January 1, 2012
RE: Monthly Letter
Happy New Year! As many of my long term readers know, I don’t send out a January letter as I am busy putting together our annual Gold Report which will come to you at the end of the month and hopefully give you some vision as to what we see for the year ahead. The other reason for not writing is that December is traditionally very slow so we don’t have much activity to report.
I’d like to give you a little hope for the New Year. This was the busiest Thanksgiving to New Year’s period I have seen in years. This gives me a lot of hope…but they have to close – but that’s what we do.
Unemployment got under 10% (9.7%) in San Diego County also giving everyone some hope.
I want to thank all of you in helping me and the entire team at CDC Commercial to survive these tough times. We look forward to building our relationship and a mutually profitable year in 2012!
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
Tuesday, January 3, 2012
Friday, December 2, 2011
December, 2011
December 1, 2011
RE: Monthly Letter
Tis the season to be jolly and giving. Every year at this time people rush around like wild herds of buffalo storming store after store looking for the best deal for their “gifts.” Sometimes to the point that people literally get trampled when the doors open on Black Friday (it is suddenly so clear why they call it that!)
What’s the point? Do we all really need dedicated seasons to remember to be thankful, generous, loving, etc. This particular holiday period is apparently all about gift giving and being generous. Yet how generous are we when all we do is open our wallet but close our hearts. When we give because it’s the thing to do rather than always doing more than what is expected.
Generosity isn’t so much about giving of things. Its true nature is in giving of ourselves, our heart, our smile, our full attention. When we are generous in this way the world around us changes for the better…
As I sit down to write this monthly letter, I realized that I have been writing it for over 25 years! Over the time frame, I can honestly say I’ve enjoyed writing this letter and working with my clients and brokers through the good times and bad times. In life and business we often break things down into what we can do, what we should do and what we must do. Failure to realize the difference will have dire consequences to your company, career and life. On the other hand, it is most amazing to me that most salesmen (or women) fail to realize that when they become the best they can be, they will attract the right offers rather than seek them.
Of course you have to be good at what you do and your product or deliverable must be beyond average. However, all things being equal, the relationship wins the day. Relationships take time because it takes time to build trust. At times, relationships that were established months or even years prior will yield results you never even dreamed of.
Once you’ve determined what you love to do and dedicate yourself to getting the skills, the third part is about believing. You must believe in your company-believe in your product-believe in your service-and believe in yourself. If you believe deeply that everything is “best,” your message will be so enthusiastically delivered that others will catch your passion. A deep self-belief will create enthusiasm, and a deep self-belief will create passion.
The final part is about your attitude. Attitude starts from within. It’s the mood you’re in when you wake up in the morning, the mood you stay in all day long, and the mood you’re in when you go to bed.
But attitude is not a feeling. Attitude is a life-long dedication to the study of positive thought and the character/charisma that you display as you interact with others. If it’s not internal, it can never be external.
John Peterson, the founder of National Cash Register (NCR) said it best when he said “put your heart into your work” and better yet when he said, “your heart is attached to the wallet.”
The funny thing is that if you figure out how to truly be interested in someone you meet, with the goal of building up a friendship instead of trying to get something out of that person, you will almost always have something happen later down the line that benefits your business or yourself personally.
During the Holiday Season more than ever, our thoughts turn gratefully to those of you who have made our progress and success possible. As we get to the end of the year, we once again realize it isn’t about what you own but who you know and I am happy that we have come to know each other this year and I hope that we both make an effort this coming year to talk, do business and build our relationship. In the meantime, the entire team at CDC Commercial wishes you a holiday in which the opening of presents overshadows the closing of transactions and due diligence is reserved for finding just the right gift. A season in which time with loved ones is the most important appointment on your calendar. And just remember… to “Keep Your Fork.” I hope you enjoy the story . . . Happy Holidays!
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
Keep Your Fork
There was a young woman who had been diagnosed with a terminal illness and had been given three months to live. So as she was getting her things “in order”, she contacted her Pastor and had him come to her house to discuss certain aspects of her final wishes. She told him which songs she wanted sung at the service, what scriptures she would like read, and what outfit she wanted to be buried in.
Everything was in order and the Pastor was preparing to leave when the young woman suddenly remembered something very important to her. “There’s one more thing,” she said excitedly... “What’s that?” came the Pastor’s reply. “This is very important,” the young woman continued. “I want to be buried with a fork in my right hand.” The Pastor stood looking at the young woman, not knowing quite what to say. ‘That surprises you, doesn’t it?” the young women asked. “Well, to be honest, I’m puzzled by the request,” said the Pastor.
The young woman explained. “My grandmother once told me this story, and from that time on I have always tried to pass along its message to those I love and those who are in need of encouragement. In all my years of attending socials and dinners, I always remember that when the dishes of the main course were being cleared, someone would inevitably lean over and say, “Keep your fork.” It was my favorite part because I knew that something better was coming… Like velvety chocolate cake or deep dish apple pie. Something wonderful, and with substance! So, I just want people to see me there in that casket with a fork in my hand and I want them to wonder “What’s with the fork?” Then I want you to tell them: “Keep your fork…the best is yet to come.”
The Pastors eyes welled up with tears of joy as he hugged the young woman good-bye. He knew this would be one of the last times he would see her before her death. But he also knew that the young woman had a better grasp of heaven than he did. She had a better grasp of what heaven would be like than many people twice her age, with twice as much experience and knowledge. She KNEW that something better was coming.
At the funeral people were walking by the young woman’s casket and they saw the cloak she was wearing and the fork placed in her right hand. Over and over the Pastor heard the question, “What’s with the fork?” And over and over he smiled. During his message, the Pastor told people of the conversation he had with the young woman shortly before she died. He also told them about the fork and about what it symbolized to her. He told the people how he could not stop thinking about the fork and told them that they probably would not be able to stop thinking about it either. He was right. So the next time you reach down for your fork let it remind you, ever so gently, that the best is yet to come.
RE: Monthly Letter
Tis the season to be jolly and giving. Every year at this time people rush around like wild herds of buffalo storming store after store looking for the best deal for their “gifts.” Sometimes to the point that people literally get trampled when the doors open on Black Friday (it is suddenly so clear why they call it that!)
What’s the point? Do we all really need dedicated seasons to remember to be thankful, generous, loving, etc. This particular holiday period is apparently all about gift giving and being generous. Yet how generous are we when all we do is open our wallet but close our hearts. When we give because it’s the thing to do rather than always doing more than what is expected.
