Summer is here — how about the recovery?

With the calendar year nearly half over, people ask me daily, “When are things going to pick up?” I wish I knew. Unemployment is continuing to grow, though less robustly than in the past several quarters. For real estate people, unemployment is not a good thing because fewer employees mean tenants need less space.

If we are in a small and quick correction like the two “mini” recessions in 2000 and 2002, then folks hang on and wait for the “V” correction to kick in and hire back those that were furloughed. However, in the second quarter of 2009, we are deemed to be in (pick one) A) the worst recession since the Great Depression; B) a major correction that will take several years to work out; C) the great unraveling of risky financialization; or D) the end of the world as we know it.

I am not quite ready to throw in the towel yet. Clearly, we are in a major correction that needs to squeeze out trillions of dollars of excess leverage. We need to reset the system before we can move on, and it will take as long as it takes. The massive economic stimulus is one tool hoping to stop the free fall and get us moving back toward 2006-2007 economic levels.

I just got off the phone with a business owner (with whom I am working to negotiate a power-line easement) who said to me, “Bill, you and I will get through this, but I don’t know about our children and grandchildren.” I don’t have any grandchildren (yet) but I know my college-age son just called to say he lost the third of his four part-time summer jobs because a full-time employee’s husband had lost his job and she needs more hours to make ends meet. This is further anecdotal evidence, but those being furloughed one or two days a week are growing in numbers.

So when asked, I say that I see 2009 continuing to auger down. I see 2010 as relatively flat and I think it is 2011 before we see measurable economic improvement. Now, depending on whether you see unemployment figures as a leading or lagging indicator, it suggests that job numbers will not start to grow until next year. Depending on what we retrospectively choose as a start date (late 2007, early-to-mid 2008, the fourth quarter of ‘08) then there will be two-plus years of diminished employment. This long spell is prompting businesses to seriously consider how much space they really need, at what rate or cost and where they need it.

The longer this goes on, the more migration to lower-cost venues. Prime example: GM’s announcement that it may move its headquarters out of Detroit. Ouch!

But why not? In a fully globally competitive world, why not seek the best locations, labor pools and regions from which to compete? If the slowdown goes on long enough, do not be surprised if northern, urban, old-line regions begin to see leakage to the southern, suburban, new regions such as the Carolinas. It would start as a trickle but could turn into a gusher. Where might GM be headquartered in 2015? Atlanta? Austin? Greenville?

Bill Norton, president of Norton Asset Management, is a Counselor of Real Estate (CRE) and a Fellow of the Royal Institution of CharteredSurveyors (FRICS). He can be reached at