U.S. office market to rebound in 2011: report

January 04, 2010 03:47PM

Although the U.S. commercial real estate market remains tenuous, its
downward decline will slow in 2010 and is likely to begin a turnaround
in 2011, according to Grubb & Ellis’ 2010 Real Estate Forecast,
released today. Among the factors slowing recovery is a lethargic job
market, the report says, which could continue to negatively influence
the office real estate sector if improvement doesn’t begin to take
hold. Nationwide, the office vacancy rate could hit 18.5 percent to 19
percent by the end of 2010. “Early 2010 may see a few isolated months
of hiring, but sustained growth in employment is unlikely before the
second half of the year,” Bob Bach, senior vice president and chief
economist with Grubb & Ellis, said. But while the office sector may
rebound, Bach isn’t confident that the retail market will ever bounce
back to its previous pre-recession glory. “It’s unlikely the shock of
the Great Recession will produce a generation of frugal consumers like
the Great Depression did,” Bach said. “On the other hand… owners of
retail real estate will need to adapt to a ‘new normal’ in consumer
attitude that may last for some time, including more conservatism and
attention to value as households rebuild their savings.” TRD