Grubb & Ellis

Good News Friday: The Long View

Recessions and expansions are cyclical. They come and go every few years, no matter how much we delude ourselves from time to time into thinking that the cycles have been suspended for one reason or another. (This time, it’s different.) Demographic growth is structural, and we can see the long-term effects already baked into the cake. In the coming decade, the U.S. Census Bureau forecasts that the nation’s population will grow by more than 31 million, rising gradually to 33.4 million in the 2040s. The percentage growth per decade will decline very gently from 10.0 percent in the coming decade to 8.2 percent in the 2040s. Population and household growth will:

• Drive demand for housing (both owned and rental);
• Drive retail sales growth, which will generate tenant demand for shopping center space;
• Create demand for warehouse/distribution space to accommodate increased retail sales;
• Generate demand for office space from businesses serving the increasing population;
• Create demand for hotel room nights as more trips are taken.

As the economy gets back on its feet, the underlying demand for space created by demographic trends will reassert itself.

… and the Short View

Speaking of retail sales, total retail and food services sales rose a strong 0.5 percent in January, while core sales (excluding autos and gas) rose 0.6 percent, a hopeful start for 2010.

—Bob Bach, Grubb & Ellis Senior Vice President, Chief Economist