Jones Lang LaSalle: Global Market Perspective

In Jones Lang LaSalle´s latest Global Market Perspective, you´ll find a summary of the economic crisis that continues to threaten the world´s financial markets and its effects on commercial real estate. This mid-November edition details a number of meaningful trends:

1. The International Monetary Fund (IMF) slashed its forecast for global growth down to just 2.2 percent, and even formerly robust economies in Asia are expecting a mere 7 percent growth rate.

1. "Real" short-term interest rates are trending downward, indicating a true shift into a stimulated monetary environment worldwide-yet concern lingers over further efforts to stimulate the economy as there is little room left to discount rates as they approach zero.

1. The G20 emergency summit was more talk than action with leaders agreeing in principal on the importance of strengthening global economic growth, a need for cooperation, and a goal of establishing reform to avoid similar economic crises in the future.

1. In Asia, a majority of China´s $586 billion stimulus package may be earmarked for projects already in the pipeline and not aimed at new spending, while Japan slipped into recession for the first time since 2001.

1. Central and Eastern Europe and Latin America have high levels of external debt which could lead to the next phase of the credit crisis.

1. Germany is now in a technical recession, while in the United Kingdom-the central bank´s most recent forecast suggests a sharp decline in GDP in 2009.

1. The United States continues to experience extreme volatility in the financial markets with a constant flow of disappointing economic data negatively influencing investor, business and consumer sentiment; however, a new fiscal stimulus package could provide direct aid to states, increase infrastructure spending and temporarily extend unemployment benefits.

1. Major financial office centers in Asia Pacific are expected to see a massive increase in vacancy rates and rental declines, while the vacancy rate holds steady at 7.2 percent in Europe.

1. The Middle East also is feeling the pinch of the worldwide economic crisis, however it is still expected to experience growth of over five percent in 2009.

1. The U.S. is experiencing the beginning of an expected shift in underlying real estate fundamentals, with vacancies expected to rise and rental rates expected to decline.

1. TARP´s expected impact on the economy in the U.S. remains unclear. The Fed´s new position to pursue equity stakes in place of asset purchases could spur financial institutions to unload assets at market clearing prices.

1. Corporate real estate occupiers should be encouraged to renegotiate lease obligations and secure long-term leases at low rents, while owners and investors will find attractively-priced commercial real estate with solid fundamentals.

Global Market Perspective, November 20, 2008