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programs, etc. In the U.S. the Federal
Reserve (the Fed) does have a history of
raising rates too quickly and a number
of times in the past that has resulted in
derailing growth.
Yes, the list of downside risks remains
long, but not uncomfortably so. Most of
these threats are slow moving, sitting
on the tails of normal probability curves.
The consensus of most economists is
that the probability that the economic
expansion will continue at least for the
next 6-12 months hovers in the 80%
range. Moreover, most central banks
around the globe are maintaining an
aggressive stance with respect to
monetary policy. In the U.S., the Fed
has slowly begun to raise rates, and it
is now hinting at unwinding its balance
sheet. Still, the fed funds target rate is
in the 1% to 1.25% range—well below
the normalized rate and, therefore,
highly supportive of near-term growth.
In many other countries—including
Switzerland, Japan and Germany—
short- and long-term rates are closer
to 0% than to 1%. From a real estate
perspective, the combination of an
accelerating global economy and low
interest rates is a recipe for healthy
office market conditions.
-100
-50
0
50
100
150
200
250
-1%
0%
1%
2%
3%
4%
5%
6%
2006
2008
2010
2012
2014
2016
2018
2020
GDP (% Yr/Yr, LHS)
Global Net Absorption (MSF, RHS)
GLOBAL GDP GROWTH VS. NET ABSORPTION
Source:
IMF, Cushman & Wakefield Research
02