In case you didn’t catch it, the government has released reports showing that the gross domestic product (GDP) for the fourth quarter of 2009 rose at an annual rate of 5.7%, the best advance in six years. That’s an encouraging sign, but only if it continues in that direction.
Technically, the upward trend over the past two quarters could mean a technical end to the recession—but only if the weak jobs market manages a turn-around. We still are a bit hesitant about the prospects of 2010 for commercial property, but at least we’re pointing now in the right direction.
Business inventories have been increasing since October, with a 3.4% growth reported that makes it the best contribution in a quarter century. As that replenishment continues, we can interpret that as a positive development for warehouse and distribution properties.
Likewise, the report shows a rebound in consumer spending (1.4%), a somewhat tentative sign that consumers are starting to spend money. That’s good news for shopping centers and retail stores everywhere, assuming it continues to increase on its present path. It should be noted, however, that spending levels are still below what they were before the recession. Government policies will continue to affect consumer confidence, as always.
Naturally, the performance of retail properties is tempered along with reluctance among consumers to increase spending significantly. The report shows that, during the 4th quarter of 2009, there was an increase in national retail vacancy to 9.9%. Look ahead to 2010, we’re expecting that to grow to around 10.5 or 10.6 percent. Should that happen, you can also expect to see rent decreases of as much as 2-4%.
Other commercial property statistics from the reports show declining Owner-user purchases and construction of new facilities (15.4%), suggesting that the number of commercial property buyers is still relatively low. You may want to keep that figure in mind if you have a property you’re looking to sell during the coming year.
