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Answer: In the early stages of economy recovery

Question: Where are we (other than the CushWake economic forecast  Thursday at the Northwood Club)? It wasn’t Carnac who told us, but CushWake prez and CEO of the Americas John Santora.

CushWake prez and CEO of the Americas John Santora

John told the 400 attendees that employment is still declining, but should grow this year. Corporate profitability is up and there are improving trends in the Department of Labor stats. But, most compelling is that while overall payroll has declined, office-using employers have increased by 150k jobs since August. Some owners are meeting the market and taking opportunities to lock in credit tenants; it’s the old blend and extend. However, many landlords face liquidity issues. 2005 buyers at the peak of the market have lost their equity, their ability to fund, and their ability to tend property is suspect. For some, it will be impossible to rework restructures.

TAMU Real Estate Center chief economist Mark Dotzour

Despite TAMU Real Estate Center chief economist Mark Dotzour’s consideration that William Shatner may be one our generation’s finest actors, we’ll give him the benefit of the doubt on his prediction that the economy is trying to turn the corner. He likened the economy to a US armored vehicle roaming Afghanistan: Land mines have to be cleared before we can reach sustained recovery. Businesses have right-sized, profits are going up, and they’re ready to play again. The only area not running lean is the federal government, he says.


Mark said under normal circumstances, signs point to an upturn, but now there is much up in the air. Washington policies, such as talks of raising the capital gains tax from 15 to 24%, have hurt the value of real estate. Businesses are hording cash, sitting on their hands, and creating pent-up demand, with the uncertainty. Pretending the banking system is OK through the extend and pretend MO (we’ll extend your loan and pretend you’re a good borrower or we’re going to extend your loan and pretend we’re not insolvent) isn’t helping. The succinct catchphrase: a rolling loan gathers no loss.

CushWake’s Les Templeton, Trey Hammett, and Lana Antos

CushWake’s Les TempletonTrey Hammett, and Lana Antos helped coordinate the event, which included a few more Mark-isms:

  • Our state bird is the construction crane
  • We do well with massive empty buildings and always will. 
  • There are billions of dollars on the sidelines itching to go; if banks would clear the decks and put that property on the market, we would see transactions and prices firm up. 
  • 2011 promises rapid job growth and absorption, no new supply delivery and rents starting to rise as space starts to fill. 
  • More 2011: watch foreclosures from properties bought 1H07 and property values start to increase, anticipating positive absorption and very limited new product.
CushWake senior director Mike Gosslee, Broad Oak Energy CEO David Braddock, and McSearch chairman Frank McLaughlin.

CushWake senior director Mike Gosslee, Broad Oak Energy CEO David Braddock, and McSearch chairman Frank McLaughlin. Actively exploring and producing on 60k acres in West Texas, Broad Oak has 1,500 locations scouted with 130 wells drilling now. This year he plans to start another 210 wells. The oil and gas producer said service costs are low and now is the time to work.