Good News Friday • 12.30.11

90 Percent Good News In 2012

Grubb & Ellis will release its 2012 Forecast report on Tuesday, but those of you dedicated enough to be in the office today, or at least dedicated enough to read your email, will get a preview. The outlook is, if not great, at least not bad, building on the momentum from late 2011:

· U.S. GDP up 2 to 2.5 percent. The European sovereign debt crisis and the unfolding recession in the eurozone will weigh on U.S. growth but not reverse it.

· 1.5 million net new payroll jobs, equivalent to 2011.

· Low interest rates with the 10-year Treasury yield ending 2012 between 2.5 and 3 percent, a modest increase from the abnormally low, sub-2 percent levels of late 2011.

· Vacancy rates will tighten: office down 110 bps to 15.7 percent, industrial down 80 bps to 8.7 percent, retail down 10 bps to 11.0 percent, and apartments down 40 bps to 4.9 percent.

· The warehouse/distribution sector will join apartments to see rental rates increase in 2012. National rent indexes for other property types will be mostly flat, but at the local level, rates in a growing number of the top properties and submarkets will get some traction.

· The dollar volume of commercial property sales will rise another 25 percent in 2012. Look for a slight decline in cap rates for non-distressed sales.

Grubb & Ellis Research wishes you a prosperous 2012 filled with 90 percent good news and 10 percent so-so news (just enough to fully appreciate all the good news).

Best regards,


Robert Bach

SVP, Chief Economist

Grubb & Ellis


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About CRE Northwest

Specialist in office & investment real estate in Seattle & the Eastside
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