Sluggish Housing Construction Reduces 2011 Sawtimber Forecast by 6% in US South; Pulpwood Markets Become Increasingly Localized and Diversified

/PRNewswire/ -- Anemic housing construction - and the resulting impacts on lumber demand - delayed the expected recovery of pine sawtimber prices this year. Despite the apparent delay in recovery, several states, and end markets for pulpwood, show signs of resiliency. Forisk Consulting's mid-year update of its 10-year, state-by-state forecast for pine sawtimber and pulpwood stumpage in the US South reflect the variability across local timber markets as sawmills retool and bioenergy projects come on-line.

South-wide, Forisk's update indicates pine sawtimber prices will be 6.4% lower in 2011 than expected six months ago. Results vary across states, with Alabama, Arkansas, Georgia and South Carolina best positioned to rebound quickly as lumber demand strengthens. According to Forest Economist Dr. Tim Sydor, "Expectations for key macroeconomic factors - such as GDP and housing starts - have, frankly, proven to be way off-base. GDP grew faster than expected, but housing starts are expected to remain 30% below 2009 projections. As a result we've adjusted our forecast of US softwood lumber consumption downward by 6.3 billion board feet for 2010. Lower lumber demand means lower stumpage prices, and pine sawtimber prices in the South have been revised downward by nearly $1 per ton for the year."

Forisk's President, Dr. Brooks Mendell, agrees that 2010 is a "bridge" year and emphasizes to investors the benefits of patiently following local markets. "Robust local markets, with capitalized mills and resilient loggers and wood suppliers, pay dividends to their investors through faster recoveries."

Pulpwood demand, relative to sawtimber, is distinct for the complexity of its end-use markets. "We follow several factors that have push-and-pull effects on pulpwood demand and stumpage prices," says Dr. Sydor. "For instance, while a housing recovery lifts demand for pulpwood from OSB producers, it decreases demand for roundwood through increased residual chip flows from lumber mills." Forisk projects that 9.6% of pulpwood demand across the South will come from new bioenergy facilities. "Bioenergy and OSB end-use markets drive any growth in pulpwood demand over the next 10 years," says Dr. Sydor.

Pine Pulpwood and Sawtimber forecasting products from Forisk Consulting help industry leaders follow and understand the impacts on stumpage prices from the economic recovery and changing demand for lumber, pulp and bioenergy products. For more information, visit www.foriskstore.com and click "Stumpage Price Forecasts."

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Employers More Focused on Keeping Current Staff Levels Than Hiring, According to Quarterly Job Forecast from CareerBuilder and USA TODAY

/PRNewswire/ -- Following a loss of 2.6 million jobs in the last four months*, U.S. employers are holding off on staff expansions and focusing efforts on keeping current headcount as they navigate through a tough economy. This is according to the latest quarterly survey from CareerBuilder and USA TODAY, conducted by Harris Interactive(R), tracking projected employment trends. The survey, titled "Q2 2009 Job Forecast," was conducted from February 20 through March 11, 2009 among 2,500 hiring managers and human resource professionals and over 4,400 workers in private sector companies.

"We'll be looking for the market to stabilize over the next three to six months, when you'll hopefully see job losses below 100,000 and eventually closer to zero," said Matt Ferguson, CEO of CareerBuilder.com. "Employers want to hold on to their talent and are taking measures to contain costs and bring in new revenue streams, so they can maintain their staff levels. Sixty-four percent of employers expect there will be no change in their number of full-time, permanent employees in the second quarter."

Hiring in Q1 2009

Thirteen percent of employers said they increased their number of full-time, permanent employees in the first quarter - down from 31 percent this time last year - while 60 percent reported their staff levels remained the same. Twenty-six percent reported a reduction in headcount, up from 13 percent this time last year. One percent were undecided.

