What trajectory are we on, anyway?

It’s not clear whether the spring uptick in inquiries is a sign of increased activity or simply seasonal


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At a recent round of meetings, several people asked me if I was seeing more activity, and were things getting better? Well, we have seen an uptick of inquiries on all types of properties -- office, medical, warehouse, even manufacturing. But to be honest, we are not sure whether this is the typical spring burst of activity and interest or a sustained and ultimately measurable increase in activity that will lead to improvement in the local and regional commercial real estate sector.

So the March jobs report of 88,000 new jobs was disappointing. But this could be statistical “noise.” They will reset the numbers for months afterward, so one month’s numbers are not sufficient to mark a trend.

Driving back from New York City a week ago, I mentally tallied which of our customers and clients were actually growing and adding employees. This exercise led me to believe that five of about 50 clients were growing, but three of those were doing so mostly by mergers and acquisitions, which left only two growing by internal, self-generated hiring. That's 2-4 percent of the sample (because the sample size is so small, there needs to be a big margin of error). But the 2-3 percent range is what the national press reports as well.

We know that New Hampshire is no longer a charging economic gazelle here in New England. In-migration has fallen way off (see the Center for Public Policy Studies report, “From Tailwinds to Headwinds,” which is short and very readable).

Having a 23-year-old son who graduated from college last year, I am reminded daily how difficult it is for these young graduates to get their first full-time job (with benefits). Tim has worked as many as four part-time jobs over the past year. For my generation, graduates would typically double their salaries in the first 10 years of their career and double them again over the balance of their working years. Today, young graduates are not getting on the initial trajectory, so their lifetime earnings could be considerably less.

Taking its toll

Every day we see the tug-of-war in Washington. If we are honest, we would have to admit we cannot afford the level of government services we have now -- hence, the debt levels for states and the national government are not sustainable. Paul Johnson, a British historian and Forbes columnist wrote in a recent article, “Peering Into the Abyss,” that nobody really knows how to get things humming again, because nobody knows what it takes to make them hum in the first place.

He cites John Maynard Keynes’ reference to “animal spirits.” David Stockman, a former Reagan budget director, wrote in a recent New York Times op-ed, “State-Wrecked: The Corruption of Capitalism in America,” that “the Main Street economy is failing while Washington is piling on a soaring debt burden on our descendants -- unable to rein in either the welfare state or raise taxes needed to pay the nation's monthly bills.”

The sequester is just the most recent example of dysfunction in the nation’s capital. Johnson calls for better leadership at both the national and state levels. I would agree, but I see a dearth of candidates.

Here, closer to home, will a casino really solve our problems and balance the state's budget? Should it? By most prognostications, the economy is not about to start soaring (here in the United States, in the euro zone, or even China) so we need to figure out how to pay our way in these doldrums (because they may last several more years).

In our office, we are paying our bills mostly by helping our clients figure out how to pay theirs -- both for-profit and not-for-profits continue to grind out a positive balance sheet year after year, but they are not shy to tell you it is not easy, and year after year takes its toll. But the United States is nothing if not resilient, so we are likely to make the turn and start addressing our imbalances in terms of debt, spending and philosophy of government services.

Bill Norton, president of Norton Asset Management, Manchester, is a Counselor of Real Estate (CRE) and a Fellow of the Royal Institution of Chartered Surveyors (FRICS). He can be reached at wbn@nortonnewengland.com.

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