NEW YORK CITY-As economic unrest unfolds in Europe and the Dow recovers from a major 5.6% decline late Monday, members of the commercial real estate community tell GlobeSt.com that the possibility of another recession is the biggest factor threatening the industry after ratings agency Standard & Poor’s downgraded the US credit rating late Friday and Fannie Mae and Freddie Mac on Monday.

“If we are going into a recession and not getting growth, retail stores aren’t making money and offices aren’t expanding, those aren’t good for those product types,” says Paul Cairns, SVP - managing director of capital services at Minneapolis-based NorthMarq, who tells GlobeSt.com that while the downgrade itself won’t have an immediate impact on commercial properties, S&P’s actions will have a small effect on market spreads. “That is more of the risk.”

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In the midst of the financial frenzy following the downgrade, investors seeking safe havens purchased US government bonds, Swiss Francs and gold due to their low-level of risk. At the same time, Cairns says that yields have decreased and may go lower by the end of the year. “The fact that yields have dropped precipitously, we’ve been locking rates left and right on our multifamily deals, so it has not affected them in a negative way at all,” he says.