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LOS ANGELES-It’s a battle to stay positive in the global commercial real estate market today, especially in retail, where so many companies are closing stores, or closing up altogether. Another problem comes when looking at the most recent quarter’s numbers, in Q3 2008, and realizing that retail didn’t really do too bad. According to CB Richard Ellis’ Retail Rents Survey, rents in the world’s most expensive retail locations, such as Hong Kong, London, New York and Los Angeles rose even higher in the third quarter.

Ray Torto, chief global economist with CBRE, says it’s easy to assume that falling consumer confidence and financial market turmoil across the globe are striking all retail stores. It’s a barbell market, he says, with top end retailers in the best locations continuing to see sales, and discounters also doing well. “There’s only so much space on Rodeo Drive,” Torto tells GlobeSt.com. “Even with all this going on around us now, vacancy rates are still in the single-digit numbers. And you look at the fastest growing markets, such as Abu Dhabi and Tel Aviv, they are emerging markets, starting to feel their oats over the more mature markets like in the US.”

However, he admits that the good news of the past in no way predicts the future. “I think we are at a turning point, our next report will show the downside. The marketplace won’t be as rosy in 2009,” Torto says. Even in the third quarter, some markets were already showing pain, such as cities such as Madrid and Tokyo, which both saw rents fall by 5% in the past six months.

Jones Lang LaSalle’s latest Global Market Perspective, on the other hand, pulls no punches in pointing out the perils of the current economy. It points out, as one harbinger, how the International Monetary Fund has slashed its global growth forecast to 2.2% (with Asia expecting a 7% growth rate and the Middle East predicting a 5% growth rate, both much lower than in the past few years).

Also, according to the JLL report, it’s not clear if and when world leaders are going to do more than just talk about joining together to strengthen global economic growth; Japan and Germany are already in a recession; and Central Europe, Eastern Europe and Latin America have high levels of external debt, not something that’s great to have in the current credit crisis. “Advanced economies are forecast to contract in aggregate by 0.3% in 2009,” the report said. Tenants should renegotiate leases at low rents, while owners and investors will find attractively-priced commercial real estate with solid fundamentals, said the report – as long as they have cash on hand.

Andrew Gold, a partner and head of the Bankruptcy Group at New York City-based Herrick Feinstein LLP, tells GlobeSt.com that anyone can see the major difference in the world since the end of Q3 2008, he says. “You look at the third quarter, it was over Sept. 30, Lehman had just filed 15 days before. I don’t think the full impact had hit the financial market. The world also didn’t have the automakers like GM saying they were close to bankruptcy,” Gold says. “I don’t know how shopping centers are going to survive when you’re facing layoffs, such as the 53,000 that Citibank will get rid of, on top of the 23,000 already. The potential layoffs at the automakers and their suppliers are in the millions. If people are out of work or close to it, I don’t think they’ll be able to go to their local mall to shop.”

He says too much leverage was used in acquiring real estate during the past few years, such as Chicago-based General Growth Properties, which has $27.5 billion in outstanding debt, and Thursday hired an attorney for bankruptcy consideration. “I’ve seen the reports of recovery in 2009 or 2010. I don’t think so. You hear about Warren Buffett, he’s buying stocks based on a recovery six or seven years down the road. I think you’re not going to see a recovery for at least five years.”

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