Hiring in Q2 2009

Fourteen percent of employers expect to add full-time, permanent employees in the second quarter, relatively unchanged from the first quarter of 2009 and down from 29 percent in the second quarter of 2008. Fourteen percent anticipate there will be a decrease in headcount in the second quarter while 64 percent expect no change and 7 percent are undecided.

Layoffs

Twenty-two percent of hiring managers reported there were layoffs at their locations in the first quarter of 2009, up from 11 percent this time last year. Twelve percent anticipate there will be layoffs in the next three months while 16 percent are unsure. Seventy-two percent expect no change.

Looking at a subset of managers specializing in human resources, nearly half (48 percent) believe their organizations will benefit from the economic stimulus in terms of getting more business. Twenty-three percent said their companies are planning to bring back workers who were laid off once the economy turns around.

Six Employment Trends for Employers and Job Seekers

No. 1 - Trimming Perks and Benefits - Companies are taking interim measures to free up funds to weather the economic storm. Forty-two percent of employers reported they experienced a cut in perks and benefits at their organizations in the first quarter of 2009; 31 percent expect there will be cuts in the second quarter of 2009. The top three areas that will be impacted are bonuses, 401K matching and healthcare coverage, according to the survey.

No. 2 - Upgrading Talent Rosters - Twenty-three percent of employers said they are taking this time, when hiring has slowed, to replace lower-performing employees with top talent that may not have been available in a healthier economy. Job seekers who stand to benefit the most include those operating in sales, accounting/finance, retail and customer service.

No. 3 - Postponing Retirement - Six-in-ten workers (60 percent) over the age of 60 said, in a separate survey, they are putting off their retirement due to the impact of the U.S. financial crisis on their long-term savings. The majority (73 percent) anticipate it will take them up to six years to recoup lost savings while one-in-ten fear they may never be able to retire.

No. 4 - Transferring Skills - Seventy-one percent of workers who were laid off and have not found work said they are looking for jobs outside of their chosen profession either because they're ready for a change or there are no available jobs in their field. Hiring managers are amenable with 69 percent stating they would hire someone who didn't have experience in their profession, but had transferable skills.

No. 5 - Relocating - Thirty-nine percent of workers who were laid off and have not found work said they would consider relocating to another city or state for a job. Employers are open to recruiting candidates from other cities with 28 percent of hiring managers stating they would pay to relocate a good job candidate.

No. 6 - Going Back to the Classroom - Twenty-one percent of all workers surveyed are going back to school for formal degrees, certifications and refresher courses to make themselves more marketable to employers.

Hourly Workers in Q1 2009

When asked if hours had changed, on average, for hourly workers in Q1 2009 year over year, 53 percent of hiring managers reported no change in the number of hours offered while 25 percent reported hours were cut. Five percent stated that hours had increased while another 5 percent were unsure.

Hiring By Region in Q2 2009

The South continues to perform better than other regions in terms of hiring, seeing the benefits of growth in healthcare and energy. Sixteen percent of hiring managers in the South plan to increase their full-time staff, compared to a 14 percent average among other regions. The Northeast, plagued by losses in banking and financial jobs, is expecting the largest decrease in headcount among the regions. Nineteen percent of hiring managers expect to trim staffs compared to 14 percent in the Midwest and West and 12 percent in the South.

Compensation in Q2 2009

Tightened budgets are restricting pay increases and, in some cases, resulting in pay reductions. Forty-two percent of employers expect to increase salaries for full-time, permanent employees in the second quarter, down from 70 percent this time last year. Twenty-nine percent estimate the average raise to range between 1 and 3 percent, 12 percent expect an average raise of 4 to 10 percent while 1 percent expect raises to be 11 percent or more. Forty-six percent of employers anticipate no change in compensation levels, 7 percent expect a decrease and 5 percent are unsure.

*Bureau of Labor Statistics, February 2009 Employment Situation Summary

Note: Totals may not equal 100 percent due to rounding.

