The lackluster new construction activities during the early 1990s has resulted in a shortage of commercial rental space in many regions, which will continue to pump up property prices and rents and spur more construction. Continued robust growth is also expected in the banking and financial services industry. The current lower interest rate environment is particularly favorable for banks because it lowers borrowing costs and helps boost profitability. The brokerage business has also boomed in recent years as merger, underwriting, and securities trading businesses have soared. But analysts think it unlikely to happen in the foreseeable future.
Banks now generate a large portion of revenues by providing fee-based services.
To prevent any loan quality problems, many banks have also tightened lending standards. Industry watchers agree that it is hard to see banks facing problems on a scale similar to those in the early 1990s. Amid rising health care costs and a near-record level of mergers and acquisitions, the health care industry has come under pressure to maintain profitability. As hospitals, medical groups, managed-care, and health insurers continue pairing up to win a competitive edge, the pace of health care consolidation is likely to continue. These moves will pay off in more efficient operations and more cost savings.