The 2012 Super Bowl featured a 2 minute advertisement by Chrysler featuring Clint Eastwood stating that “its halftime in America and our second half is about to begin” Many thought back in 2009 when Chrysler, General Motors and several automotive suppliers filed for bankruptcy protection that Detroit lost the game. Now, Detroit is being depicted as an example for the rest of the country to follow. Yes, its halftime in America and Detroit is leading the way to winning the game!
General Motors recently announced a $7.6 billion profit for 2011, the highest in its 101 year history; Chrysler posted its first profits in 5 years. The Automotive News is reporting that Carmaker’s sales targets outpace initial forecasts for the industry at 14.5 million units for 2012. While many feel that this growth will be hard to sustain, Detroit’s automotive industry has been actively expanding in emerging markets such as China and India while experiencing slower sales in Europe due to the Euro debt crisis. The word on the street is that Detroit is poised to lead the country out of the long-running recession.
We continue to see signs of improvement in the commercial real estate sector as activity picks up. As rents and values have not yet started to increase; many tenants in the market are looking to take advantage of the opportunities available to them in the market with the expectation that rents and values will slowly creep up.
While we are seeing improvements in the market, the economy is still fragile as Greece continues to recieve bailout money from the European Union while gas prices are expected to spike due to continue political unrest and instability in Syria and Iran. Iran’s threat to shut down the Strait of Hormuz could see oil prices spike up to $150.00 per barrel as a fifth of the world’s oil supply passes through the strait on its way to market. These events could see consumers looking to spend less on vacations during the upcoming summer season and look to cut costs in their personal budgets to offset the higher gas prices.
While many thought that the Detroit area was dead, it has continued to show its resilience and stamina. Yes, it is halftime in America, and Detroit is leading the way to winning the game!
Matthew B. Fenster, CCIM, MCR