New York, New York (PressExposure) September 01, 2011 -- The recent downgrade of US debt by the S&P was interesting for many reasons but is not the cause of the market turmoil. What people are reacting to is the realization that the economy is not recovering as evenly and quickly as people felt earlier in the year. The Euro Sovereign Debt Crisis is also causing panic. There has been the saying that when the US gets a cold Europe gets pneumonia and that seems to be holding true today.
The slight downgrade of the US debt ironically resulted in people flooding into treasuries pushing the yield down further. At AA+ it is still safer and more liquid than some AAA rated countries.
What does this mean for commercial real estate in NYC? The Fed's announcement that rate will stay exceptionally low into 2013 give lenders and borrowers/purchasers confidence in their underwriting and DCR for the near term allowing them to unlock value in an asset. This should continue to build confidence and momentum as we have been seeing recently.
As I have said repeatedly NYC is a safe harbor globally and real estate is the safe harbor for investment. Anyone can go "see the bricks" and get a feeling of security they may never feel from reading a 10Q report. This is further exaggerated by the macro-swings the stock market likes to take.