Commercial real estate forecasts are predicting more of 2011 for 2012: slow recovery with pockets of activity worthy of optimism.
The Urban Land Institute is reporting that much of what will take place in 2012 is the start of a shift toward tighter geographic markets, that is, less sprawl and more urban infill. Transit-oriented development will become a notable market draw and higher end space within those corridors will command the attention of office users.
One reason for the ignition of this switch is the talent inherent in a younger, more tech-oriented workforce that is demonstrating it eschews traditional, suburban residential. Cities with such infrastructure in place will see boosts in activity in the coming year and less vacancy.
Smart businesses will focus their real estate efforts on efficiency and flexibility, choosing to forgo higher-end space if it commands significant operational commitments. Efforts to reduce operating costs will drive space management decisions, namely as it relates to energy costs and "green" renovations. Additionally, employees will need reasons to not seek mobile working solutions. Still, what remains in the heavily discounted Class A market is expected to be absorbed at the same pace evident in 2011.
Europe's economic woes will continue to have an impact on the United States. Investment activity should increase, but not as evidently as it has in the last two years.
Despite signs of moderate growth and high vacancy, many experts believe that slow construction activity will become a problem beyond 2012, citing that office market metrics can become positive quickly enough to outpace construction. In short, an uptick in office construction in 2012 could have longer-term benefits.
Without a stable Europe in a globally dependent economy, the U.S. will be hard pressed to witness enough growth to warrant jubilation. Nevertheless, there seems to be little reason to fear another 2008.