“The best of times, the worst of times”. This quote from Charles Dickens aptly describes today’s economic environment. Good times are the rising GDP, (3.4%), low unemployment, (4.6%) and solid corporate profits. Thus, the stock market rose above 14,000 and the national office market drove vacancy rates down to 11.2% and the average asking rent up to $23.35.
Long Island’s economy has remained robust by experiencing moderate job growth. This has created a very low unemployment rate of 3.4% and a steady housing market. Thus the LI office vacancy rate continued dropping to 9.8% and the average asking rent remained high at $27.01 PSF.
Recently, however, we have experienced the worst of times; driven by the failing housing market, spiking oil prices, the credit crunch and the imploding mortgage industry. Some economists are predicting a future drop in consumer spending and confidence due to sinking house values and rising gas prices. Thus the stock market has dropped back to the 13,000 range fearing a low 2% – 2.2% GDP for 2007. Furthermore, since inflation is slowly rising the Fed will not offer any relief. So America may be facing the worst of times as the economy slows.
The worst of economic times should result in a softening commercial office market. However, many economists still believe that this period is just a blip in a still solid economy; it’s anybody’s guess. Only the future will tell if this is “the best of times or the worst of times”.
– Ross Selinger