Generosity isn’t so much about giving of things. Its true nature is in giving of ourselves, our heart, our smile, our full attention. When we are generous in this way the world around us changes for the better…
As I sit down to write this monthly letter, I realized that I have been writing it for over 25 years! Over the time frame, I can honestly say I’ve enjoyed writing this letter and working with my clients and brokers through the good times and bad times. In life and business we often break things down into what we can do, what we should do and what we must do. Failure to realize the difference will have dire consequences to your company, career and life. On the other hand, it is most amazing to me that most salesmen (or women) fail to realize that when they become the best they can be, they will attract the right offers rather than seek them.
Of course you have to be good at what you do and your product or deliverable must be beyond average. However, all things being equal, the relationship wins the day. Relationships take time because it takes time to build trust. At times, relationships that were established months or even years prior will yield results you never even dreamed of.
Once you’ve determined what you love to do and dedicate yourself to getting the skills, the third part is about believing. You must believe in your company-believe in your product-believe in your service-and believe in yourself. If you believe deeply that everything is “best,” your message will be so enthusiastically delivered that others will catch your passion. A deep self-belief will create enthusiasm, and a deep self-belief will create passion.
The final part is about your attitude. Attitude starts from within. It’s the mood you’re in when you wake up in the morning, the mood you stay in all day long, and the mood you’re in when you go to bed.
But attitude is not a feeling. Attitude is a life-long dedication to the study of positive thought and the character/charisma that you display as you interact with others. If it’s not internal, it can never be external.
John Peterson, the founder of National Cash Register (NCR) said it best when he said “put your heart into your work” and better yet when he said, “your heart is attached to the wallet.”
The funny thing is that if you figure out how to truly be interested in someone you meet, with the goal of building up a friendship instead of trying to get something out of that person, you will almost always have something happen later down the line that benefits your business or yourself personally.
During the Holiday Season more than ever, our thoughts turn gratefully to those of you who have made our progress and success possible. As we get to the end of the year, we once again realize it isn’t about what you own but who you know and I am happy that we have come to know each other this year and I hope that we both make an effort this coming year to talk, do business and build our relationship. In the meantime, the entire team at CDC Commercial wishes you a holiday in which the opening of presents overshadows the closing of transactions and due diligence is reserved for finding just the right gift. A season in which time with loved ones is the most important appointment on your calendar. And just remember… to “Keep Your Fork.” I hope you enjoy the story . . . Happy Holidays!
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
Keep Your Fork
There was a young woman who had been diagnosed with a terminal illness and had been given three months to live. So as she was getting her things “in order”, she contacted her Pastor and had him come to her house to discuss certain aspects of her final wishes. She told him which songs she wanted sung at the service, what scriptures she would like read, and what outfit she wanted to be buried in.
Everything was in order and the Pastor was preparing to leave when the young woman suddenly remembered something very important to her. “There’s one more thing,” she said excitedly... “What’s that?” came the Pastor’s reply. “This is very important,” the young woman continued. “I want to be buried with a fork in my right hand.” The Pastor stood looking at the young woman, not knowing quite what to say. ‘That surprises you, doesn’t it?” the young women asked. “Well, to be honest, I’m puzzled by the request,” said the Pastor.
The young woman explained. “My grandmother once told me this story, and from that time on I have always tried to pass along its message to those I love and those who are in need of encouragement. In all my years of attending socials and dinners, I always remember that when the dishes of the main course were being cleared, someone would inevitably lean over and say, “Keep your fork.” It was my favorite part because I knew that something better was coming… Like velvety chocolate cake or deep dish apple pie. Something wonderful, and with substance! So, I just want people to see me there in that casket with a fork in my hand and I want them to wonder “What’s with the fork?” Then I want you to tell them: “Keep your fork…the best is yet to come.”
The Pastors eyes welled up with tears of joy as he hugged the young woman good-bye. He knew this would be one of the last times he would see her before her death. But he also knew that the young woman had a better grasp of heaven than he did. She had a better grasp of what heaven would be like than many people twice her age, with twice as much experience and knowledge. She KNEW that something better was coming.
At the funeral people were walking by the young woman’s casket and they saw the cloak she was wearing and the fork placed in her right hand. Over and over the Pastor heard the question, “What’s with the fork?” And over and over he smiled. During his message, the Pastor told people of the conversation he had with the young woman shortly before she died. He also told them about the fork and about what it symbolized to her. He told the people how he could not stop thinking about the fork and told them that they probably would not be able to stop thinking about it either. He was right. So the next time you reach down for your fork let it remind you, ever so gently, that the best is yet to come.
Monday, October 31, 2011
November, 2011
November 1, 2011
RE: Monthly Letter
“Pasteur’s theory of germs is a ridiculous fiction. How do you think that these germs in the air can be numerous enough to develop into all those organic infusions?”
- Professor Pierre Pocket 1872
Walt Disney was fired as a newspaper editor because “he lacked imagination.” Thomas Edison was fired from his first two jobs for being “non productive.” Decca Records turned down the Beatles because, “we don’t like their sound and guitar groups are on their way out.”
As regular readers, you know that I have pounded the table that it is “all about jobs.” Watch the unemployment numbers drop and you’ll see the real estate market recover. Like many writers I would like to focus on the other “Jobs” for a moment. Steve Jobs’ philosophy was understanding the importance of putting the customers experience first. However, it was deeper than that he saw that the experience had real bearing on people’s lives. Technology didn’t have to be about people sitting behind a desk doing what’s generally thought of as “work.” It was teenagers trying to find new music, grandmothers browsing family photos or people wandering a strange neighborhood looking for a bagel shop. Jobs’ insight wasn’t in seeing that technology could help people do these things (which is obvious) but that in doing so the technology needed to get out of the way as much as possible. Tech is a window to content and services, nothing more. Hmmm….maybe it is time to think about real estate in this way.
I must say that as genius as Steve Jobs was, he has almost single handedly contributed to the largest negative absorption of commercial space in the history of real estate. Think about it, the iPod replaced Tower Records, Warehouse records, in fact records, tapes and CD’s. The iphone has replaced daytimers, cameras (infact probably Kodak), and the way we think about telephones. Computers and Internet have turned the retail world upside down (and emptied space) and the iPad is poised to finish off the bookstore and video store. Meanwhile, cloud computing has lessened the need for office space and laptops and iPads and iPhones allow workers to be productive from all corners of the world (as long as you’re connected to the internet.) This would all seem to be gloomy for real estate (maybe we should organize a march to Occupy Silicon Valley!) but just as human nature so misreads genius, as I illustrated in my opening, I am here to tell you that we all still have an inner need to see, be seen, do and be served. We are social beings It is when we realize this in context of our properties and tenants that we will prosper again. Our spaces and tenants need to be warm, friendly and inviting. Places that people want to go rather than sit in front of a computer or TV. This is what defines great real estate and the genius of great developers, investors and brokers.
