sit in your office, thinking about shopping at the mall, for your business vacation hotel trip
And, then remember how much has been lost, to the time price of money.
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This graph shows investment in offices as a percent of GDP.
Office investment as a percent of GDP peaked at 0.46% in Q3 2008 and has declined sharply to a new series low as a percent of GDP (data series starts in 1959).
Reis reported that the office vacancy rate is at a 17 year high at 17.4% in Q2, up from a revised 17.3% in Q1 and 16.0% in Q2 2009. With the office vacancy rate still rising, office investment will probably decline further - although most of the decline in investment has already happened
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The second graph is for investment in malls.
Investment in multimerchandise shopping structures (malls) peaked in 2007 and has fallen by over two-thirds (note that investment includes remodels, so this will not fall to zero). Mall investment is also at a series low (as a percent of GDP) and will probably continue to decline through 2010.
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The third graph is for lodging (hotels).
The bubble boom in lodging investment was stunning. Lodging investment peaked at 0.32% of GDP in Q2 2008 and has fallen by over 70% already. And I expect lodging investment to continue to decline through at least 2010.
As projects are completed there will be little new investment in these categories for some time.
Also notice that investment in all three categories typically falls for a year or two after the end of a recession, and then usually recovers very slowly (flat as a percent of GDP for 2 or 3 years). Something similar will probably happen again, and there will not be a recovery in these categories until the vacancy rates fall significantly
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Q2: Office, Mall and Lodging Investment
http://www.calculatedriskblog.com/2010/08/q2-office-mall-and-lodging-investment.html
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