CHICAGO, IL – May 26, 2011 – (RealEstateRama) — Though not ready to declare the economy is on the upswing, Wells Fargo Securities economist Mark Vitner told attendees at the recent midyear conference of The Counselors of Real Estate® in San Diego that the economic decline—at least in commercial real estate—is over. Members of the invitation-only The Counselors of Real Estate (CRE®) association are top advisors in real estate matters throughout the U.S. and abroad.
Vitner said non-residential construction spending will show modest improvement over the next few years but noted commercial real estate prices remain weak. Commenting on key commercial sectors, he said the apartment market is in recovery and demand for office space is finally increasing. Injecting humor, he pointed to office vacancies leveling off in many cities despite the fact that “there was no tax credit for those leasing offices for the first-time like there was for first-time homebuyers in the residential sector.” He said the industrial sector is improving, but slow job growth is hindering retail recovery.
Vitner noted that the U.S. is producing more goods and services today than before the recession began—but with 4.7 million fewer workers employed. And unlike smaller recessions in the past few decades, large numbers of people are remaining unemployed for long periods of time. Any retail rebound is essentially dependent on a change to this employment trend.
Pointing to some positives, Vitner noted that an upturn in international trade is boosting industrial production and exports while mortgage rates continue to be at close to an all-time low. He also pointed out that core inflation is still low.
Despite the challenges he foresees ahead in residential real estate and, to some extent, the commercial sector, Vitner reminded the audience, “Don’t buy real estate as an inflation hedge. But if you invest in real estate and do it well, it IS an inflation hedge.”
The Counselors of Real Estate, established in 1953, is an international group of high profile professionals including members of prominent real estate, financial, legal and accounting firms as well as leaders of government and academia who provide expert, objective advice on complex real property situations and land-related matters. Membership is selective, extended by invitation only. The organization’s CRE (Counselor of Real Estate) credential is awarded to all members in recognition of superior problem solving ability in various areas of real estate counseling. For more information, contact The Counselors of Real Estate, 430 N. Michigan Avenue, Chicago, IL 60611; 312/329.8427; http://www.cre.org