There is money and fame for any contrarian willing to stand in the face of popular sentiment and boldly call the top of a bubble or the bottom of a crash. But that hasn’t been incentive enough for anyone in the region to step up and trumpet a full-fledged real estate recovery for 2011.
Of course, so little of a real estate turnaround is actually dependent on the real estate market.
“The city is ripe for new development, but you’re still not going to see it until you see the underlying issues in the economy improve,” said Sierra Commercial Real Estate President David Delich. “Unless we see a program to reduce debt, a program to rebuild jobs, stability in tax policy, reduced regulations on lenders to free-up money; all of these things have to occur before you see money put back into the real estate market.”
Lowering the unemployment rate, of course, is tops on anyone’s list.
“Job growth continues to be the No. 1 challenge in the commercial markets,” Delich said in his market outlook summary. “Without a strong trend upwards, vacancy rates will continue to be high, absorption will continue to be low, and rental rates will continue to remain flat.”
Despite that largely negative outlook, Sierra’s market outlook was laced with some tepid optimism, if only because things have been so dreadful for so long.
According to the report, the office properties sector should benefit from low supply because of reduced construction the past few years; the land investment and development market can only improve from the generational lows hit in 2010; the industrial properties market, which hasn’t seen the same amount of foreclosures as other areas, should benefit from rising lease prices and a rebounding manufacturing employment environment; and the retail sector will see “measured growth,” assuming the local and national economies improve.
It’s not much, but it’s starting to sound like a bottom. Just don’t be surprised if the market is content to trawl those depths for a while longer.