In contrast with past downturns, the recent recession was not preceded by a stretch of overbuilding that boosted supply.

In 2012, and possibly beyond, the “new normal” for the US economy will be a growth rate of around 2% rather than the 3% growth rates of the past, according to a Green Street Advisors, Inc. report in mid-December 2011.

Jobs growth in 2012 will be just good enough to spur tenant demand for space.

In contrast with past downturns, the recent recession was not preceded by a stretch of overbuilding that boosted supply.

Financing for new construction is hard to find, and supply growth is the lowest in more than a generation, barely exceeding the rate of building obsolescence. As a result, the lack of new supply will nearly offset the weakness of the demand recovery.

Across commercial property markets, fundamentals are improving, led by multifamily properties. Prices should increase about 5% over the next six months, Green Street noted, an outlook that is notably improved over recent months. This is largely because REIT investors are expressing more optimism and the high-yield market is evidencing less skittishness.

These factors should eventually find their way into property valuations.

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