"It doesn't matter where you are or what real estate market you're in, you are not insulated from what's going on today," Torto tells GlobeSt.com in discussing his recent "Current State of Global Real Estate" report. "But when we talk about the economy, people have to understand the historic and complex issues here, it's really about a crisis of confidence. He says the root of credit is trust, and across everything that's happened, including the sub-prime mess, Bear Stearns, Lehman, AIG, and banks, there's a lack of confidence and trust.

"One of the biggest solutions is to rebuild that trust. And people want to trust again. I remember this one story about the Great Depression, when President Roosevelt closed all the banks for a banking holiday. Prior to the holiday, people were lining up to get their money out. During the holiday, FDR said that only the banks that were strong would reopen. After they opened again, the people were back in line…putting in their money again," Torto says.

Even the global markets are suffering, Torto says. In Asia, Tokyo registered a 7.1% decline in prime office rents in Q3, its third straight quarterly decrease, marking the end of a positive cycle in which rates had risen for four years. European markets are either declining, such as in London, Dublin and Barcelona, or staying level, as in Paris, Madrid and Frankfurt, Torto says in his report.

Other companies are showing lags in overseas markets. Jones Lang LaSalle reported Friday that revenue for the firm's Asia Pacific region was down $1 million to $133 million, as compared to Q3 2007, and was at $392 million for the first nine months of 2008, compared with revenue of $432 million in the same time period a year before.

In his report, Torto says that the global leasing market will be hobbled for some months to come. However, there's no overall glut of excess space in the overseas commercial real estate markets, he says, and the development pipeline is modest in most places. Also, while investment is down everywhere, he says, lenders and capital is awaiting the recovery. "Look at other situations that we've had, such as the early 1980s recession. We lost three million jobs then, in 1982, and the economy didn't fall apart. And we lost 2.7 million after 2001. Today we've only lost 750,000. Everyone's inpatient. Once the market starts to see that the world's not coming to an end, you'll see activity again."

Instant Insights /

Trust Can Stop Global Crisis, Says Expert

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