It won't be pretty.

That's our quick – and oh-so-obvious – prediction for how the local economy will fare next year.

We anticipate the capital region will endure higher unemployment (perhaps hitting 10 percent), more hard times in housing, a grim market for commercial real estate and perhaps a bank failure or two.

But there also will be some positives, including a few new development projects as nimble entrepreneurs take advantage of opportunities.

Here's our annual forecast:

Housing revival?

Builders and buyers will continue struggling in 2009, but by midyear we see home prices bottoming out, foreclosures dropping and sales picking up, spurred by declining interest rates.

Toward year's end, we'll even see some builders dusting off long-shelved subdivision plans.

And we envision at least one CADA-backed project breaking ground next year. The most likely: Developer Ravel Rasmussen Properties will start building apartments and retail on twin corners at 16th and O streets.

Commercial pains

After a tortuous year in the residential market, the commercial sector is about to feel the pain.

Lots of retailers will close, office tenants will thin out, industrial space will go begging. The result: soaring vacancy rates in overbuilt markets like Roseville, El Dorado Hills and Natomas – and plenty of properties being swept up by lenders.

The bright news? More golf time for commercial real estate brokers.

Downtown moves

We'll see a half-dozen restaurants and a couple of nightclubs shut their doors.

Will there be progress on invigorating the blighted 700 and 800 blocks of K Street? Of course not.

But the neighborhood news isn't all grim. Westfield Corp. will proceed with its multimillion-dollar renovation of Downtown Plaza. And across the river, work will finish on CalSTRS' 14-story headquarters site.

Let's eat

Despite tough times, most local grocers will survive the year. (We all need to eat, right?) That's partly because they won't face competition from Fresh & Easy, the British-owned chain which will again delay its move into Northern California.

Meanwhile, Safeway will select Sacramento as a test site for its new small-store format. And we predict that gourmet grocery Corti Brothers will remain at its Folsom Boulevard site, despite a May date set for its relocation.

In for a landing

The merger of Northwest and Delta will create some desirable gate space for a newcomer at Sacramento International Airport. First arrival: upscale carrier Virgin Americawith initial routes from Sacramento to San Diego and Los Angeles.

Startup fever

Venture capital money will be scarce. Nevertheless, we'll see a rash of new companies starting up in the tech and clean-energy fields.

Why? Would-be entrepreneurs at large companies will gamble that their current job uncertainty makes it the right time to launch their own businesses.

Stalled out

Don't expect any movement on the downtown railyard. Ditto the long-delayed Elk Grove Promenade mall.

But the latter project will acquire new owners – and renewed momentum – after what we expect will be a bankruptcy filing by General Growth Properties. The Promenade's likely new owner: Indianapolis-based Simon Property Group.

As for that iffy proposal to build a waste-to-energy plant in Sacramento? Not happening.

Heard it here first

Look for a first-quarter announcement tied to ambitious plans to transform California State University, Sacramento, from a commuter school to an urban destination campus, as envisioned by CSUS President Alexander Gonzalez.

West Sacramento officials also will soon issue a big development announcement. Hint: It involves significant expansion by an industrial firm.

And in South Placer County, developers will submit paperwork to build a vast industrial park.

Hot prospects

Look for expansion and new locations for Gary Cino's WiseBuys Liquidators, whose debut outlet in Roseville sells everything for $9.98 or less. Given the current economy, it can buy deeply discounted inventory from failing companies, snap up great deals on real estate – and sell to consumers hungry for bargains.

It could be a good year, too, for Surewest Communications. The company will soon make a significant acquisition – and reward its long-suffering shareholders.

And a final note:

Here's our sports-and-politics prediction for the New Year: New Mayor Kevin Johnson will lose his ballot proposal to convert Sacramento to a strong-mayor system. With too much time on his hands, he'll start moonlighting as coach of the Sacramento Kings. Now there's a rebuilding challenge.

Reach Bob Shallit at (916) 321-1049. Back columns: www.sacbee.com/shallit.