Dhawan: Recession Won't End Till Mid-2010

ATLANTA (Jan. 13, 2009)- The current recession will last 30 months, and when the recovery starts, it will be weak, said Rajeev Dhawan, director of Georgia State University's Economic Forecasting Center.

Dhawan said the current recession started in December 2007 and he doesn't expect recovery - in the form of substantial job growth - to begin until mid 2010. "This recession is not like the '82 one," he said. "This is like the '73-'75 recession. It hits you like a hammer in the end. [Also], the recovery will be weak this time."

Dhawan made his comments during a Q-and-A session after delivering the keynote speech at GSU's annual Views from the Top commercial real estate forecast conference at Allen Plaza in downtown Atlanta.

The recession has hammered office markets from Atlanta to Los Angeles, and the View from the Top event - appropriately enough - was held in vacant office space in 55 Allen Plaza. Attendance at Views from the Top clearly was down from when it was held during the real estate heyday of 1999 and 2000.

Hal Barry, chairman of Barry Real Estate Cos., developer of Allen Plaza, sounded pretty pessimistic during a panel following Dhawan's speech. Banking "basically is out of the real estate business," Barry said. With fewer banks to provide debt, it will be harder for developers to access the capital needed to do business.

"I don't buy his 30-month [prediction]," Barry said of Dhawan."It isn't over until someone figures this out." On a positive note, Barry, shown at right in photo, pointed out that the W Hotel at Allen Plaza is about to open and that Barry Real Estate has a lot of land left for development at Allen Plaza.

But, Barry said his company's partnership with Atlanta-based REIT Post Properties to develop multifamily product at Allen Plaza "has slowed down." The residential aspect of Allen Plaza will be critical in Barry's endeavor to create a lively mixed-use project.

He also said sales of the condos atop the W Hotel haven't lived up to expectations. "We're slow like everybody else." Barry said 10 of the 74 condos have been sold. And while development at Allen Plaza will continue, "we've had to back off on [other] projects," he said.

Meanwhile, Dhawan, known for his entertaining delivery and bold predictions, said he has no concern that the country will slip into a depression. "That possibility has been taken off the table by all the actions (the government) has taken," Dhawan said.