LONDON—As Greece now considers a pullout from the euro currency, and Spain and even the United Kingdom plunge back into recession, most commercial real estate experts agree that problems across the pond have a strong impact on the global markets. However, they also agree that the United States can benefit from the troubles as well, as lenders look for alternative investment regions.
Ross Ford, president and CEO of TCN Worldwide, shares the view that the debt crisis presents major implications, and that if the challenges in facing this economic crisis are not met, there will be a significant negative impact on the overall US economy. "It's shortsighted not to recognize the degree to which we are an interwoven global marketplace in many respects," Ford says.
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."
Hans-Ulrich Berendes, from Berlinbased Berendes & Partners, tells Real Estate Forum that the big emphasis on the Greek problem is not totally justified. "Greece is a very small economy of the euro zone," Berendes says. "Europe suffers from those countries that have spent money like crazy during the past several years. The real problems to solve are the bigger economies, like Spain with a real estate bubble burst, tourism going down and a high percentage of unemployed young people."
Spanish bank BBVA said in a May report that the country is now in a confirmed recession, with an expected contraction of 1.3% GDP this year. The London-based Office of National Statistics said a drop of 3% in the first quarter proves the UK is again in a recession, unwelcome news for one of Europe's central economies.
Steve Collins, managing director with Jones Lang LaSalle Capital Markets, says most CRE professionals are watching Europe's struggles from afar, hesitant to take any action. "A smaller subset sees the debt crisis in Europe as a real opportunity," he says. "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."
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