Commercial Real Estate Index
SIOR Index — Commercial Markets
Plateau in Third Quarter 2011
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 Manager of Quantitative & Commercial
Research with the NATIONAL ASSOCIATION OF
REALTORS® in Washington, D.C. His research focuses
on macroeconomic indicators, commercial real estate, and
international investments. He writes regular columns for
Commercial Property Executive and Real Estate Insights,
and produces NAR’s Commercial Real Estate Outlook, which
provides quarterly forecasts for the office, industrial, retail and
multi-family sectors. He also manages the NAR Commercial
Real Estate Quarterly Market Survey. He earned his graduate
degree in Economics from Western Kentucky University.
NAR Economic Overview
With a month left in 2011, the economy is looking for some good cheer. While
the third quarter brought some positive news, it barely makes for holiday sparkle. With unemployment still high, a bagful of European issues threatening
financial markets, and a consumer mood that’s more attuned to Grinch than
Santa, economic concerns weigh on commercial real estate markets.
Based on the Bureau of Economic Analysis’s first estimate, gross domestic
product (GDP) rose 2. 5 percent in the third quarter. Mirroring second quarter’s patterns, all major components advanced, except government spending.
Business investments provided a double-digit boost behind the economic
advance. Business spending rose 16. 3 percent during the quarter. Businesses
have accelerated spending with each successive quarter during 2011. Businesses
upped their spending on equipment—transportation was up 37. 9 percent while
industrial equipment rose 33. 2 percent. Notably, spending on commercial real
estate gained for the second consecutive quarter, advancing 13. 3 percent.
The major driver of economic growth by scale, consumer spending remained
steady, gaining 2. 4 percent during the third quarter. While at modest levels,
consumers increased their spending on both goods and services. Spending on
furnishings and household equipment was up 4. 5 percent, while consumption
of recreational goods and vehicles rose 12. 1 percent. Cars and auto parts registered a 3. 2 percent decline. Consumers also increased their spending on financial services and insurance ( 3. 3 percent), recreation ( 3. 2 percent) and health
care ( 5. 4 percent).
Gross Domestic Product
6.0
4.0
2.0
0.0
2006 - Q2
2006 - Q3
2006 - Q4
2007 - Q1
2007 - Q2
2007 - Q3
2007 - Q4
2008 - Q1
2008 - Q2
2008 - Q3
2008 - Q4
2009 - Q1
2009 - Q2
2009 - Q3
2009 - Q4
2010 - Q1
2010 - Q2
2010 - Q3
2010 - Q4
2011 - Q1
2011 - Q2
2011 - Q3
- 2.0
2006 - Q1
- 4.0
- 6.0
Source: Bureau of Economic Analysis
- 8.0