Survey Methodology

This survey was conducted online within the U.S. by Harris Interactive on behalf of CareerBuilder and USA TODAY among 2,543 hiring managers and human resource professionals (employed full-time; not self-employed; with at least significant involvement in hiring decisions; non government); and 4,435 U.S. employees (employed full-time; not self-employed; non government); and 361 respondents who have been laid off in the past 12 months from a full time position and have not found a new job; ages 18 and over between February 20 and March 11, 2009 (percentages for some questions are based on a subset of U.S. employers or employees, based on their responses to certain questions). With a pure probability sample of 2,543, 4,435, and 361, one could say with a 95 percent probability that the overall results have a sampling error of +/- 1.94 percentage points, +/- 1.47 percentage points, and +/- 5.16 percentage points, respectively. Sampling error for data from sub-samples is higher and varies.

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Grubb & Ellis Predicts a Challenging 2009 for Commercial Real Estate as Economy Weathers Recession

/PRNewswire-FirstCall/ -- Grubb & Ellis Company (NYSE:GBE) , a leading real estate services and investment firm, today released its 2009 Global Real Estate Forecast, which indicates that 2009 will be a challenging year for commercial real estate with the economy starting the year 13 months into what may become the longest recession since the 1930s.

"The economy will struggle in 2009, which will dampen demand for all product types, resulting in negative absorption and increased vacancy," said Robert Bach, senior vice president, chief economist of Grubb & Ellis. "We expect total payroll job losses in the range of 1 to 2 million in 2009 on top of the 2+ million in 2008. GDP is likely to shrink by 1 percent in 2009, compared with growth of 1.3 percent and 2 percent in 2008 and 2007, respectively."

The investment market, which saw transaction volume plummet in 2008 as the financial markets collapsed and the credit markets froze, is expected to see a 15 percent increase in sales volume in 2009 as distressed properties are brought to market, particularly those acquired in the past couple of years with floating rate debt. Loan delinquencies and foreclosures will increase with more properties returning to lenders, who will be anxious to sell them. Debt capital will remain expensive and tight in 2009, but more of it will be available than in 2008, and there will be a slow increase in equity capital flowing into the market from private, institutional and offshore investors waiting on the sidelines. The coming year should be more active as the gap between buyers and sellers gradually narrows, with sellers making up most of that difference.

Debt will be the hot investment type in 2009. Investments could be made in CMBS, collateralized debt obligations or funds investing in these assets. Or debt investments could be made at the property level with owners seeking to refinance their properties. More equity investments will be made as well in 2009 as investors holding an estimated $300 to $400 billion in institutional, private and offshore equity begin to deploy their capital in response to falling prices.

The outlook is equally challenging for global markets, both developed and emerging. The previous contention that emerging markets would largely escape the financial crises in North America and Europe looks to be overly optimistic. This will not be an ordinary downturn, but rather a structural correction in global capital markets that will impact every sector of the economy and real estate market.

One benefit of the global market correction has been the rapid evaporation of inflationary pressures in most key economies. The decline in inflation has left governments less reticent in using interest rates as a weapon in the battle to stave off sharp economic and commercial decline.

Office Tenants Will Have the Upper Hand in 2009

The office construction pipeline contained 90 million square feet at year-end 2008, the lion's share of which will be delivered in 2009. This combined with a projected 45 million square feet of negative absorption, including a big jump in sublease space, will push vacancy up by two percentage points to end 2009 at 16.5 percent. Tenants will have greater negotiating leverage in 2009 with concession packages becoming more generous as the year progresses. The growing inventory of sublease space will put downward pressure on asking rental rates for direct lease space, which are expected to decline in the range of 4 to 5 percent for both Class A and B space by year-end.

"Employment growth drives demand for office space and the labor market will be shrinking in 2009," said Bach. "Government and health care will be among the few sectors with growing demand for office space."

