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Friday, February 25, 2011

Confidence- It's a Global Word

As February draws to a close, we have had an opportunity to build on our 2011 forecasts, present to the industry and meet with clients to discuss the drivers that impact real estate decision making. Long term strategies are sound and opportunities are available to grow and prosper in this environment. Interest rates are low, capital is abundant, GDP and employment look to be going in the right direction and most importantly, decision makers are becoming optimistic. On the investment side, 100% of our meetings year to date have resulted in the same mandate- "find us product!" Everyone wants to grow, but finding the right investment at the right price is key. The same can be said about the occupier. Decision making is loosening up as the clouds disappear, stability returns and clarity of purpose comes back.

All is looking good in North America, but not so fast- we live in a global world. Over the past few weeks, the events in the Middle East illustrate a point we have been making for some time. Mainly, we live in a global world, no matter how local you would like it to be. Whatever your views are of the struggles and protests in Egypt, Bahrain, Tunisia, Iran and Libya, these conflicts will impact the global world and global decision making. This week, Libya took center stage as the first oil producing country in trouble and was responsible for sending Brent Crude Oil to $120 a barrel. The fact that this rise in oil resulted in heavy losses in global financial markets is secondary to the price increases we are experiencing in commodities. Given rapid commodity inflation- will the economic recovery be derailed? If not, is this all part of healing or are economic inputs moving too quickly? Will Quantitative easing end quickly, followed by interest rate hikes to combat inflation?

These issues will play out eventually and we will get past this too, but expect concern to reemerge and short term strategies to dominate the Board Room as global decision makers navigate these material events. It just seems that we are limited to weeks and months of good news and not years of prosperity and stability to allow decision makers to attain the level of confidence necessary to grow. Economic and social influences are global. Our financial markets are global. Our local decisions are impacted by global pressures. Confidence is a very specific, local human emotion, but confidence is now global in context.

Looking past current events, spikes in commodities and inflation discussions that are sure to dominate over the next few months, we are looking for stability and the orderly digestion of market influences in the back half of the year.

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