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Home > Industry Analysis > Research & Analysis > Revision "Ranking Metropolitan Areas at Risk for Overbuilding" Third Quarter 2000 Regional Outlook |
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Revision "Ranking Metropolitan Areas at Risk for Overbuilding" Third Quarter 2000 Regional Outlook |
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A computational error led to an overstatement of total construction activity in the retail property segment in the Third Quarter 2000 Regional Outlook. This error materially affects two charts, Chart 4 and Chart 11, in the above-named In Focus article. In Chart 4, the bar segments labeled "Completions" were calculated correctly; however, the bar segments labeled "Under Construction" were overstated by approximately a factor of four. Accordingly, total retail construction activity was overstated for every market listed in both Chart 4 and Chart 11.To correct this error, revised versions of these charts are provided below. |
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Chart 4
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Chart 11
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After this revision, the criteria applied by the author would still result in retaining eight cities on the list of markets at risk of commercial real estate overbuilding that had been identified in an article published in the First Quarter 1999 Regional Outlook.1 These markets are: Atlanta, Charlotte, Dallas, Las Vegas, Orlando, Phoenix, Portland (Oregon), and Salt Lake City. However, as a result of the revision, only four additional markets--Denver, Fort Worth, Jacksonville, and Seattle--would be added to this list. According to the author's criteria for inclusion on this list, namely that a city must rank in the top 10 markets nationwide for construction activity as a percent of existing stock in at least two property segments, Sacramento would not qualify for inclusion. Sacramento still ranks 6th among major markets for development in the industrial segment (Chart 3) but falls from 8th to 13th nationally among retail markets after the data revision ( Chart 4, Revised). The net effect on the rankings of other cities in terms of retail construction activity was minimal.This revision should not be construed as a reversal of the author's conclusion that the Sacramento market is among the metropolitan areas that "are particularly sensitive to any decline in real estate demand that could result from a slowdown in the national or regional economy." Even after the revision, Sacramento would have qualified as an at-risk market under the criteria applied in the original 1999 report. Furthermore, as cited in both the 1999 and 2000 reports, private market analysts have expressed concerns about the recent pace of development in both the office and retail property segments in Sacramento. The editors of the Regional Outlook are committed to achieving the highest possible degree of accuracy in the articles that appear in this publication, and to promptly correcting errors when they are identified. We welcome your continued feedback as a means of maintaining our high standards for the quality of this publication. Sincerely,
George E. French 1 See "Commercial Development Still Hot in Many Major Markets, but Slower Growth May Be Ahead," Regional Outlook, First Quarter 1999.Posted 12/1/00
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