The Commercial Real Estate Outlook Patrick Newport U.S. Economist July 2010.
11
The Commercial Real Estate The Commercial Real Estate Outlook Outlook Patrick Newport U.S. Economist July 2010
Transcript of The Commercial Real Estate Outlook Patrick Newport U.S. Economist July 2010.
The Commercial Real Estate The Commercial Real Estate OutlookOutlook
Patrick Newport
U.S. Economist
July 2010
Copyright © 2010 IHS Global Insight. All Rights Reserved.
2
-8
-6
-4
-2
0
2
4
6
8
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
3
4
5
6
7
8
9
10
11
Real GDP Growth (Left scale) Unemployment Rate (Right scale)
(Annual percent change) (Percent)
The U.S. Expansion Proceeds at a Slower Pace
Copyright © 2010 IHS Global Insight. All Rights Reserved.
3
-8
-6
-4
-2
0
2
4
2000 2002 2004 2006 2008 2010 2012
(Percent change, annual rate)
Payroll Employment Begins to Recover
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4
The Stress in Financial Markets Has Been Reduced Considerably
TED Spread*
*3-month LIBOR less 3-month Treasury bill rate;** Low-Quality (A2/P2) over High-Quality (AA), 30-day spread, non-financial; *** Corporate Yield Less 10-Year Treasury
0
1
2
3
4
5
2006 2007 2008 2009 2010
(Percentage points)
Commercial Paper Spreads**
0
2
4
6
1997 1999 2001 2003 2005 2007 2009
Corporate Bond Spreads***
0
2
4
6
8
1962 1968 1974 1980 1986 1992 1998 2004 2010
BAA Spread AAA Spread
Fed Policy
0
2
4
6
2007 2008 2009 2010
Fed Funds Target 3mo. LIBOR 3mo. T-Bill
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5
1,200
1,300
1,400
1,500
1,600
1,700
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
(Loans outstanding, billions of dollars)
Bank Commercial and Industrial Loans: Still Shrinking
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6
(Net percent tightening standards for commercial and industrial loans)
Commercial and Industrial Loan Standards No Longer Tightening
Source: Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices
-40
-20
0
20
40
60
80
100
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Large & Medium Firms Small Firms
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7
Nonresidential Construction: Architects’ Billings Still Soft, But Off the Floor
(Diffusion Index)
30
35
40
45
50
55
60
65
1995 1997 1999 2001 2003 2005 2007 2009
* Source: American Institute of Architects
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8
The Downturn Has Another Year to Go
• Spending stabilizes at just over 3% of GDP
• Real spending turns around in the second half of 2011.
2
3
4
5
6
1960 1969 1978 1987 1996 2005 2014
Nonresidential Construction as a Share of GDP(Percent)
300
350
400
450
500
550
1980 1986 1992 1998 2004 2010
Nonresidential Construction(Billions, chained 2005 dollars)
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9
Real Spending Declines Across the Board
0
50
100
150
200
2000 2003 2006 2009 2012
Office and Commercial(Billions, chained 2005 dollars)
0
20
40
60
80
2000 2003 2006 2009 2012
Miscellaneous Structures (Billions, chained 2005 dollars)
0
20
40
60
80
2000 2003 2006 2009 2012
Power Plants(Billions, chained 2005 dollars)
0
20
40
60
80
2000 2003 2006 2009 2012
Industrial Structures(Millions)
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10
Multi-Family Housing Activity: Bottoming Out?
0
100
200
300
400
2000 2003 2006 2009 2012
(Thousands units, annual rate)
