The Azucena Take: The Economic Recovery is Happening

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Since January, I’ve looked at and broken down a series of studies done by Marcus & Millichap regarding the economic landscape of 2021. This week, I’m going to do something different by looking at what others have to say about the economic landscape and what it means for commercial real estate investors.

Economists at several financial institutions have published their outlook for the 2021 economic landscape and it has supported what we have been saying. The most resent forecast was from Morgan Stanley, which anticipates that we could see one of the largest rise in GDP since the 1950’s. Here is a breakdown of all the forecasts just to give you an idea:

  • Morgan Stanley: 8.1%

  • Goldman Sachs: 6.8%

  • Capital Economics: 6.5%

  • Barclays: 6.1%

  • Bank of America: 6.0%

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So why is there so much confidence that 2021 will be a prosperous year?

The new stimulus along with the roll out of vaccines has given a boost to investor confidence. The third stimulus package passed last week and it provides a solid lifeline for the economy. Meanwhile, 10% of Americans have been fully vaccinated with 2.5 million shots administered per day.

We are already witnessing the affects of the new stimulus and the rise of a vaccinated population. States and counties have started to scale back on social restrictions. Employment numbers are still on the rise and they are expected to grow even more in the next few months.

If these trends continue, commercial real estate investors could start benefiting from a post-pandemic economy. Hotels could see a rise in occupancy rate along with a stabilization of retail property. Industrial and apartments will continue to be strong as they will be focused on meeting the new demand. The future of office will be the only uncertainty as its demand will be based on a companies WFH policy and the overall change in employee lifestyle.

Back in January, we stated that commercial real estate investors will have a solid year even if the economy grows at a small 5% growth rate. Don’t expect the economy to grow with those low numbers as 2021 is going to be a prosperous year for everyone.

Carlos Azucena