CEO sees 'fragile recovery' for real estate, stock markets.

Cushman & Wakefield president and CEO Arthur J. Mirante II said the economy and real estate markets are already in a "fragile recovery" after absorbing a "tremendous onslaught of damaging shocks" during the past two years. The leader of the global real estate services firm recently addressed the Building Owners and Managers Association (BOMA) at a luncheon at the Marriot Marquis in Manhattan.

Mirante said the combination of the dot-corn bubble bursting, the U.S. recession, and the tragedy of Sept. 11 turned "our business and personal lives upside down." This was followed by corporate scandals, which led to the bankruptcies of Enron and World Corn, and the dissolution of Arthur Andersen amid widespread accounting fraud.

Globally, Mirante said, the collapse of the Argentine economy and the elections in Brazil added to the pile-up. The Japanese economy continues to be stalled for a decade, and the largest economy in Europe, Germany, is in recession. "Our world economy is weathering a major storm," Mirante said.

The real estate executive also said that although the U.S. economy may be in recovery with GDP growth of 3 to 4%, "most businesses are struggling to grow revenues and have no confidence that conditions will improve." He called this lack of confidence "irrational negativism."

"Ironically, just as people lost their bearings with irrational exuberance and over confidence in the 1990's, now the converse is true, and it's the exact same pattern in reverse," he said.

"Executives are simply not comfortable in taking risks and making the investments to grow their operations, with the result that business expansion has come to a halt."

Mirante said this is reflected in the fact that for eight consecutive quarters, U.S. tenants have given up more space than they have leased. He added, "today there is a lack of demand for office and industrial space in all major world markets."

The economic climate is not that bad and is improving. "Even with the lack of demand most of our major world office and industrial markets have remained stable," he continued.

Overall, Mirante is optimistic that world markets will improve in 2003, as the economy bounces back. "We must resolve the Iraq crisis and learn to live with the fear of terrorism," he said. "Business conditions are improving, albeit slowly, and hopefully, in time, we will enjoy peace in our world as well."