I used to worry about the concept of what government did for me. But now I worry about what government is going to do to me! If you are still trying to figure out the whole budget, debt crisis and Super Committee, I thought I would give it to you as an analogy to my new diet. Now that I am 50, I thought I would look at various weight loss programs. I decided that the government deficit reduction program (GDRP) was the most palatable. I decided I have been eating poorly for 10 years and probably should lose 15 pounds. Most of us assume that is 15 pounds from what we weight now. However, under the GDRP weight reduction plan, I assume that I am going to eat badly for the next 10 years and gain 45 more pounds so I am going to lose 15 pounds relative to the 45 pound increase. So…I’ve got 30 pounds to still gain over the next decade! I love this plan. Cheers!
Dan Quayle once said, “Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement.” Well, banks are slowly repairing and rebuilding themselves. They are starting to lend again but you still need to realize that there are still a lot of “bikini loans” out there (you know, those are the ones you can see but not touch!)
The International Council of Shopping Centers (ICSC) said it expects holiday sales to increase, the second consecutive increase following two down years in 2008 & 2009. Michael Niemira, ICSC’s Chief Economist says, “The sales trend points to a continued picture of unevenness.” Wal-Mart, meantime said low-income shoppers are having a harder time stretching their dollar than they did a year ago. As part of their response, they are bringing back layaway services for the holiday season.
This year we are going to experience four unusual dates: 1/1/11, 1/11/11, 11/1/11, 11/11/11, and that’s not all: Take the last two digits of the year you were born and the age you will be this year on December 31st and the result will add up to 111 for everyone!!! Also, this year October had 5 Sundays, 5 Mondays and 5 Saturdays. This happens only once every 823 years. These particular years are known as “moneybag years”. So whether you want to be #1 or this is a moneybags year for you, remember that it is persistence and attention to detail (virtues we at CDC Commercial try to avow) that is the genius in innovation and success. I hope you enjoy this month’s story.
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
Google executive Vic Gundotra offered up a memory of now-former Apple CEO Steve Jobs on his Google+ page.
The account gives us a bit of insight into just how hands-on Jobs has been over the years, during which he’s been accused of being a control freak and a visionary.
Gundrotra, a senior vice president of engineering who is overseeing the Google+ project, described a 2008 phone conversation and presented Jobs as a person who not only genius but also cared about details others may otherwise miss.
Here’s Gundotra’s full account, as written on his Google+ profile:
One Sunday morning, January 6th, 2008 I was attending religious services when my cell phone vibrated. I looked at the phone and noticed that my phone said “Caller ID unknown.” I choose to ignore.
After services, as I was walking to my car with my family, I checked my cell phone messages. The message was from Steve Jobs and said call me at home I have something urgent to discuss.”
Before I even reached my car, I called Steve Jobs back. I was responsible for all mobile applications at Google and dealing with Steve was one of the perks of my job.
“Hey Steve – this is Vic”, I said. “I’m sorry I didn’t answer your call earlier. I was in religious services and didn’t pick up.
Steve laughed. He said, “Vic, unless the Caller ID said “God”, you should never pick up during services.”
I laughed nervously. After all, while it was customary for Steve to call during the week upset about something to call on Sunday and ask me to call his home was unusual. I wondered what was so important?
“So Vic, we have an urgent issue, one that I need addressed right away. I’ve already assigned someone from Apple to fix this tomorrow” said Steve.
“I’ve been looking at the Google logo on the iPhone and I’m not happy with the icon. The second O in Google is the wrong shade of yellow. It’s just wrong and I’m going to have Greg fix it tomorrow. Is that okay with you?”
Of course this was okay with me. A few minutes later on that Sunday I received an email from Steve which directed me to work with Greg Christie to fix the icon.
Since I was 11 years old and fell in love with an Apple II, I have dozens of stories to tell about Apple products over the decades. Even when I worked for 15 years for Bill Gates at Microsoft, I had a huge admiration for Steve Jobs.
But in the end, when I think about leadership, passion and attention to detail, I think back to the call I received that morning in January. It was a lesson I’ll never forget. CEOs should care about details. Even shades of yellow.
To one of the greatest leaders I’ve ever met, my prayers and hopes are with you Steve.
RE: Monthly Letter
“Pasteur’s theory of germs is a ridiculous fiction. How do you think that these germs in the air can be numerous enough to develop into all those organic infusions?”
- Professor Pierre Pocket 1872
Walt Disney was fired as a newspaper editor because “he lacked imagination.” Thomas Edison was fired from his first two jobs for being “non productive.” Decca Records turned down the Beatles because, “we don’t like their sound and guitar groups are on their way out.”
As regular readers, you know that I have pounded the table that it is “all about jobs.” Watch the unemployment numbers drop and you’ll see the real estate market recover. Like many writers I would like to focus on the other “Jobs” for a moment. Steve Jobs’ philosophy was understanding the importance of putting the customers experience first. However, it was deeper than that he saw that the experience had real bearing on people’s lives. Technology didn’t have to be about people sitting behind a desk doing what’s generally thought of as “work.” It was teenagers trying to find new music, grandmothers browsing family photos or people wandering a strange neighborhood looking for a bagel shop. Jobs’ insight wasn’t in seeing that technology could help people do these things (which is obvious) but that in doing so the technology needed to get out of the way as much as possible. Tech is a window to content and services, nothing more. Hmmm….maybe it is time to think about real estate in this way.
I must say that as genius as Steve Jobs was, he has almost single handedly contributed to the largest negative absorption of commercial space in the history of real estate. Think about it, the iPod replaced Tower Records, Warehouse records, in fact records, tapes and CD’s. The iphone has replaced daytimers, cameras (infact probably Kodak), and the way we think about telephones. Computers and Internet have turned the retail world upside down (and emptied space) and the iPad is poised to finish off the bookstore and video store. Meanwhile, cloud computing has lessened the need for office space and laptops and iPads and iPhones allow workers to be productive from all corners of the world (as long as you’re connected to the internet.) This would all seem to be gloomy for real estate (maybe we should organize a march to Occupy Silicon Valley!) but just as human nature so misreads genius, as I illustrated in my opening, I am here to tell you that we all still have an inner need to see, be seen, do and be served. We are social beings It is when we realize this in context of our properties and tenants that we will prosper again. Our spaces and tenants need to be warm, friendly and inviting. Places that people want to go rather than sit in front of a computer or TV. This is what defines great real estate and the genius of great developers, investors and brokers.
