Yesterday we saw some optimism about cap rates and interest spreads that made me feel good. But what still has me worried?
1. The dollar. We keep printing money and are running obscene deficits in the hopes that it will bring back the economy. Is the the 1970s (or even the New Deal) all over again, albeit on steroids? Remember, we are not out of the woods yet. And this story about the allegedly planned demise of the dollar as a reserve currency really spooked me. Maybe a weak dollar might encourage foreign investment in CRE in the US -- I understand that -- but that does not necessarily make it good for the future of the United States as a nation.
2. A jobless recovery. Unless you have jobs you have little need for additional office space. People can't or won't start new companies and existing employers don't want any new space. Bob Herbert at the New York Times has an excellent piece on this today. We need to find incentives for job creation. More government, regulation and taxes is not, in my humble opinion.
3. Technology. It is a great thing. But it could also mean a need for less office space and more efficient industrial space.
I am still optimistic about recovery and cycles and all that. Believe me. But that does not mean I do not have a healthy does of reality checking to do.