In the same way that the Roman Empire was brought to its knees 1500 years ago by low-level “terrorist attacks” from the Germanic hordes, so too might the pre-eminent position of the United States in world affairs be eroded, according to Professor John Baen. Professor Baen specialises in real estate at the University of North Texas and was speaking to delegates attending the Pacific Rim Real Estate Society conference in Christchurch recently.
In the United States, office worker anxiety has soared with some tenants at Chicago’s Sears Tower apparently keeping surplus military parachutes under their desks on the 49th floor and higher. Office workers are also taking longer breaks at ground level and their productivity has reduced, says Baen.
One immediate effect of the terrorist attacks has been a surge in sales and prices of US farms and lifestyle blocks in spite of predictions of a 20% fall in farm incomes this year. By contrast, Manhattan house prices are expected to remain static this year.
The Manhattan residential area known as Battery Park housed 9000 residents and only 5400 have returned to their homes.
Dr Baen predicts acceleration of suburbanisation and decentralisation of businesses from central business district locations, a trend already under way before the attacks because of cost issues. Peripheral regions may see benefits from this process. US companies are now considering whether to relocate to various locations, move to a single suburban or semi-rural corporate campus with high security or go global with their corporate locations so as to have duplicate data and functions in several countries.
Relocation and security services costs for corporates are other elements to consider. Insurance premiums are expected to soar.
The loss of small service providers like cafes, cleaners and the like is another down-side with hotel and conference centres also likely to be migrating out of the CBD.
Dr Baen said estimated direct losses from the terrorist attacks were about $US20 billion to $US30 billion with 300 businesses affected representing 4% of the Manhattan office market.
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