RE execs: Recession will be felt until 2004.

The impact of the recession will be felt until 2004. That was the consensus at the "Mapping the Future: Corporate Real Estate in Uncharted Territory" forum, held by GRID magazine and Newmark & Company Real Estate on Jan. 10. The state of the global economy and the various layoff announcements made by major corporations in the past few weeks indicate that real estate prices will be driven significantly down in 2002 and 2003.

"2002 is not the year in which we are going to be back and swaggering," said economist Hugh Kelley. "We should anticipate another three months of contraction in the new year of the kind we saw in the past quarter. And 25% of the recession would be felt mostly around Ground Zero. We will lose about 100,000 jobs in the office market, and the same amount or more in the blue collar sector. But the good news is that economists agree that the most dire predictions made after Sept. 11 are not going to (materialize)."

According to Kelley, the real estate market in particular will be able to whether the recession quite well.

"Real estate enters this without the crisis of the early 1990s," he noted. "Of course, hotels took a big hit and retail is not far behind, but the demand is slowly growing for industrial properties and office buildings seem to be pretty resilient. Real estate looks more like a safe haven right now than anything else."

Also speaking at the forum was Scott Panzer, executive managing director of Newmark & Company, who said that landlords should expect to be in a tenant's market for a while.

"Restructuring will continue through 2004 and we'll see a lot of write-offs," he said. "Continued weak demand is clear through 2003 and will drive down asking rents. But in 2004 the light will shine again. The vacancy rate at its peak this year was 17%. It really isn't terrible. And in terms of job losses we are not as bad as the rest of the world."

Representatives from JP Morgan Chase, Bloomberg Financial, and General Electric were present at the forum, as well, to provide insights into their companies' corporate strategies ma changing market. Among the topics discussed was whether corporate tenants plan on moving out of New York.

According to Leslie Whatley, senior vice president of global real estate and global services with JP Morgan Chase, the possibility of terrorist attacks will not be a deciding factor in that question.

"Of course, many of us are still scared, but you can't have a knee jerk reaction when you are making decisions like that," she said. "The bottom line is you have to look at where you business needs to be. And another thing you have to focus on is disaster recovery. If something were to happen to one of your buildings, could you still function?"

Harry Stein, director of corporal real estate for General Electric, conceded that his firm has gotten "some unsolicited incentives to move." So far, however, the company has decided to keep its offices in New York.

The panelists were also asked what measures they see as integral to the revitalization of Lower Manhattan.

"The only thing that it's going to take is time," said Paul Darrah, head of the facilities department at Bloomberg. "Right now people don't want to go there because they feel it's bad karma. But in four-five years that feeling is going to disappear."

Whatley, on the other hand, seemed to think that the major issue is transportation. "We have 14,000 people Downtown right now, of which I am one," she said, "and it's a hassle to get there. One of the issues that the real estate companies need to work on with the city is transportation."