Posted by: realtormarkpalace | March 17, 2012

Resurging U.S. Sunbelt economies may surpass national growth rates

CHICAGO – March 16, 2012 – Recent economic and real estate factors indicate that most of the Sunbelt geographies have already hit their cyclical lows and during the next six to 12 months are likely to surpass national growth rates, according to a special office report issued by Jones Lang LaSalle, a global financial and professional services firm specializing in real estate.

Although nearly all areas of the U.S. were negatively impacted by the recession, some of the hardest hit were the Sunbelt markets of Fort Lauderdale, Jacksonville, Las Vegas, Los Angeles, Miami, Orange County (Calif.), Orlando, Phoenix, San Diego, Tampa and West Palm Beach.

“The Sunbelt markets witnessed substantial drops in their overall economies in 2007-2009 with relatively no recovery in 2010-2011,” said John Sikaitis, senior vice president of research at Jones Lang LaSalle. “However, despite ongoing negative perceptions, most of these markets are undergoing a resurgence and poised for dramatic changes in 2012 and beyond. These economic upswings bring much optimism for future office and employment levels, as well as investor interest for the capital markets.”

Office recovery indicates future gains to surpass national levels

Currently nearly all Sunbelt markets posted substantial upticks in occupancy, experienced declines in vacancy and moved closer to seeing office rents and concession levels hit bottom. In 2011, occupancy gains in these beaten-down housing economies totaled nearly 6.0 million square feet and provided evidence that, as we move forward in 2012, most of these geographies will start to outpace the national recovery. This resurgence is due to strengthening employment, migration and housing market shifts with absorption rates in the 1.5 percent to 2.0 percent range across most Sunbelt geographies.

Employment gains picking up speed month by month

Markets such as Jacksonville, Miami, San Diego, Tampa and West Palm Beach have surpassed the national average in total non-farm, private and professional and business services (PBS) job growth. Floridian markets have dominated the jobs recovery of late: Jacksonville’s 5.9 percent annual increase in PBS jobs is among the largest in the nation, while Tampa’s 2.5+ percent annual growth in all measures shows signs of revival and diversification. Miami also surpasses both national expectations, increasing at around 1.9 percent overall annually.

Migration trends starting to turn positive

In terms of domestic migration, the majority of Sunbelt cities display a common pattern: a net loss of residents in 2007, shifting to an inflow of residents in 2008 or 2009 and then stable, yet increasing, population growth in 2010 and through 2011. Nearly 75 percent of the Sunbelt markets are now, once again, showing significant positive migration with Florida reporting the largest increase of at least 20 percent. As the hub to Latin America, Miami and Fort Lauderdale are leading the charge due to strong immigration trends from Latin America that drive population, business and economic growth.

Housing crunch on the verge of stabilizing

Since their pre-recession peaks, housing markets within the Sunbelt have experienced drastic reductions in price and sale volume, far greater than any other region of the United States. In most cases, these housing markets have yet to begin recovery. However, as a result of positive office demand growth, employment and migration indicators, there is a strong chance that most of these geographies are hitting their market low and will soon begin to recover, if this has not begun already.

Since employment and other indicators point to recovery while housing prices are only beginning to stabilize or in some cases are still decreasing, continued economic, employment and office sector growth will lead to gradual, but steady, gains in the housing sector moving forward.

Source: Jones Lang LaSalle

© 2012 Florida Realtors®

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