BubbleOmics: U.S. Office Price Index Forecast to 2013

By: Andrew_Butter

My view is that the office market in USA has bottomed.

No particular reason, just I’ve been tracking office prices for twenty years and that’s what I think. Although you could argue that since I haven’t visited USA for three years and that was only for a week (during which time, interestingly I got a guided Sunday tour of Fannie or Freddy’s head office (can’t remember which), by the architect who designed it, and who was trying to impress me (he did, and he got the job, and then he screwed me (but that’s another story)).

If I’m right then it’s possible to figure out to figure out what’s next:

That’s if the basic premise of BubbleOmics is correct. That says the “fundamental” on or around the bust is equal to the square root of the peak multiplied by the trough, and that the time below the fundamental after the pop, is equal to the preceding time above.

I figured the line going forwards on 3% nominal GDP growth and no additions to supply; rough numbers, but the way the 30 Year looks, well that’s my best guess.

So you can buy the idea that al Qaeda won’t destroy America in the next four years, and that slowly, chaotically, the “ship” will start to turn the corner, well then, with interest rates so low, and a potential upside of 7.5% a year (plus what you collect in revenue), well real estate is traditionally a solid and safe investment option, and if you can find anyone to gear that, you could do worse.

By Andrew Butter

Twenty years doing market analysis and valuations for investors in the Middle East, USA, and Europe; currently writing a book about BubbleOmics. Andrew Butter is managing partner of ABMC, an investment advisory firm, based in Dubai ( hbutter@eim.ae ), that he setup in 1999, and is has been involved advising on large scale real estate investments, mainly in Dubai.

© 2010 Copyright Andrew Butter- All Rights Reserved
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