Real Estate Recession and Recovery
Recently I was reading real estate trends, recovery periods, and was encouraged by some of the articles that I read. Costar.com interviewed Hessam Nadji, the chief of research for Marcus and Millchap, and he expects that job losses and the recession will end this year. He predicts that job losses will bottom by the third quarter, maybe into the fourth quarter.
Historically the years after a recession show years of positive growth spikes and growth that is better than average, especially within the first year after the recession. As the market begins to level out, companies begin to feel less pressure and are able to start cautiously hire and expand operations.
In recent recessions, job losses were at an average of 150,000 to 225,000 jobs per month. Early 2008 numbers were less than that, however right now we have been at 600,000 to 700,000 losses per month since November. Nadji predicts that we will see another few months of extreme losses, but slowly companies won’t feel the need to eliminate jobs in order to stay afloat.
Here in St. George, Utah Job losses have not been as severe as the rest of the country and we still maintain an unemployment percentage well below the national average. We have seen several lease transactions in the past few months which is good. Most of these companies are local companies who are moving from one commercial space in St. George to another. Unfortunately the vacancy rates don’t change because as they occupy a new space, their old space becomes vacant again.
As lease rates continue to fall, job losses steady, GDP will increase and there will be more consumer confidence. At that time, we will once again be able to talk about the economy…in a positive way.
