If a company is considering overseas expansion, waiting until the downtrodden market recovers isn’t necessarily advisable, says a global real estate forecast by Grubb & Ellis and property consultants Knight Frank.
Although global real estate markets are rapidly shifting, investing overseas might make more sense sooner than later, says Barry Barovick, Grubb & Ellis CEO. "Our research is telling us the economy is already showing signs of getting back to normal," says Barovick. "I’m afraid many companies are not forward planning for their real estate needs, and those companies are going to pay a steep price both here and abroad as space begins to tighten andproperty prices rise."
The report examinesopportunities in world office markets. "Many American business people don’t understand the national, regional and, in some cases, the local impact of events like the adoption of the Euro, or the World Trade Organization’s new Chinese membership," Barovick says.
Resilient world markets
Although U.S. office buildings are facing high vacancy rates and a glut of sub-space, some markets around the world are showing signs of improvement, says the report. For example, Class-A office space in several European capitals remains severely under-built.
Countries with improving policy environments, such as Botswana and Uganda are expected to attract morebusiness. "The similarities between the two Southern Hemispheric continents (Africa and South America), namely political instability, huge untapped natural resources and evolving consumer and labor populations will eventually subside," says John Martin, senior partner at Knight Frank in London. "From what we’ve seen, the attraction among Euros to sub-Saharan markets is growing with some consistency."
London, Madrid, Paris, Lisbon and Amsterdam experienced reductions in office space demand in 2001, while Berlin saw an increase in office demand, the report says. However, unlike U.S. markets, many of these markets also have extremely low vacancy rates.