Italy, Greece and U.S. Apartment Rents

Apartment rents have been a bright spot in an otherwise dreary economic outlook. The last time I had a conversation with anyone from Greece, he was a taxi driver taking me to LaGuardia. We had a very spirited conversation about Greek politics along with his insistence the speed limit signs in Manhattan were only advisory and didn’t apply to taxi drivers. An interesting fact that came out of the trip to the airport, white knuckled, seat-belt tightening aside, was that people in Greece apparently feel a sense of comfort that their system, however disorganized and prominently dysfunctional, takes care of the populace.

It kind of reminds me of New Jersey, but that’s another column. I think I understand more now about the Greek protests and the lack of willingness on the part of the citizens to give up hard fought benefits.

Greece, while not a major trading partner, is a bell-weather state of the European Union. Italy, on the other extreme, can be a problem. So much of what happens in the U.S. is now affected by world events, and economically we want the European Union to be healthy. It does appear, however that the E.U. is headed into a recession of their own and Italy, and potentially economic powerhouse Germany, have seen meaningful slowdowns. While the current picture in U.S. export activity is better than it’s ever been, it won’t last if the E.U. can’t find a way out of this debt crisis. The fundamentals of world trade are beginning to cause slowdowns in employment growth in the U.S., not only in trade, transportation and utilities but in the many multiplier industries that create jobs beneficial to renters. My own forecasts continue to show a slowing demand, not based on seasonality but on lack of growth in mid-market employment so important to this industry. For the moment, one of two likely solutions loom ahead, either the finance ministers of the affected countries accept significant reforms and control their spending, or the U.S. somehow regains economic strength and pushes rent growth to higher levels. With a little bit of foresight and lots of luck, we might just get both.

Jack Kern is the research editor of Mult-housing News and Commercial Property Executive magazines and the lead singer in a country western band call “Pond Scum Acres.” The band is working on an album of songs about the E.U. He can reached at or 301.601.1900.