Commercial Property News - October 2008 - (Page 7)

Tire Corp. for $128 million in the middle of September. Hartman Income REIT, meanwhile, recently completed a $68 million credit facility, taking advantage of a weakened investment market. —Reach news writer & economic editor Adam Perrotta at adam.perrotta@nielsen.com. Inflation Threatens Performance The period of benign global inflation is over. The forces of deregulation, globalization and strong productivity growth contained inflation from the early 1980s on. But new forces are now radically altering the global inflationary landscape: the ebbing productivity boom, expansionary global monetary policy and, most important, the growth of the middle class in emerging nations. This demographic shift is having a significant effect. According to a Brookings Institution report, by 2020, the world’s middle class will grow to include 52 percent of the global population, up from 30 percent today. By 2025, China will account for the world’s largest middle class, while India’s will be 10 times greater than it is today. The growth in the world’s middle class has sharply increased demand for supply-constrained natural resources. Over the past several years, cheaper imported products and services replaced the more costly domestic substitutes, depressing both domestic prices and By Asieh Mansour wages. More recently, the growth of many emerging economies has run into bottlenecks, given the low supply elasticity of primary commodities and oil.This has been a big driver of higher consumer prices and the globalization of inflation. Rather than exporting deflation, emerging economies are now a direct source of inflation. Higher commodity prices are not the only cause. Monetary policy remains highly expansionary as central banks worldwide struggle to contain the adverse effects of the credit crisis.Real policy rates are negative in many parts of the world, including the United States, Japan, China and Russia. Where inflation is concerned, Deal Trends Atlanta: With strong demographic fundamentals, the fast-growing suburban Atlanta area continues to attract multi-family buyers. In early September, Grubb & Ellis Realty Investors L.L.C. acquired The Retreat at Peachtree City, a 312-unit, 306,000-square-foot complex in the Peachtree City suburb of Atlanta. That deal came shortly after Fowler Property Acquisitions L.L.C. nabbed a 420-unit property in nearby Norcross for $32 million. Recent area transactions have not been limited to one-offs. In August, a joint venture between The Praedium Group L.L.C. and Audubon Communities Management L.L.C. bought a 938-unit suburban portfolio of seven multi-family properties for $45 million. —Reach staff writer Elena Gontar at elena.gontar@nielsen.com. however, a majority of economists are in denial.They are assuming that a global economic slowdown will provide relief from inflation. But they are not letting the data tell the story, especially in the United States, where real-time inflation figures for July are painting a much more ominous picture: s The Headline Consumer Price Index hit a 17-year high at 5.6 percent; s The “Core”Consumer Price Index for the year was 2.5 percent; s The Producer Price Index for finished goods rose 9.8 percent for the year, the highest rate since 1981. The fact that core inflation can be so high amid a U.S. economy that is in recession is disturbing. And economic weakness is preventing the Federal Reserve Board from hiking rates to control inflation. For the first time in 35 years, it remains the greatest risk to the outlook for global economic performance. — Asieh Mansour is chief economist & strategist for RREEF. Your real estate deserves real management. Count on an AMO® ﬁrm to deliver real results. AMO ® For maximum returns on your real estate portfolio, partner with a management company that has earned the ACCREDITED MANAGEMENT ORGANIZATION® (AMO®) accreditation. An AMO® offers: • Expert insight on your local market • Vast management expertise and proven leadership • Unparalleled ethical standards • Commitment to reaching your investment goals Or, contact us at: IREM Headquarters 430 North Michigan Avenue, Chicago, Illinois 60611 Phone: (800) 837-0706 (312) 329-6000 Fax: (312) 338-4736 E-mail: custserv@irem.org Looking for optimal performance from your investments? Partner with an AMO®. To ﬁnd an AMO® in your area, visit www.irem.org/AMO www.cpnonline.com • October 2008 • COMMERCIAL PROPERTY NEWS 7 ECONOMIST’S OUTLOOK http://www.irem.org/AMO http://www.irem.org/AMO http://www.cpnonline.com

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CPN - October 2008 Contents Starting Line Industrial Data/Analysis Conferences Chicago Market Profile Finance International Title Insurance Brokerage Corporate Report

Commercial Property News - October 2008

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