Commercial Real Estate Index
SIOR Index – Office and Industrial Markets
Advance in the Fourth Quarter 2010
By Lawrence Yun, Senior Vice President & Chief Economist
and George Ratiu, Economist
national Association of REALTORS®
Lawrence Yun is Senior Vice President
and Chief Economist at the NATIONAL
ASSOCIATION OF REALTORS®. He writes regular
columns on real estate market trends,
creates NAR’s forecasts, and participates
in many economic forecasting panels,
including Blue Chip and the Harvard
University Industrial Economist Council.
He received his undergraduate degree
from Purdue University and earned his
Ph.D. from the University of Maryland.
George Ratiu is an Economist with
the NATIONAL ASSOCIATION OF REALTORS®
in Washington, DC. He specializes
in mortgage finance, foreclosures,
and commercial real estate. Mr. Ratiu
produces NAR’s Commercial Real
Estate Outlook, which provides quarterly
forecasts for the office, industrial,
retail, and multi-family sectors. He
received his undergraduate degree from
Campbellsville University and earned
his graduate degree in Economics
from Western Kentucky University.
nAR Economic Overview
Economic activity quickened its pace during
the fourth quarter 2010 to close the year on an
upbeat note. Based on the Bureau of Economic
Analysis’s first estimate, gross domestic product
(GDP) rose 3. 2 percent in the fourth quarter, to
close the year at a 2. 9 percent higher annual rate
than 2009. While that is good news, the rate of
growth remains lower than post-recession historic averages of 4.0 to 6.0 percent.
Consumer spending provided the main foundation for the economic advance, increasing
at an annual rate of 4. 4 percent in the fourth
quarter. Notably, during the period, consumers
purchased more aggregate goods than were produced, leading to a negative change in inventories. Consumers boosted spending on goods at
a double-digit pace. Spending on durable goods
increased 21. 6 percent, driven by a surge in
purchases of cars and automotive parts, which
advanced 45. 1 percent. Spending on furniture
and household equipment rose 11. 4 percent, and
on recreational goods and vehicles it increased
15. 8 percent. Consumers spent 5.0 percent more
on nondurable goods as well. With the exception
of gasoline and fuel oil, purchases of food, beverages, clothing and shoes were positive.
Consumers also spent more on services.
Housing and utilities consumption increased a
modest 0.6 percent. However, consumption of
health care rose 2. 9 percent, transportation 1. 9
percent, financial services and insurance 2. 9 percent, and food services and lodging 4. 1 percent.
Meanwhile, business spending continued to
rebound. Private fixed investment rose 4. 2 percent. The other categories of business spending
posted moderate growth—spending on structures
increased 0.9 percent, while on business equipment and software it rose 5. 8 percent. Businesses
purchased 12. 3 percent more industrial equipment, while cutting back on transportation
expenses by 26. 6 percent. However, inventory
investment fell sharply.
International trade provided another positive
contribution to economic growth in the fourth
quarter. More importantly, the balance of trade
took a positive turn, as exports advanced 8. 5 per-
cent and imports declined 13. 6 percent.