4B — September 28 - October 11, 2018 — Shopping Centers — M id A tlantic

Real Estate Journal


S hopping C enters By Anirban Basu, Marcum LLP A Noisy Expansion


because for certain other segments of the economy are facing growing headwinds. There are few segments for which this is truer that for housing. With prices rising in the wake of shrinking for-sale inventory and with mortgage rates also edging higher, Americans are facing the worst housing affordabil- ity in about a decade. Meanwhile, builders are wrestling with higher ma- terials prices, including softwood lumber, the price of which expanded 20 per-

cent over a recent 12-month period. Then there’s the consumer, who has been stung in recent months by rising inflationary pres- sures. Should consumers respond by ramping down expenditures, growth in fu- ture quarters is unlikely to resemble anything like the 4.2 percent annualized GDP growth performance of the second quarter. If We Could Only Turn Down the Volume Like a good movie, it’s tough to enjoy a healthy econ- omy when the environment is noisy. For months, econo- mists, business owners, and others have been unnerved by expanding skills shortages and the implications of those shortages for productivity, inflation, and interest rates. Then came the specter of tariffs, retaliatory tariffs, and fears of full-blown trade wars. Even more recently, there are growing concerns regarding the state of emerg- ing markets like Turkey and Argentina. Given this rising set of obstacles as well as the fact that many observers are con- cerned about what appear to be bubbly asset prices, many economists have begun to predict the onset of the next recession in 2020 or 2021. That said, there is little indi- cation of recession presently. Looking Ahead – It Won’t Get Quieter According to Census Bu- reau data, nonresidential construction spending ex- panded 4.2 percent from over a recent 12-month pe- riod. That isn’t nearly what one might expect given the general performance of the U.S. economy. Many factors have served to constrain con- struction spending growth, including a lack of available workers and growing con- cerns regarding over-valued and over-built real estate markets in certain parts of the country. Still, the near-term out- look remains quite positive. Business confidence is ele- vated and plentiful liquidity is flowing through the global banking system. These fac- tors among others should keep contractors busy as we approach and enter 2019. Anirban Basu is Chief Construction Economist with Marcum LLP. 

ech Leads the Way When Amazon an- nounced that it was

dollars in subsidies to a com- pany founded by the world’s wealthiest individual. At stake is a $5 billion facil- ity that will employ 50,000 people, will substantially expand a region’s local tax base, and position a commu- nity for leadership in global e-commerce. Among the finalists are predictable cit- ies like Boston and Atlanta and arguably less obvious choices such as Indianapolis and Columbus, OH. But Amazon represents only one of a number of

blockbuster real estate deals involving America’s tech giants. Google, Facebook, Apple, and other tech giants are also pursing physical ex- pansions, and while the pace of tech-related construction is unprecedented, the sector and its specialized physi- cal needs have produced disproportionate levels of construction investment for over a decade. More than Tech The ongoing strength of the tech sector is becoming in- creasingly important. That’s

s e a r c h i n g for a second headquar - t e r s , 2 3 8 c ommu n i - ties across the c ont i - nent scram- bled to put together ex-

Anirban Basu

pansive applications. As of this writing, 20 finalists remain in the race, with a number offering billions of

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