As published in Scotsman Guide's Commercial Edition, October 2007.
On one day in August, Germany's European Central Bank dunked $130 billion U.S. into the euro market to dampen short-term interest rates.
Now that's a big number for anyone. But consider the bigger picture: The bank's previous similar move came on Sept. 12, 2001.
Coupled with daily news of overseas firms taking losses on funds tied to U.S. home loans, it's clear that the panic about the U.S. mortgage industry has hit a global scale. To say nothing of the fervor at home: An Aug. 22 Associated Press article compared 2007's losses of 38,000 mortgage jobs and 20,000 construction positions to the airline industry's troubles after Sept. 11.
For commercial brokers, there are numerous implications.
On one hand, strong wholesale trade and industrial production pushed the National Association of Realtors' commercial real estate market index to a record high in the second quarter of 2007. This could lead to greater net absorption in office and industrial spaces in the next six to nine months, the association reported, with potential high returns for investors.
On the other, as numerous articles point out in this month's Scotsman Guide, investors' attention could turn away from properties at home.
With comparatively weak performance from U.S. real estate investment trusts (REITs), foreign REITs are gaining some traction. This month's Trends feature tells more.
Meanwhile, as Reis Inc.'s Victor Calanog and Chris McFall detail in their article, market changes in China and India could draw U.S. investment interest from those seeking opportunities in growing areas.