NEW YORK, N.Y., Nov. 30, 2009 – Conceding that the current economic picture is "pretty bleak," SIOR national president Craig S. Meyer urged his colleagues in the commercial real estate brokerage community to "connect with others around the world as we work ourselves out of this deep recession. It will help drive our future success."

The forum was the annual joint meeting of the Industrial and Office Brokers Association of the New York Metropolitan Area (IOREBA) and the New Jersey and Downstate New York Chapter of the Society of Industrial and Office Realtors (SIOR). During the presentation at the New York Athletic Club, Meyer, who is managing director of Jones Lang LaSalle in El Segundo, CA, and leader of the firm's national Industrial Services Group, addressed the impact of the recession on the nation and the Northeast region.

"I hope in the not-too-distant future to say that the U.S. economy bottomed out in the summer of 2009," Meyer said, pointing to four straight quarters of decline in gross domestic product (GDP) through mid-year, unemployment topping 10%, and consumer confidence as recorded by the Conference Board "at its all-time low. It is a bleak picture, but I am a commercial broker, so I am a cynical optimist by nature."

What are the "positives" that lead him to believe that the economy may have bottomed out? Meyer pointed to recent forecasts of positive GDP growth by the first quarter of 2010, the fact that the Dow has topped 10,000 in the stock market, "and the National Association of Realtors reports an increase in housing prices month-to-month for the first time since June 2006."

On the industrial side, "Prologis and AMB, the two largest industrial REITs, state that occupancy has begun to stabilize, and each expects occupancy gains in 2010," Meyer related. The story in the industrial sector is not as bleak as others, he said.

In the office sector, Meyer recited such statistics as a national vacancy rate of 17% and year-to-date net absorption of a negative 46 million square feet. In the suburbs, the national vacancy rate is 19.6%. The CBDs nationally are a bit better, but "five top markets are greater than 20% and seventeen are greater than 15%. The consensus is that in the CBDs, nearly 80% of all leasing activity is renewals."

Locally, Meyer pointed to New York City's vacancy rate of about 12%, including "the largest negative absorption across the U.S. — negative 9.5 million square feet. New Jersey, statistically the largest suburban market in the U.S., has had more than 3.9 million square feet of negative absorption.

"If there is a 'jobless' recovery, this will be a long, painful period before these building and markets reach stability," Meyer said.

Touching on the capital markets, "everybody by now knows that upcoming maturing debt will be growing," he said. "There is approximately $100 billion of troubled debt. The pressure will grow on lenders to dispose of real estate assets.

"What does all of this mean for the brokerage business? All of us in brokerage are under tremendous profitability pressure, both as firms and individuals," Meyer conceded. "No firm, no matter how large, is immune. Firms, networks, and owners of smaller firms are under stress to downsize.

"I think our industry is due for at least one more round of consolidation," he concluded. "There are several candidates, without naming names, that wouldn't surprise me if they joined forces."

The Society of Industrial and Office REALTORS® is the leading professional commercial and industrial real estate association. With more than 3,100 members in 480 cities in 20 countries worldwide, the Society represents today's most knowledgeable, experienced, and successful commercial real estate brokerage specialists.

With roots dating back to 1927, IOREBA is one of the nation’s largest regional commercial real estate groups; its more than 300 members conduct business in New Jersey, New York, Pennsylvania and Connecticut.

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