Article by Bob Howard
NEWPORT BEACH, CA-Commercial property markets in the US could suffer from a protracted war, according to a real estate outlook presented by Stuart Gabriel, director of the USC Lusk Center for Real Estatecolor>.
Gabriel, in a briefing here for Orange County business and real estate leaders, said a war could erode consumer confidence, further depress stock prices and weaken commercial property markets hurt by the loss of 2.4 million jobs nationally over the past two years.
Despite the uncertainty about the war and other factors that could affect the economy, however, Gabriel believes the US economic performance could still improve in 2003. Gross domestic product could increase to 3.5% in 2003, compared with an estimated 2.8% annual rate in 2002 and only 1% in the fourth quarter of last year. How the economy ultimately performs will depend on whether there is a war and whether it is ended quickly, he said.
The prospect of a war also was mentioned by Stan Ross, chairman of the board at the Lusk Centercolor>, who ticked off a list of positive and negative influences on Orange County and national commercial real estate markets. Ross said Californians have "a lot of reasons to feel good" about their economy, and Orange County has one of the strongest county economies in the state. He noted that West coast ports handled 42% of all US waterborne trade in 2000 and nearly a third of all automobile and truck imports are shipped through the ports of Long Beach and Los Angeles.
Ross said Orange County will continue to cash in on the state's population growth, citing US Census Bureau estimates that California will add six million jobs and 12 million people who will need "at least four million new homes, places to shop, work and have fun."
Besides demand for commercial real estate to meet this growth, Ross pointed to the potential for opportunities with governmental agencies, including state and local entities requiring new facilities. He also cited the potential of joint ventures with railroads to develop unused or underutilized properties as well as acquisitions of surplus railroad assets, and opportunities for the renovation and rehabilitation of historic properties.
Gabriel and Ross were among five speakers at the Lusk Center's economic and fiscal outlook for Orange County and the nation. The others included William R. Halford, vice president of office properties for the Irvine Co.; Robert Best, president of Westar Associates; and Stephen Duffy, a partner at Ernst and Young.