Uncertainty Not Knocking CRE Off of Q1 High

CHICAGO-After what seemed a successful first quarter, nervousness returned quickly to the global economy, with woes of countries such as Greece and Spain bringing the Euro down, North Korea’s saber rattling and the Dow Jones Industrial Average ending below 10,000 for the first time in three months at Wednesday’s close. However, according to commercial real estate industry experts, positive global investment, on a tear after a depressing 2009, has not been much affected.

The reasoning is simple. Even though there might be a slight dip in confidence, it’s nothing next to the massive drop in world economies, and of all US markets, in the past two years. "People still have money to put out," says Steve Collins, managing director of Jones Lang LaSalle’s International Capital Group.

He says while the instability of Greece and Portugal are forcing small runs on open-ended funds, the fluctuations with the Euro have not been a cause for concern. And if there’s any nervousness by foreign investors looking at US properties, interest is still there for top markets such as New York and Washington, DC. "Where there might be a softening is where groups were looking to go into the secondary markets, such as Charlotte or Atlanta, that may be put on hold in favor of staying with historical performing markets," Collins says.

Secondary markets are also in danger of losing momentum in Europe, according to a recent ING Real Estate Management Europe report. Distressed properties in these markets will lack the attention that major markets will get, and may be more threatened by the region’s fragile economic recovery, said the study.

Ed Mermelstein, from Edward A Mermelstein & Associates in New York City, says that investors are being the opposite of anxious. "The last few weeks have been exceptional in terms of activity. We’ve seen a large influx of capital, mostly in cash purchases, in the past two-three weeks, with foreign firms purchasing more than several units and gobbling up the remainder of new construction," he says.

Ross Moore, chief economist for Colliers International, tells GlobeSt.com that he’s also not hearing any alarm bells from current crises. "There may be a bit of nervousness, but there’s been nothing to suggest the markets are freezing up or that deals are falling apart. The credit signs are still aligned," Moore says.

He says the instability in countries such as Greece has not been much of a factor, and ditto for the fluctuations of the Euro. "I’ve spoken to our London office, things are going well. It’s been my experience that short-term movement in the exchange rate won’t have much of an impact on the industry."