I used to worry about the concept of what government did for me. But now I worry about what government is going to do to me! If you are still trying to figure out the whole budget, debt crisis and Super Committee, I thought I would give it to you as an analogy to my new diet. Now that I am 50, I thought I would look at various weight loss programs. I decided that the government deficit reduction program (GDRP) was the most palatable. I decided I have been eating poorly for 10 years and probably should lose 15 pounds. Most of us assume that is 15 pounds from what we weight now. However, under the GDRP weight reduction plan, I assume that I am going to eat badly for the next 10 years and gain 45 more pounds so I am going to lose 15 pounds relative to the 45 pound increase. So…I’ve got 30 pounds to still gain over the next decade! I love this plan. Cheers!
Dan Quayle once said, “Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement.” Well, banks are slowly repairing and rebuilding themselves. They are starting to lend again but you still need to realize that there are still a lot of “bikini loans” out there (you know, those are the ones you can see but not touch!)
The International Council of Shopping Centers (ICSC) said it expects holiday sales to increase, the second consecutive increase following two down years in 2008 & 2009. Michael Niemira, ICSC’s Chief Economist says, “The sales trend points to a continued picture of unevenness.” Wal-Mart, meantime said low-income shoppers are having a harder time stretching their dollar than they did a year ago. As part of their response, they are bringing back layaway services for the holiday season.
This year we are going to experience four unusual dates: 1/1/11, 1/11/11, 11/1/11, 11/11/11, and that’s not all: Take the last two digits of the year you were born and the age you will be this year on December 31st and the result will add up to 111 for everyone!!! Also, this year October had 5 Sundays, 5 Mondays and 5 Saturdays. This happens only once every 823 years. These particular years are known as “moneybag years”. So whether you want to be #1 or this is a moneybags year for you, remember that it is persistence and attention to detail (virtues we at CDC Commercial try to avow) that is the genius in innovation and success. I hope you enjoy this month’s story.
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
Google executive Vic Gundotra offered up a memory of now-former Apple CEO Steve Jobs on his Google+ page.
The account gives us a bit of insight into just how hands-on Jobs has been over the years, during which he’s been accused of being a control freak and a visionary.
Gundrotra, a senior vice president of engineering who is overseeing the Google+ project, described a 2008 phone conversation and presented Jobs as a person who not only genius but also cared about details others may otherwise miss.
Here’s Gundotra’s full account, as written on his Google+ profile:
One Sunday morning, January 6th, 2008 I was attending religious services when my cell phone vibrated. I looked at the phone and noticed that my phone said “Caller ID unknown.” I choose to ignore.
After services, as I was walking to my car with my family, I checked my cell phone messages. The message was from Steve Jobs and said call me at home I have something urgent to discuss.”
Before I even reached my car, I called Steve Jobs back. I was responsible for all mobile applications at Google and dealing with Steve was one of the perks of my job.
“Hey Steve – this is Vic”, I said. “I’m sorry I didn’t answer your call earlier. I was in religious services and didn’t pick up.
Steve laughed. He said, “Vic, unless the Caller ID said “God”, you should never pick up during services.”
I laughed nervously. After all, while it was customary for Steve to call during the week upset about something to call on Sunday and ask me to call his home was unusual. I wondered what was so important?
“So Vic, we have an urgent issue, one that I need addressed right away. I’ve already assigned someone from Apple to fix this tomorrow” said Steve.
“I’ve been looking at the Google logo on the iPhone and I’m not happy with the icon. The second O in Google is the wrong shade of yellow. It’s just wrong and I’m going to have Greg fix it tomorrow. Is that okay with you?”
Of course this was okay with me. A few minutes later on that Sunday I received an email from Steve which directed me to work with Greg Christie to fix the icon.
Since I was 11 years old and fell in love with an Apple II, I have dozens of stories to tell about Apple products over the decades. Even when I worked for 15 years for Bill Gates at Microsoft, I had a huge admiration for Steve Jobs.
But in the end, when I think about leadership, passion and attention to detail, I think back to the call I received that morning in January. It was a lesson I’ll never forget. CEOs should care about details. Even shades of yellow.
To one of the greatest leaders I’ve ever met, my prayers and hopes are with you Steve.
Thursday, September 29, 2011
October, 2011
October 1, 2011
RE: Monthly Letter
In an attempt to be efficient, I am going to give you a sneak peak at an article I just wrote for a commercial real estate trade paper on the state of the San Diego Retail Market.
The lights may have gone out in San Diego on September 8th but the economy and the retail market continue to churn and march forward on the path to recovery. Countywide retail vacancy hovers at 5.5 percent according to CoStar Group, however, Shopping Centers sit at just below 8 percent.
Because of the last recession, tighter lending requirements, onerous governmental processes and the lack of developable land, San Diego’s retail market is not overbuilt. Certainly the economic malaise we are in has put stress on retailers big and small. An even bigger issue is the restructuring of the retail industry. Between Big Box Super retailers and internet sales, the demand for retail space has flattened. Just as our economy is retrenching so too are users of retail space. Service office users (doctors, lawyers, alternate healthcare, financial services and education) are moving out of office and into retail space offered at bargain rents but with better public exposure. Food uses continue to pop up taking advantage of the latest health trends or new ethnic cuisines.
New retail development in San Diego County is still scarce but the “green shoots” are starting to appear. Shea Properties is developing the Mercado Del Barrio in Barrio Logan anchored by Northgate Market plus an approximately 50,000 square feet of shops and service uses. Part of a mixed use redevelopment, the project is also to include ninety-two apartments and a community college. Additionally, Sunroad Enterprises has announced plans for a 500,000 square foot shopping center in Otay Mesa. This Big Box Project is expected to serve the eventual population of the Mesa but also provide for tens of thousands of consumers across the border.
