In Barry LePatner’s book, Broken Buildings, Busted Budgets, he wrote that our nation was poised to see tremendous economic growth and cited some impressive facts: the U.S. population would expand from 300 million to 400 million by the year 2045; between 2000 and 2030, the number of Americans over the age of 65 will more than double and see massive migration to the South and Southwest where we will build 100 billion square feet of new homes; that U.S. construction in the next thirty years would represent a boom of $25 trillion that would sweep along every sector of the U.S. economy. Of course, there are many who see the severe downturn in the economy over the past few years as an indication that our nation will not be returning to glory days of a roaring economy anytime soon nor see such heady news of a renewed economy likely to eventuate. LePatner could not disagree more.
So for those who want to see a real economic harbinger of things to come (now that spring flowers are budding along the streets and byways of our nation) here are a few statistics to buoy your own sense of optimism. They come courtesy of the Urban Land Institute and its survey of 38 leading real estate economists across the nation. The results show solid reasons for a rebounding economy. Keep in mind that real estate and the associated activity that it generates in the construction industry are true leading indicators of an economy emerging from a recession.
The ULI survey notes that over the next three years:
Commercial property transaction volume is expected to increase over 50%; Institutional real estate assets and REITS are expected to provide returns ranging from 8.5% to 11% annually; Vacancy rates are expected to drop in a range from 1.2 and 3.7 percentage points for office, retail and industrial properties while hotel occupancy rates are likely to rise; Housing starts will nearly double by 2014 and home prices will begin to rise in 2013 increasing by 3.5% in 2014.
The economists surveyed expect GDP to rise steadily from 2.5% in 2012 to 3% in 2013 and 3.2% in 2014. Unemployment is expected to fall to 6.9% by 2014 and we will see new job creation total 2 million in 2012, 2.5 million in 2013 and 2.75 million in 2014.
And, yes, there may be bumpy roads ahead and some doubts attributable to the European debt crisis, Middle East tensions, access to oil and climate change. But we need to remember that these same or similar world concerns have been around for many decades where the U.S. economy grew and prospered following every recession on record. Naysayers can join in against these thoughts, but it is hard to ignore the pent up demand of our economy where corporations, lean and mean from the recession and flush with monstrous amounts of cash on hand, are not going to continue to grow or, at the expense of other well-heeled competitors, take on the characteristics of the dinosaur and die off unnecessarily.
As always, we welcome comments.