In this difficult market, Washington, D.C. should be at the top of office investors' buy list, according to Grubb & Ellis' Investment Opportunity Monitor, a proprietary market ranking in which Grubb & Ellis annually measures 60 office, 53 retail, 56 apartment and 55 industrial markets against 13 to 17 criteria important to the performance of real estate investments. Washington, D.C., is the one market that will benefit from the credit crisis as the government expands to implement its economic recovery plan.

Following Washington, D.C., on the top 10 list are Portland, Ore.; Los Angeles; San Francisco; Austin, Texas; Dallas-Fort Worth; Houston; Raleigh-Durham, N.C.; Boston; and Oakland, Calif. The Texas markets offer strong population growth, while the others offer strong population growth as well as natural barriers to entry.

Industrial Users Strive to Reduce Costs

Businesses look at industrial space as a productivity enhancer, an integral part of their supply chain strategies. Their relentless quest for cost-saving efficiencies should sustain demand for industrial space in 2009, despite the weak economy. However, supply is expected to outpace demand with absorption dipping into the red and the vacancy rate rising by 60 basis points to end the year at 9.4 percent as the construction pipeline delivers space still underway.

"The industrial market will recover more quickly than the office market because the construction pipeline is set to thin out sooner," said Bach.

For the third consecutive year, the logistics business is driving demand for space in Grubb & Ellis' Investment Opportunity Monitor's 2009 rankings. Los Angeles retained the top spot on the list, with its proximity to the busiest ports in the U.S., negligible vacant space and little developable land. Also making the list were other cities with nearby port facilities including Houston (No. 2), Oakland, Calif., and Seattle (tied for No. 4), Miami (No. 8), Portland, Ore. (No. 9) and New Jersey (No. 10). Inland distributions hubs Atlanta (No. 3), Dallas (No. 6) and Chicago (No. 7) rounded out the list.

Will Consumer Spending Rebound in 2009?

Consumer spending hit a 28-year low in 2008 with retailers in the crosshairs of the downturn. Grocery store-anchored centers in mature trade areas will hold their ground in 2009, while centers on the urban fringe, where housing construction has stalled will suffer. Retailers will be even more conservative with their expansion plans in 2009, with more store closings and fewer openings. Expect higher vacancies and softer rental rates by year-end.

"Value retailers are garnering the majority of consumers' dollars in this challenging economic climate," said Bach. "Even the luxury retailers, which are usually immune to downturns, are feeling the pain."

According to Grubb & Ellis' Investment Opportunity Monitor, no retail market will escape the effects of the recession entirely, but some offer more protection due to factors such as strong population growth, a high median income and/or limited land for further development. Los Angeles topped the list for retail investment followed by Washington, D.C. California had an additional three cities in the top 10 with Orange County (No. 6), San Francisco (No. 7) and San Diego (No. 9). Texas appeared three times with Houston (No. 3), Dallas (No. 4) and Austin, Texas (No. 8). Also making the list were Atlanta (No. 5) and Portland, Ore. (No. 10).

Multi Housing Will See Vacancy Rising as Well

The housing slump and recession have produced countervailing forces that will both help and hurt the multifamily market in 2009. Apartments are seeing some new renters who have lost their homes to foreclosure, while landlords are able to maintain existing renters who are waiting for prices and mortgage rates to fall further. However, new graduates who can't find jobs are doubling up with a roommate or moving in with a relative to conserve cash. At the same time, the apartment market faces competition from an increasing supply of unsold condos and foreclosed homes returning to the market as rentals. The negative forces are expected to have a slight edge in 2009 resulting in slowly rising vacancies for the multi housing market this year.

Of the top 10 apartment markets in Grubb & Ellis' Investment Opportunity Monitor, seven are on the West Coast and three are on the East Coast. All offer barriers to entry, good economic prospects and high home prices. Los Angeles ranks first followed by San Francisco; Orange County and Oakland, Calif.; Washington D.C.; San Diego; New York City; San Jose, Calif.; Long Island, N.Y.; and Portland, Ore.

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