A Year of Shifting Winds

The European debt crisis. Social unrest in the Middle East. Legislative gridlock in the US. Questions about the impact and timing of Dodd-Frank rulemaking. The availability of credit, or lack thereof. The extended slump in housing sales. Minimal personal income growth. All of these challenges heading into 2012, even as the country’s economic vital signs continue to improve, mean another year of uncertainty. It’s little wonder that some experts predict that the pace and depth of recovery would remain highly segmented across the US this year. Yet amid the uncertainty and the headwinds, domestic and foreign, there are plenty of opportunities, albeit highly fragmented ones.

On the office side, 2011 started with great potential. The economy gained momentum as job growth skewed upward and capital markets loosened. But the uncertainty that surfaced over the summer with CMBS, Europe and the debt ceiling arguments stifled momentum. There’s been a nationwide uptick in the industrial sector, as fundamentals improved across the board. Industrial experts are now cautiously optimistic about 2012. Though the retail sector has been beaten up in recent years, a slowly improving economy, coupled with a boost—somewhat—in consumer confidence means the sector might be seeing a light at the end of the tunnel. This won’t be a banner year, but there will be some much-needed stabilization.

Meanwhile, those in the apartment business are generally floating on cloud 9. Financing is still available; demographics, job growth and household formation are in favor of the rental market; and the sector’s strong fundamentals and economic indicators are attracting a bevy of investors, particularly institutional and foreign capital. Demand for apartments is actually outpacing the supply. And for hotels, 2012 will be the year of discipline, particularly among buyers and lenders, following the recovery period seen in 2011.

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