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Despite the best efforts of Washington to kill the recovery, existing businesses are expanding while entrepreneurs feel it is the right time to open new ones.
After nearly six years of doom and gloom, people seem ready to look to their futures optimistically.
While there are still some lagging economic indicators, I believe that we will continue to have steady, if slow, growth for the next several years.
In the past manufacturing in the U.
S.
was declining, but that is no longer the case.
The lowering of U.
S.
wages, energy concerns and our continued productivity compared to the rest of the world make the overall sector on the edge of a growth spurt.
Industrial real estate will have to be upgraded since the new plants will have many fewer semi-skilled workers but more robots and highly skilled employees.
This knowledge-based manufacturing will be suited to the Northeast, West Coast and Midwest markets.
Any new large-scale plants, such as car manufacturing, will be located in the south where there are cheaper land and labor costs.
The office sector will continue to improve.
New York has shown that it has the resilience to adapt to changing times.
Tech companies are coming into the City in increasing numbers.
Along with other more traditional office users, the City has rebounded nicely from the depths of the recent recession.
Other cities such as Atlanta and Los Angels is have not yet turned around.
Chicago is making steady, although unspectacular, progress in the office market.
All in all, as long as the office property has modern infrastructure, there should be little problem in renting.
However, I do see continued problems for the retail sector.
It was over-built at the time of the recession, and the supply is still greater than demand.
Absorption of locations will be slow and, in some markets, it will be years before equilibrium has been achieved.
Areas such as Manhattan or downtown Chicago have little to fear, but from strip centers to conventional malls, I would urge caution before buying.
Finally the multifamily sector has been doing quite well.
As more and more people were precluded from buying, renting became their only option.
As rents rise and the economy improves, more people will want to own again.
However I believe that the under 40 generation will not as eagerly want to tie up so much of their capital in home ownership.
While their parents moved to the suburbs to have children, this generation is staying in the cities.
As the job market changes from one where employees remained with a company for years, the evolving model means employment is more and more fluid.
They may need to move much more rapidly than their parents to take advantage of the changing market.
The illiquid nature of owning a house or condo may prevent them taking the next job or assignment.
I believe that the commercial market will continue to do modestly well over the next three to five years.
If the federal government can get its act together, it may prove to be a very good time for the real estate industry.
In fact if the mortgage interest and/or the real estate tax deduction are cut back or eliminated, then owning a home will not be as financially appealing as it is now.
This will lead to more people renting rather than buying.
At the same time as the economy improves so too will the office and industrial sectors.
All in all, it is a good time to be in the commercial market.
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