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That would be an unusually protracted decline in GDP, according to James Smith, chief economist at Parsec Financial Management in Asheville, N.C. Since the government began keeping quarterly records in 1947, only two recessions (1953-1954 and 1974-1975) have lasted as long as three quarters. Even so, Goldman Sachs is predicting not three — but four — quarters of shrinking GDP, the longest recession on record.

By a more practical definition for commercial real estate, the recession began with the onset of net job losses in December 2007, according to Dr. Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University. The reduction in non-farm payrolls began to accelerate this fall and totalled 1.2 million through the first 10 months of 2008.

In each of the nation's past four recessions, job losses spanned an average of 17 months from peak to trough, Dotzour says. By that measure, job losses in the current downturn should continue through May 2009. “We've been in a recession almost this whole year,” he says, “so in my opinion we're almost half through.”

Smith is even more optimistic, positing that the recession is nearly over and that GDP growth will return, albeit slowly, by the end of this year. He expects GDP to expand at an average rate of 2.2% in 2009. Other forecasters don't see GDP climbing above negative territory until the first or even second quarter of 2009.

Lament for landlords

The recent acceleration in job losses is an ominous indicator of weakening demand for commercial space of all kinds, particularly for the office market. At 6.5%, the national unemployment rate in October already exceeds the 6.3% jobless rate that followed the 2001 recession. Bach expects the rate to peak between 7% and 8%, while Boston-based Property & Portfolio Research predicts the unemployment rate will crest just above 8% in 2009.

Investors can take some solace in the likelihood that this recession won't be followed by a jobless recovery like the one that followed the tech bust, economists say. That recession ended in November 2001, but job cuts continued for nearly two years as employers maintained a laser-like focus on efficiency.

Economists emphasize that the nation's employers remained lean through most of the last upswing, so the jobs that are currently being eliminated will need to be replaced when the recovery begins to take shape.

Forecasters expect a more typical three-quarter lag between a return to GDP growth and a corresponding uptick in real estate fundamentals, so landlords can expect demand to improve six to nine months after the economy begins to grow again. That will bring renewed demand for space in 2010.