At the North end of the County, the coastal market has held up with less vacancy and less rent declines than the inland markets. A tough economy and tighter immigration policies have contributed to higher unemployment and a shrinking population which translates to less deals and higher vacancies. There are a few bright spots such as two new hospitals under construction Palomar Hospital in Escondido and Kaiser Hospital in San Marcos. These users are sure to be job generators and economic stabilizers in the future. Stone Brewery continues to grow and is now the fourteenth largest craft brewer in the United States with plans for the addition of a boutique hotel and new brew pubs in North Park and Liberty Station near Lindberg Field airport. San Diego has become the Napa Valley of Craft beer brewing. Lexus of Escondido has opened a mega facility. The dealership sells cars, offers wedding and meeting venues, a coffee house, golf simulator, and now Vintanas an upscale restaurant from the Cohn Group.
The Big Box fallout from the Great Recession was quickly stemmed in San Diego by retailers seeking a foothold in the market. Most spaces were quickly taken by Best Buy, Dicks Sporting Goods, Ross and Sprouts. We are seeing the excess of small shop space caused by the economy and structural changes to the industry being slated for lease at lower rates to service/office or for redevelopment by tenants like Fresh & Easy and Big 5 Sporting Goods. Petco continues to seek sites but has launched a small store concept, Unleashed, to get into tighter more expensive markets and take advantage of redevelopment opportunities. Kahoot’s a pet store competitor continues to roll out its stores. The big banks, Chase, Wells Fargo and CITI are seeking sites and growing market share. Dollar Tree is trying to take advantage of low rents and hungry landlords to grow its foot print in the market. New food concepts are springing up. The burger wars are continuing. Besides the usual suspects, In-N-Out, Sonic, Smash Burgers and Five Guys all are seeking growth. Lots of new food concepts, sit down and fast food, are seeking growth throughout San Diego.
Things are still tough in the market. However, there is just too much good information out there and real estate in San Diego is in just too good of a shape to stay at these levels. The financial, technology, healthcare and education sectors are coming back and are the “emerging leaders. San Diego gained 20,100 nonfarm jobs from 2010 to 2011. The light is on at the end of the tunnel. It is time to work hard, be productive and pray for recovery. In the movie catch me if you can, the infamous con artist Frank Abagnale Jr (Leonardo DiCaprio), who collected cash passing himself off as an airline pilot, doctor and lawyer said when asked to say grace “Two little mice fell into a bucket of cream. The first mouse quickly gave up and drowned, but the second mouse, he struggled so hard that he eventually churned that cream into butter and he walked out. Amen.”
In keeping with the churned butter story above, I was pleased to hear Christopher Thornberg at Beacon Economics, confirm that things are dim, “but the chance of us shrinking back into another recession in 2011 is pretty close to zero percent.” The USD Real Estate index faltered in August mirroring the slow August that we saw at CDC. September has seen more activity but still not much closing. We’re doing our best to drag these deals across the finish line!
So keep on struggling as we figure out how to step out of this hole or... I hope you enjoy the story (sorry it is a repeat of 2007 but it is very fitting with the state of things and the mouse story above).
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
The Donkey Story
One day a farmer’s donkey fell down into a well. The animal cried piteously for hours as the farmer tried to figure out what to do. Finally he decided the animal was old, and the well needed to be covered up anyway; it just wasn’t worth it to retrieve the donkey. He invited all his neighbors to come over and help him. They each grabbed a shovel and began to shovel dirt into the well.
At first, the donkey realized what was happening and cried horribly. Then, to everyone’s amazement, he quieted down. A few shovel loads later, the farmer looked down the well, and was astonished at what he saw.
As every shovel of dirt hit his back, the donkey did something amazing. He would shake it off and take a step up. As the farmer’s neighbors continued to shovel dirt on top of the animal, he would shake it off and take a step up. Pretty soon, everyone was amazed, as the donkey stopped up over the edge of the well and trotted off.
The Moral:
Life is going to shovel dirt on you, all kinds of dirt. The trick to getting out of the well is to shake it off and take a step up. Each of our troubles is a stepping stone. We can get out of the deepest wells just by not stopping, never giving up! Shake it off and take a step up!
Ok, that’s enough of that B.S....The donkey later came back, caught the farmer out in the field and kicked the *#?* out of him. Then he went over to each of his neighbors’ farms and kicked the *#?* out of them too for helping.
The REAL Moral:
When you try to cover your ass, it always comes back to get you.
RE: Monthly Letter
In an attempt to be efficient, I am going to give you a sneak peak at an article I just wrote for a commercial real estate trade paper on the state of the San Diego Retail Market.
The lights may have gone out in San Diego on September 8th but the economy and the retail market continue to churn and march forward on the path to recovery. Countywide retail vacancy hovers at 5.5 percent according to CoStar Group, however, Shopping Centers sit at just below 8 percent.
Because of the last recession, tighter lending requirements, onerous governmental processes and the lack of developable land, San Diego’s retail market is not overbuilt. Certainly the economic malaise we are in has put stress on retailers big and small. An even bigger issue is the restructuring of the retail industry. Between Big Box Super retailers and internet sales, the demand for retail space has flattened. Just as our economy is retrenching so too are users of retail space. Service office users (doctors, lawyers, alternate healthcare, financial services and education) are moving out of office and into retail space offered at bargain rents but with better public exposure. Food uses continue to pop up taking advantage of the latest health trends or new ethnic cuisines.
New retail development in San Diego County is still scarce but the “green shoots” are starting to appear. Shea Properties is developing the Mercado Del Barrio in Barrio Logan anchored by Northgate Market plus an approximately 50,000 square feet of shops and service uses. Part of a mixed use redevelopment, the project is also to include ninety-two apartments and a community college. Additionally, Sunroad Enterprises has announced plans for a 500,000 square foot shopping center in Otay Mesa. This Big Box Project is expected to serve the eventual population of the Mesa but also provide for tens of thousands of consumers across the border.
At the North end of the County, the coastal market has held up with less vacancy and less rent declines than the inland markets. A tough economy and tighter immigration policies have contributed to higher unemployment and a shrinking population which translates to less deals and higher vacancies. There are a few bright spots such as two new hospitals under construction Palomar Hospital in Escondido and Kaiser Hospital in San Marcos. These users are sure to be job generators and economic stabilizers in the future. Stone Brewery continues to grow and is now the fourteenth largest craft brewer in the United States with plans for the addition of a boutique hotel and new brew pubs in North Park and Liberty Station near Lindberg Field airport. San Diego has become the Napa Valley of Craft beer brewing. Lexus of Escondido has opened a mega facility. The dealership sells cars, offers wedding and meeting venues, a coffee house, golf simulator, and now Vintanas an upscale restaurant from the Cohn Group.
