Chief executive officer
LaSalle Investment Management Inc., Chicago
Assets under management: $23 billion
GDP: 3% to 4%
10-year Treasury note: 4.65% by June 30
Hot sectors: Apartments, grocery-anchored neighborhood centers
Favored regions: Washington, Texas, Southern California
Lynn Thurber is cautiously optimistic. She argues the tragic events of Sept. 11 accelerated the economy's decline, but that, in turn, has positioned the economy for a speedier recovery.
The Fed's 11 interest rate cuts in 2001 will work their way through the economy and, by the end of 2002, should result in a growth rate of 3% to 4% for the gross domestic product, she said.
Layoffs will continue into the first quarter, which could drive unemployment to 6% by March 31. "That's not drastically high," she said. But if the recovery occurs in the second half, the unemployment rate should be reduced to 5.5% by the end of the year.
Inflation is unlikely to heat up in the next two years, and should remain in the 2% to 3% range.
She expects real estate will have a tough first half of the year, because businesses are cautious about growing. "In terms of rental rates and occupancy, there is a mood of great caution. We have gone in well positioned in terms of supply and demand, so there won't be a major drop in occupancy or rental rates, but there will be an impact in occupancy. We've been seeing more vacancies in the office sector during the last 12 months and that could go to 12% in 2002.
"Our outlook in general is that real estate in pension fund portfolios will do what it's supposed to do - provide good cash flow, current income and diversification from other asset classes."
She expects the NCREIF Property Index to return between 7% and 9%.
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