The State of Real Estate 2011/N. CaliforniaJanuary 25, 2011
On January 12th I attended Economist Dr. Peter Linneman’s presentation of his National Economic Forecast for 2011. In it he provided insights on what is happening in today’s national economy, the local ramifications to the Northern California market, and what to expect for 2011.
Three Years to Full Recovery
In a nutshell, we need 10 million jobs for a full recovery of the economy. We’ve added 1M so far and have 9M to go. Depending on the pace, the data shows different time frames for this to happen.
- Current Pace – 9 years to recover
- Normal Pace – 5 years to recover
- Recovery Pace – 3 years to recover
- “Bubble” Pace – 2 years to recover
- Bottom Line for Peter’s estimate – 3 years to recover
High Cash Reserves Need Better ROI – Consider Real Estate
Corporate profits have risen to even higher peaks than they have been in the recent past. As a result, reserves are high but companies aren’t receiving adequate investment returns by holding on to so much cash. Corporations, like many of us personally, are still hunkering down afraid to plan for growth but ultimately this cash needs to be put to better use. If you are in this situation, keep in mind your real estate decisions. If your lease is coming up, be mindful of areas where it makes sense to build a little growth into your space plan. Smart growth can take place either by utilizing existing space more efficiently or making room for a larger lease next time around to expand your most profitable operations. This might include adding square footage to your manufacturing area or making room for more cubicles in your office space.
While right-sizing your company is always smart to do, the next time your lease expires make sure you have some room for growth in areas where you will earn the highest return on your investment.
The State of Real Estate Webcast/Podcast
Check out the complete Webcast/Podcast by clicking this link National Economic Forecast for 2011