The Big Box fallout from the Great Recession was quickly stemmed in San Diego by retailers seeking a foothold in the market. Most spaces were quickly taken by Best Buy, Dicks Sporting Goods, Ross and Sprouts. We are seeing the excess of small shop space caused by the economy and structural changes to the industry being slated for lease at lower rates to service/office or for redevelopment by tenants like Fresh & Easy and Big 5 Sporting Goods. Petco continues to seek sites but has launched a small store concept, Unleashed, to get into tighter more expensive markets and take advantage of redevelopment opportunities. Kahoot’s a pet store competitor continues to roll out its stores. The big banks, Chase, Wells Fargo and CITI are seeking sites and growing market share. Dollar Tree is trying to take advantage of low rents and hungry landlords to grow its foot print in the market. New food concepts are springing up. The burger wars are continuing. Besides the usual suspects, In-N-Out, Sonic, Smash Burgers and Five Guys all are seeking growth. Lots of new food concepts, sit down and fast food, are seeking growth throughout San Diego.
Things are still tough in the market. However, there is just too much good information out there and real estate in San Diego is in just too good of a shape to stay at these levels. The financial, technology, healthcare and education sectors are coming back and are the “emerging leaders. San Diego gained 20,100 nonfarm jobs from 2010 to 2011. The light is on at the end of the tunnel. It is time to work hard, be productive and pray for recovery. In the movie catch me if you can, the infamous con artist Frank Abagnale Jr (Leonardo DiCaprio), who collected cash passing himself off as an airline pilot, doctor and lawyer said when asked to say grace “Two little mice fell into a bucket of cream. The first mouse quickly gave up and drowned, but the second mouse, he struggled so hard that he eventually churned that cream into butter and he walked out. Amen.”
In keeping with the churned butter story above, I was pleased to hear Christopher Thornberg at Beacon Economics, confirm that things are dim, “but the chance of us shrinking back into another recession in 2011 is pretty close to zero percent.” The USD Real Estate index faltered in August mirroring the slow August that we saw at CDC. September has seen more activity but still not much closing. We’re doing our best to drag these deals across the finish line!
So keep on struggling as we figure out how to step out of this hole or... I hope you enjoy the story (sorry it is a repeat of 2007 but it is very fitting with the state of things and the mouse story above).
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
The Donkey Story
One day a farmer’s donkey fell down into a well. The animal cried piteously for hours as the farmer tried to figure out what to do. Finally he decided the animal was old, and the well needed to be covered up anyway; it just wasn’t worth it to retrieve the donkey. He invited all his neighbors to come over and help him. They each grabbed a shovel and began to shovel dirt into the well.
At first, the donkey realized what was happening and cried horribly. Then, to everyone’s amazement, he quieted down. A few shovel loads later, the farmer looked down the well, and was astonished at what he saw.
As every shovel of dirt hit his back, the donkey did something amazing. He would shake it off and take a step up. As the farmer’s neighbors continued to shovel dirt on top of the animal, he would shake it off and take a step up. Pretty soon, everyone was amazed, as the donkey stopped up over the edge of the well and trotted off.
The Moral:
Life is going to shovel dirt on you, all kinds of dirt. The trick to getting out of the well is to shake it off and take a step up. Each of our troubles is a stepping stone. We can get out of the deepest wells just by not stopping, never giving up! Shake it off and take a step up!
Ok, that’s enough of that B.S....The donkey later came back, caught the farmer out in the field and kicked the *#?* out of him. Then he went over to each of his neighbors’ farms and kicked the *#?* out of them too for helping.
The REAL Moral:
When you try to cover your ass, it always comes back to get you.
Thursday, September 1, 2011
September, 2011
September 1, 2011
RE: Monthly Letter
It may seem hard to believe but the kids are going back to school and football is in the air. Also, as hard as it is to believe amid S&P downgrades, Wall Street turmoil and financial troubles in Europe, the US economy is heading in the right direction, albeit slowly.
Football today requires its players to be athletic “all-rounders”, with excellent muscular endurance, so they can sprint, jump, block and tackle for the full 3 hours of game day. They are also required to have this strength and endurance to avoid injury. Gone are the days of training sessions consisting of little more than running laps, a few sprints followed by some basic ball drills. Todays game requires players to be high performance athletes-possessing strength, speed, power and stamina.
Just as in football, we need to be smarter, stronger and possess more stamina to get our economy and real estate markets working. And by working I mean making us money and dropping unemployment. We must innovate and sell (productivity) our way out of this slump. The main problem is not an economy on the ropes, but a weak recovery plagued by institutional gridlock, and changing expectations of whether U.S. policy makers can encourage job creation while managing debt and deficit levels.
Christopher Thornberg of Beacon Economics explains last months financial turmoil well; “the financial markets are shuddering because they weren’t expecting a slow recovery. They were expecting a fast recovery. What you are seeing now has been a correction.” In school you are taught that this is the reversion to the mean average (ie. slow upward trend). In football you start talking about it being a building year!
Lawrence Yun, the National Association of Realtors® economist provides some simplicity and clarity to the winning path. He says the United States 3% annual growth in GDP is due to the “simple math of a 1% rise in population and a 2% rise in worker productivity.” Overtime, a small boost in GDP growth - due either to faster population growth or increased worker productivity – could have a huge impact on national income, tax revenue and government debt. If GDP grew at 5% instead of 2%, Yun said, by 2040 the federal government could be netting $11.4 trillion in tax revenue instead of $4.8 trillion, without raising taxes – “more than plentiful to cover just about any government program pay off debt and then some.”
I hate to be the one to tell you this, but things may not be better next week or even the week after. But eventually they will get better. There is just too much good information out there and real estate in San Diego is in just too good of a shape to stay at these levels. The financial, technology, healthcare and education sectors are coming back and are “emerging leaders.” US retail sales rose in June and July. Worldwide, commercial real estate transactions rose 60%. There are less loan workouts and more liquidations as buyers return to the market and banks foreclose. On a very positive note, between July 2010 and July 2011 San Diego County gained 20,100 non- farm jobs! San Diego’s median home price in 2010 was $315,000 – 3 years ago you would have killed for a house at that price. I know everything has gone down but to keep this in perspective, why I say this is such a good deal, Louisville, KY has an average home price of $342,000.
Certainly this is a risky market but if you believe like me the light is still on at the end of the tunnel. This is a time for “athletic” investors to take on vacancy, renovate tired properties and snatch up assets outside of primary markets in order to reap larger profits from their investment dollars. Here are a few tips from the trenches.
