Sign of an economic rebound are beginning to show, according to survey findings from top executives in real estate. Survey data from the participants at the ULI McCoy Symposium on Real Estate Finance, held on December 14, 2009, in New York, present a mixed but generally improving outlook for a variety of key indicators.

In general, for 2010 these observers expect a healthy 3 percent gross domestic product (GDP) growth rate, a persistent 10 percent unemployment rate, positive job growth of 1 million jobs, modest growth in housing starts reaching 675,000 units annually, increasing bond rates, modest growth in property transactions, real estate investment trust (REIT) total returns of 10 percent, negative returns of -5 percent in the NCREIF index, growing REIT issuance, and office vacancies climbing higher to 18 percent. A summary of their responses appears below.

Most economists said that the economy bottomed between February and July of 2009, but job growth is certainly lagging and the volume of job losses is staggering. The question remains whether there will be a robust, average, or weak recovery, and participants had varying views on this, with the general consensus falling around 3 percent growth in GDP. With the job losses we have seen, even a robust recovery of 3.5 percent or more would take three years or more to re-create the jobs that have been lost since 2008.

Inflation is certainly a concern going forward. The federal deficit is also a major concern. The fiscal imbalances are outside Fed control, and will likely lead to inflation, higher taxes, and higher interest rates, and with higher interest rates this deficit problem will balloon further. Higher rates could also create further threats for real estate and housing. LIBOR will rise and this will affect those who are today benefiting from the existing low rates.

A lot of population growth assumptions are also in question. Many have assumed that population growth will continue as in the past, but there is reason to believe it may not, as immigration has declined and reverse immigration is actually happening in some areas, e.g., many Brazilian immigrants are moving back to Brazil, where the economy is better. This is especially important for the multifamily property sector, which may see much less absorption from these demographic sectors. Immigration is not driving markets in places like Phoenix and Florida as it has in the past.

Read more from the McCoy Symposium white paper.