"Wisdom of Crowds"

Here on the 27th floor of the Good News Friday Tower in Downtown Chicago, we are reluctant to comment on the stock market, much less make forecasts, since that is not our (ahem) stock in trade. Nevertheless, it is worth pointing out that nearly 51 percent of those polled by the American Association of Individual Investors in its weekly sentiment survey say they are bullish on the stock market. This ratio has moved above 50 percent only rarely in the past several years – just eight other weeks since January 2007. There are two ways to look at this. One is that small investors have a reputation for jumping into the market late in a cycle. But the other is the wisdom-of-crowds view, perhaps signaling a more optimistic outlook for the economy and business profits.

Getting back to commercial real estate, Grubb & Ellis recently surveyed its investor clients. One of the notable findings is that 81 percent say they are net property buyers in the next 12 months. This is consistent with an informal show-of-hands survey at the company’s client dinner last night in Chicago. Most of our guests had closed a deal in the last 60 days. At a similar dinner around this time last year, no one said they were buying or selling. But now, the commercial real estate industry – and in fact industries across the economy – are moving ahead, cleaning up the excesses of the bubble years and dealing with still-sluggish demand as best they can. They are no longer frozen in place. They are buying, selling, pruning, hiring (selectively) and positioning themselves for stronger growth in the years ahead. That is the very definition of a recovery. Compliments of:

Robert Bach SVP, Chief Economist Grubb & Ellis