1. Buy with Cash - To win deals, buyers with sufficient capital are acquiring with cash and then financing after closing or renovation.
2. Understand lender preferences – You have to understand where the deal fits into the lender universe.
3. Lock in rates – Mortgage rates are at historic lows. If your loan expires in next 12 months try to lock in now.
Whether it is competing like a football player or studying like a student these are historical times that we will look back upon and say; “I only wish I had…” It is important to prepare today so that tomorrow’s challenges can be opportunities rather than crisis.
Speaking of school, preparation and tomorrow’s challenges, I am going to give a shameless plug for my wife, Candy who does college counseling.. If you are trying to figure out what school for your kids or grandkids, what major, how to get in, do applications or what a FAFSA is, feel free to call her (858-254-2933) or email candy@candyzech.com She’s about half the price of the competition and the first visit is free.
We can’t predict the market but you can control how you react to it. Kinda like football. Hope you enjoy this months story.
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
What Would Happen If…
We Ran Our Football Teams As We Do Our Classrooms:
Everyone would have the right to equal playing time so that all could develop their athletic skills equally.
Cooperation would be more important than excellence. Competition would be frowned upon.
Since star athletes are already talented, they would not need special coaching or conditioning. They could help teach other athletes since “to teach something is really to learn it.”
We would “coach to the middle.”
We would strive to develop well-rounded athletes. Thus, the star quarterback would take a turn sitting on the bench as a trainer. The student of lower analytical skills would get a turn as quarterback. The out-of-shape student who hates physical activity would get the opportunity to play running back.
Coaches would be expected to be understanding when jobs, family trips or homework interfered with practice time by adapting game plans to accommodate much multiple interests.
Coaches would be assigned parking lot supervision duty immediately before and after games and during half-time. If athletes had questions about game plans, they could meet with coaches in the parking lot. Coaches would have to plan their plays before or during supervision duty.
Coaches could not demand too much of students lest they create stress or interfere with many other interests and priorities.
If the team had a losing season, new philosophies of coaching would be developed. Each new philosophy would discard all previous philosophies. It would require a two-hour training session and supply the coach with a pocket folder crammed with philosophy and objectives. Coaches could plan their strategies between supervision duties and games.
We Ran Our Classrooms As We Do Our Football Teams:
Teachers would walk into class enthused and fired up with the importance and relevance of what they were teaching.
Students would be in class because they wanted to learn and they would respect the teacher and put all their energy into the class. Class would be more important to them then their jobs or football practice.
Parents would jam the schools asking the teacher how to help their students excel.
Students wouldn’t dare miss class or skip doing homework lest they be dropped from the academic team.
Students would develop a sense of teamwork and cooperation fueled by their love of learning and challenging of each other. Students would take pride in their classes and demand that classmates give their best.
Students would clamor to be “student of the week” or make the honor roll. Other students, teachers and the community would enthusiastically and supportively be involved in student learning.
We would have rallies and bands and cheerleaders for National Merit Scholars and honor students, and they would not feel uncomfortable about receiving the attention because this would be every student’s dream.
Every night, the 10 o’clock news would devote a full 10 minute segment to education issues and highlights. The morning radio stations would compete for the education audience.
Newspapers would devote several pages (for a whole section) complete with pictures to academic activities.
We would demand excellence in the classroom and teach cooperation and patience on the playing field.
Our society would clamor to build and equip learning facilities because everybody would recognize the value of well –educated citizens to the business community.
RE: Monthly Letter
It may seem hard to believe but the kids are going back to school and football is in the air. Also, as hard as it is to believe amid S&P downgrades, Wall Street turmoil and financial troubles in Europe, the US economy is heading in the right direction, albeit slowly.
Football today requires its players to be athletic “all-rounders”, with excellent muscular endurance, so they can sprint, jump, block and tackle for the full 3 hours of game day. They are also required to have this strength and endurance to avoid injury. Gone are the days of training sessions consisting of little more than running laps, a few sprints followed by some basic ball drills. Todays game requires players to be high performance athletes-possessing strength, speed, power and stamina.
Just as in football, we need to be smarter, stronger and possess more stamina to get our economy and real estate markets working. And by working I mean making us money and dropping unemployment. We must innovate and sell (productivity) our way out of this slump. The main problem is not an economy on the ropes, but a weak recovery plagued by institutional gridlock, and changing expectations of whether U.S. policy makers can encourage job creation while managing debt and deficit levels.
Christopher Thornberg of Beacon Economics explains last months financial turmoil well; “the financial markets are shuddering because they weren’t expecting a slow recovery. They were expecting a fast recovery. What you are seeing now has been a correction.” In school you are taught that this is the reversion to the mean average (ie. slow upward trend). In football you start talking about it being a building year!
Lawrence Yun, the National Association of Realtors® economist provides some simplicity and clarity to the winning path. He says the United States 3% annual growth in GDP is due to the “simple math of a 1% rise in population and a 2% rise in worker productivity.” Overtime, a small boost in GDP growth - due either to faster population growth or increased worker productivity – could have a huge impact on national income, tax revenue and government debt. If GDP grew at 5% instead of 2%, Yun said, by 2040 the federal government could be netting $11.4 trillion in tax revenue instead of $4.8 trillion, without raising taxes – “more than plentiful to cover just about any government program pay off debt and then some.”
I hate to be the one to tell you this, but things may not be better next week or even the week after. But eventually they will get better. There is just too much good information out there and real estate in San Diego is in just too good of a shape to stay at these levels. The financial, technology, healthcare and education sectors are coming back and are “emerging leaders.” US retail sales rose in June and July. Worldwide, commercial real estate transactions rose 60%. There are less loan workouts and more liquidations as buyers return to the market and banks foreclose. On a very positive note, between July 2010 and July 2011 San Diego County gained 20,100 non- farm jobs! San Diego’s median home price in 2010 was $315,000 – 3 years ago you would have killed for a house at that price. I know everything has gone down but to keep this in perspective, why I say this is such a good deal, Louisville, KY has an average home price of $342,000.
Certainly this is a risky market but if you believe like me the light is still on at the end of the tunnel. This is a time for “athletic” investors to take on vacancy, renovate tired properties and snatch up assets outside of primary markets in order to reap larger profits from their investment dollars. Here are a few tips from the trenches.
1. Buy with Cash - To win deals, buyers with sufficient capital are acquiring with cash and then financing after closing or renovation.
