to park dollars over the long-term, but they are a bit concerned about investing at recent pricing levels—considering possible federal government cutbacks in the nation’s capital and looming financial industry retrenchment in the Big Apple.

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