"We have been seeing increased US investment activity overseas as European public companies and government companies sell their real estate assets to opportunistic investors to clean their balance sheets," Livingston tells GlobeSt.com. "The easy picking (however) may be over already in Europe," the developer says, but "expect the trend to move to America."

European corporations and governments own "a much higher percentage of their properties than do their US counterparts," the developer says. As a result, the transactions tend to be large, $1 billion or more. Most of those deals are gone, he says.

Livingston is just back from a London seminar on European real estate investment strategies. The by-invitation-only seminar was restricted to top real estate investment analysts in the United States and Europe. Position papers were presented by Onion Capital Fund, Morgan Stanley Real Estate Europe, Merrill Lynch International and Royal Bank of Scotland. They focused on capital investments in England, France, Germany and Central European countries.

Livingston is past president of the Orlando Council of FIABCI International, an international corporate real estate network based in Paris. He is a graduate economist and has been a Central Florida developer for 30 years. Livingston sees several positive effects on the commercial real estate industry surfacing from the current economic slowdown.

Among them: borrowing will become more difficult; capitalization rates will increase; expansions and relocations will slow, along with absorption; vacancies will rise; rents will plateau or decline; and new construction will crawl.

"The good news, finally, is that construction costs will decline, along with interest rates," Livingston predicts. "Despite this bleak outlook, it appears unlikely the real estate market will crash."

The developer concedes, however, the economy "appears to be headed toward a substantial correction in response to market pressures." In fact, he says, despite outward appearances, "the New Economy is stronger than it looks, and will have a lasting positive impact on real estate demands and productivity."

Livingston looks to the stock market as the leading predictor of economic health. Wall Street ill probably be the first to forecast the eventual recovery. "When interest rates are cut and monetary policy loosens, the stock market will begin to advance," he says. "The stock market will recover, perhaps even more quickly, and that, in turn, will lead to a stronger real estate market."

Instant Insights /

Livingston Sees European Asset-Sale Trend Heading for US

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