CHICAGO-Most commercial real estate experts agree with GlobeSt.com’s recent poll regarding the debt crisis in Europe, mainly that problems across the pond have a strong impact on CRE issues for everyone. However, they also agree that the United States can benefit as well, as lenders look for alternative investment regions.
In the poll, 64% of 241 respondents agreed that the debt crisis “has major implications for all of us,” and 23% voted that the crisis “could create new global opportunities.” The remaining 13% said they believe European issues are either a non-issue because the worst is over, or is of no concern whatsoever. You can see the poll results here.
Steve Collins, managing director with Jones Lang LaSalle Capital Markets, said the numbers are right in line with what is being heard from the global investment community. “A majority of the folks are watching it from afar, knowing it will affect us, but hesitant to take any actions,” Collins tells GlobeSt.com “A smaller subset see the debt crisis in Europe as a real opportunity. Over the past year, the amount of private equity firms looking for loan portfolios in Europe has tripled. There, they can still buy non-CMBS loans at 40 cents on the dollar and there's a great deal more of that in the pipeline-- $60 billion of non-CMBS real estate loans will come to market each year for the next three in Europe.”
Ross Ford, president and CEO of TCN Worldwide, tells GlobeSt.com that he shares the view that the debt crisis presents major implications, and that if the challenges in facing this economic crisis are not me, there will be a significant negative impact on the overall US economy and most likely will dampen or stop the weak recovery currently in place.
He says he’s not sure how to take the minority view that the crisis is “of no concern.” “While I can certainly imagine circumstances where the effect may be muted on a specific person or a ‘well insulated’ position in the commercial real estate sector, I believe it is shortsighted not to recognize the degree to which we are an inter-woven global marketplace in many respects,” Ford says. “A significant collapse of the European economy will have dramatic effects for us all.”
Raymond Torto, global chief economist for CBRE, also said he finds it incredible that real estate professionals would ignore what happens in Europe. “On the pricing side of the equation the European crisis adds to the risk premium, and on the leasing side it hampers overall economic demand,” Torto says. “There is also a lesson from watching Europe for US political decision-making as we approach our own “fiscal cliff” at the end of the year. Avoidance in making the hard decisions will buy time but not solutions! The solutions to the problems in Europe will get more difficult, not easier as this year wears on.”
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