Mid Atlantic Real Estate Journal — New Jersey — February 14 - 27, 2014 — 15B
www.marejournal.com
WOODBRIDGE, NJ — The U.S. is still at a recessionary point from a labor force standpoint, the economy’s $2 trillion gap in GDP “is either a tailwind or a new para- digm,” but the table is set for a major rebound. “I believe we’re on the cusp of a real golden age for the economy, and real estate will benefit.” That was the mixed, but hopeful message delivered by Dr. Peter Linneman, principal of Linneman Associates, discussing “An Economic Forecast for 2014” at the January meeting of CREW NJ at The Hilton Woodbridge. First, the $2 trillion gap—GDP is higher now, in real terms and per capita, than be- fore the recession, and “is the highest ever,” Linneman noted. To put that number in perspective, it is equal to “every transaction that occurs in the United Kingdom.” And in general, “the good economic times have not begun to occur—we haven’t recovered all of the jobs that were lost.” One key issue is the difficulty in setting economic policy because of “the diverse situ- ations” across the country, he noted. As an example, he cited the booming, energy-fu- eled economy in Houston compared to the double-digit unemployment in Los Angeles. Other issues include everything from financial market regulation, the high federal budget deficits, “unsustainable low interest rates,” the national healthcare overhaul, and the growing monetary base related to liquidity. As a result “people don’t thrive in the face of uncertainty,” said Linneman. “But we are potentially looking at a huge explosion of economic activity in the next decade because of the pent-up demand of this decade. In terms of commercial real estate, that pent-up demand focuses on residential. “The cumulative shortage of single-family homes adds up to $400-500 billion of pent-up demand—we have under-produced by 1.3 million homes,” he said. “For multifamily, there is $200-300 billion of pent-up economic activity, amounting to a shortfall of one million units. Those shortfalls also have a spin-off effect in terms of furniture, carpeting and other materials.” Office construction, meanwhile, is “very muted,” and the decline in vacancy “is slower than after past recessions,” Linneman said. “This sector is poised to have a pretty good comeback.” Industrial, on the other hand, is already rebounding, especially related to the nation’s ports. “A strong recovery is underway, and the rebound in manufacturing will help pick up new construction,” Retail is “flat-lining along the bottom,” and the dollars being spent for construction are mostly for refurbishing existing properties, “not new construction. There are very few major new projects.” Finally, the lodging industry is still seeing low construction, with two-thirds of current outlays going for deferred spending. There are exceptions: “New construction in New York City accounts for 18% of all existing building stock,” Linneman said. Overall, however, relating to pent-up demand, “we’re on the cusp of a real golden age for the economy,” he reiterated. The next CREW NJ event is slated for February 13th at The Hilton Woodbridge. The topic, “Repurposing an Icon – the Greatest Experiment Yet” will focus on the future of the former Bell Labs building in Holmel, NJ, and the discussion will feature Ralph Zucker of Somerset Develoment. CREW NJ is the New Jersey Chapter of CREW Network (Commercial Real Estate Network), which is dedicated to the advancement of women in commercial real estate. Membership organizations are comprised of nearly 9,000 members representing every discipline within the industry and are located in 76 chapters across North America. N The Economic Recession Lingers, but a Golden Age Lies Ahead, CREW NJ Members are Told
2014 BOARD OF DIRECTORS President Monica Ceres, Giordano Halleran & Ciesla mceres@ghclaw.com
President-Elect Patricia Faulkner, NAI Global pfaulkner@naiglobal.com
Treasurer Rebecca Machinga, WithumSmith+Brown, PC rmachinga@withum.com Secretary Lory Karakashian, PE, CME , InSite Engineering, LLC Lory@InSiteEng.net Director - Communityservice/ Outreach TinaMarie Cortina, Liberty Elevator Corporation Director - Membership Krista Korinis, Global Installation Resources, LLC kkorinis@gi-resources.com Director - Programs Tara Carver, Esq., Giordano Halleran & Ciesla P.C. tphelancarver@ghclaw.com
PR/Marketing and Communications Susan Karp, Esq., Cole Schotz Meisel
Forman & Leonard, P.A. skarp@coleschotz.com
Director - Special Events Suzanne Bonney, AIA smbonneyra@comcast.net Director - Sponsorship Jennifer Mazawey, Esq., Genova, Burns, Giantomasi & Webster jmazawey@genovaburns.com
Director - Sponsorship Diane Menard, Prestige Title Agency, Inc. diane.menard@prestigetitle.net
Counsel/Advisor Cheryl Hardt, CBRE Group, Inc. cheryl.hardt@cbre.com Counsel/Advisor & By-Laws Sheila Nall, KSS Architects snall@kssarchitects.com Counsel/Advisor Patricia Riedel, CBRE Group, Inc. pat.riedel@cbre.com www.crewnj.org
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