{"id":1004606604,"date":"2022-10-12T10:47:13","date_gmt":"2022-10-12T18:47:13","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004606604"},"modified":"2022-12-08T21:10:05","modified_gmt":"2022-12-09T05:10:05","slug":"economic-forecaster-at-naiop-what-cre-investors-can-expect","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/","title":{"rendered":"What CRE Investors Should Expect: NAIOP Keynoter"},"content":{"rendered":"
\"Marci<\/a>

Marci Rossell, Expert Economic Forecaster. Image courtesy of Marci Rossell<\/p><\/div>\n

Looking at the U.S. economy through a commercial real estate lens, Marci Rossell, expert economic forecaster, former CNBC<\/strong> chief economist and co-host of Squawk Box<\/strong>, said during a keynote address at the NAIOP CRE.Converge conference in Chicago this week to expect more short-term pain, but a gradual economic rebound.<\/p>\n

\u201cI don\u2019t believe the office is dead. The balance of power [between employers and employees] has permanently shifted. In terms of pure office worker space, the equilibrium will settle out, so the necessary footprint is 70 percent of what it was pre-pandemic.\u201d<\/p>\n

Rossell disputed that we are currently in a recession and called this a transition period.<\/p>\n

\u201cIn order to truly experience a recession, a few other things have to happen: consumer spending has to outright decline, business activity and production have to decline. And not in just one area or one sector, but show decline everywhere, be broad-based.\u201d<\/p>\n

\u201cThe economy in the wake of COVID-19 delivered a very unusual set of circumstances. Inflation is at a 40-year high. Supply chains are disrupted globally, and the labor supply is tighter than many of us have seen it in our entire lives.\u201d<\/p>\n

\n

READ ALSO<\/strong>: Foreign CRE Investors Weigh Opposing Forces<\/a><\/p>\n

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In light of this, the Federal Reserve is aggressively raising interest rates in an effort to bring economic conditions more in line with their long-run fundamentals. \u201cIn general, the U.S. economy over the long run is still characterized as what I\u2019ll call a 2-2-2 world: 2 percent long-term growth, 2 percent inflation, and the appropriate Fed funds rate of 2-3 percent.\u201d<\/p>\n

Noting that commercial real estate is one of those industries that are dependent on the interest rate environment<\/a>, Rossell predicted that the Fed would begin to reduce the key Fed Funds Rate by the middle of 2023.<\/p>\n

\u201cOnce inflation hits 5 percent, in six months, the federal reserve will stop raising rates, at about the second quarter next year. The proper rate is a 2 percent fed funds rate,\u201d but she noted, \u201cthe next six months is going to be really tough.\u201d<\/p>\n

Other economic headwinds include supply chain issues, and a demographic shortage of new workers entering the workforce.<\/p>\n

Yet on the positive side, consumers are in better shape going into any downturn compared to where they were leading up to the Great Recession of 2008, Rossell said. Americans\u2019 debt levels relative to their incomes are very, very low because they\u2019ve saved so much over the last couple of years. \u201cBack in June 2020, the savings rate in America hit 35 percent because we simply couldn\u2019t spend money traveling or eating out.\u201d<\/p>\n

\u201cSo savings rates explode, and we go into this time where interest rates are rising, but personal balance sheets are in much better shape compared to where they were going into 2008,\u201d Rossell said. And banks\u2019 lending standards are completely different now than they were in 2005, 2006 and 2007.<\/p>\n

\u201cEven if house prices decline in the U.S., you still have so many people who have 20 percent down or, frankly, paid cash for their house, so you don\u2019t have the panicked buyers who are rushing to sell. That\u2019s what you\u2019d need to have happen for house prices to decline.\u201d<\/p>\n

A tight labor market<\/h2>\n

\u201cThe most long-term issue I believe we\u2019re facing as businesspeople is the difficulty of attracting workers,\u201d Rossell said. She pointed out that COVID-19 escalated the retirement of baby boomers\u2014roughly 1.3 million excess retirements happened during COVID-19.<\/p>\n

\u201cIs anyone out there having success hiring young people? Anyone? Where are these young people?\u201d Rossell asked the crowd.<\/p>\n

\u201cMillennials, as a group, were a huge demographic bulge, and they entered the labor force in 2008, 2009, 2010, right into a nasty recession,\u201d Rossell said. \u201cIt gave this impression that there were unemployed people everywhere and labor was easy to find, because this huge group came into the labor market when the economy was in the tank.\u201d<\/p>\n

But this demographic trend did not endure. Now, every year, there are hundreds of thousands fewer people turning 18 than a decade ago. Following this staggering statistic, Rossell clarified: \u201cThe young people, the reason you can\u2019t find them is because they aren\u2019t there. They\u2019re never going to be there. The demographic fall-off in this country is enormous.\u201d<\/p>\n

What that means is the balance of power between employers and employees has permanently shifted. The five-day workweek is moving to a four-day work week, candidates are demanding flexibility, and if a company isn\u2019t offering that, \u201cThey go, \u2018Okay, fine, because there are 10 other people who want to hire me anyway,\u2019\u201d Rossell said.<\/p>\n

\u201cThe pandemic moved us, it kind of drop-kicked us 10 years into the future in terms of the way we live, work and play.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Marci Rossell discusses the long-term implications of the pandemic-induced forces for the industry. <\/p>\n","protected":false},"author":3073,"featured_media":1004606610,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[23891,21742,21747],"tags":[32878],"class_list":["post-1004606604","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-national","category-latest","category-office","tag-naiop"],"acf":[],"yoast_head":"\nWhat CRE Investors Should Expect: NAIOP Keynoter - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Marci Rossell, expert economic forecaster and former CNBC chief economist, looks at the U.S. economy through a commercial real estate lens.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What CRE Investors Should Expect: NAIOP Keynoter\" \/>\n<meta property=\"og:description\" content=\"Marci Rossell, expert economic forecaster and former CNBC chief economist, looks at the U.S. economy through a commercial real estate lens.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2022-10-12T18:47:13+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-09T05:10:05+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/10\/Marci-Rossell-featured.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"797\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Brielle Scott\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/\",\"name\":\"What CRE Investors Should Expect: NAIOP Keynoter - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/10\/Marci-Rossell-featured.jpg\",\"datePublished\":\"2022-10-12T18:47:13+00:00\",\"dateModified\":\"2022-12-09T05:10:05+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/251b4d8380fdbc0e888f0e67581b2599\"},\"description\":\"Marci Rossell, expert economic forecaster and former CNBC chief economist, looks at the U.S. economy through a commercial real estate lens.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/economic-forecaster-at-naiop-what-cre-investors-can-expect\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/10\/Marci-Rossell-featured.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/10\/Marci-Rossell-featured.jpg\",\"width\":797,\"height\":620,\"caption\":\"Marci Rossell, Expert Economic Forecaster. 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