2. Understand lender preferences – You have to understand where the deal fits into the lender universe.
3. Lock in rates – Mortgage rates are at historic lows. If your loan expires in next 12 months try to lock in now.
Whether it is competing like a football player or studying like a student these are historical times that we will look back upon and say; “I only wish I had…” It is important to prepare today so that tomorrow’s challenges can be opportunities rather than crisis.
Speaking of school, preparation and tomorrow’s challenges, I am going to give a shameless plug for my wife, Candy who does college counseling.. If you are trying to figure out what school for your kids or grandkids, what major, how to get in, do applications or what a FAFSA is, feel free to call her (858-254-2933) or email candy@candyzech.com She’s about half the price of the competition and the first visit is free.
We can’t predict the market but you can control how you react to it. Kinda like football. Hope you enjoy this months story.
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
What Would Happen If…
We Ran Our Football Teams As We Do Our Classrooms:
Everyone would have the right to equal playing time so that all could develop their athletic skills equally.
Cooperation would be more important than excellence. Competition would be frowned upon.
Since star athletes are already talented, they would not need special coaching or conditioning. They could help teach other athletes since “to teach something is really to learn it.”
We would “coach to the middle.”
We would strive to develop well-rounded athletes. Thus, the star quarterback would take a turn sitting on the bench as a trainer. The student of lower analytical skills would get a turn as quarterback. The out-of-shape student who hates physical activity would get the opportunity to play running back.
Coaches would be expected to be understanding when jobs, family trips or homework interfered with practice time by adapting game plans to accommodate much multiple interests.
Coaches would be assigned parking lot supervision duty immediately before and after games and during half-time. If athletes had questions about game plans, they could meet with coaches in the parking lot. Coaches would have to plan their plays before or during supervision duty.
Coaches could not demand too much of students lest they create stress or interfere with many other interests and priorities.
If the team had a losing season, new philosophies of coaching would be developed. Each new philosophy would discard all previous philosophies. It would require a two-hour training session and supply the coach with a pocket folder crammed with philosophy and objectives. Coaches could plan their strategies between supervision duties and games.
We Ran Our Classrooms As We Do Our Football Teams:
Teachers would walk into class enthused and fired up with the importance and relevance of what they were teaching.
Students would be in class because they wanted to learn and they would respect the teacher and put all their energy into the class. Class would be more important to them then their jobs or football practice.
Parents would jam the schools asking the teacher how to help their students excel.
Students wouldn’t dare miss class or skip doing homework lest they be dropped from the academic team.
Students would develop a sense of teamwork and cooperation fueled by their love of learning and challenging of each other. Students would take pride in their classes and demand that classmates give their best.
Students would clamor to be “student of the week” or make the honor roll. Other students, teachers and the community would enthusiastically and supportively be involved in student learning.
We would have rallies and bands and cheerleaders for National Merit Scholars and honor students, and they would not feel uncomfortable about receiving the attention because this would be every student’s dream.
Every night, the 10 o’clock news would devote a full 10 minute segment to education issues and highlights. The morning radio stations would compete for the education audience.
Newspapers would devote several pages (for a whole section) complete with pictures to academic activities.
We would demand excellence in the classroom and teach cooperation and patience on the playing field.
Our society would clamor to build and equip learning facilities because everybody would recognize the value of well –educated citizens to the business community.
Thursday, July 28, 2011
August, 2011
August 1, 2011
RE: Monthly Letter
Scientists are now learning that life is wiped out on earth about every 20 million years. Great…we will finally get the deficit paid off and we’ll all be wiped out! I heard one of the proposed budget cuts was for our representative to now play miniature golf! Speaking of golf and living forever, I will be turning 50 years old on the 9th and to celebrate I am going to play 50 holes of golf. It should make for a long frustrating day celebrated with family and good friends.
Last month I reported that we have seen an upturn. I still hold to this but as in other previous bumps we have to get and maintain momentum. This month we have seen a little flattening again. The USD index was down two tenths of a percentage point. Down for the first time in 27 months – but essentially flat. Unemployment in San Diego the single most significant number rose nearly 1 full percentage point in June to 10.4%, the highest mark for 2011. However, tech employment was up slightly. Merger and acquisitions activity in San Diego nearly tripled in the first quarter of 2011 over the same quarter last year. The number of patents granted rose sharply in San Diego. The growth of patents serves as a good indicator of the level and pace of innovation in the region (and future jobs and space requirements).
Just as a reminder, as things slowly pick up, we want to make it as easy as possible to make a deal. On our end, let me assure you we are hustling on deals “like our hair is on fire” . From the property perspective, we ask that the vacant spaces are light (lights all work, windows are not cracked and are clean), bright (space is unobstructed, electricity is on, lenses are clear – not yellow ) and white (walls clean and preferably fresh white paint – no holes or damage, ceiling tiles white and unstained). On owners end, turn documents (LOI’s and leases) around quickly. “Time kills all deals” . We are seeing deals fall out because owners take to long to respond or sign.
Maybe it is turning 50 or maybe it is the dog days of summer but this month I am going to keep the letter short and share some graphics with you rather than commentary.
First follow this link to Google Trends for Real Estate-Rentals. Granted this chart reflects residential rentals but search activity closely parallels that for commercial.
www.GoogleTrendsforRealEstateRentals.com
Second, below you will see my own proprietary chart which charts market activity. To be healthy we want to be over 250 and prefer to be over 300. As you will note breaking through that magical “250.” line is the start and stop that I have been reporting all year.
Outgoing FDIC Chair, Sheila Bair summed up the situation best when she said; “The fact that so many residential and commercial properties are currently underwater goes a long way to explaining the continuing weakness of the small business sector, which is so important to the creation of new jobs.” “Almost half of the liabilities of nonfarm noncorporate businesses are secured by real estate, both residential and commercial.”
“The large and persistent declines in real estate values in many areas of the country have hurt both the demand for small business products on the part of their Main Street customers as well as the ability of small businesses to borrow against the real estate collateral they own.”
Years ago I remember banks giving away toaster ovens when you opened an account. The problem seems to have occurred when they started loaning out money like it was an ATM machine. Soon Wal-mart will be giving away banks as your free gifts when you buy a toaster oven!
Lest you think I am crazy to play 50 holes of golf in one day, I still have my eye on the Guinness Book of World Records for the most golf in a year…enjoy this month’s story.
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
Richard Lewis set out to play 600 rounds of golf last year to get his name in the Guinness Book of World Records. The Guinness Book of World Records required Lewis to sign in and out with golf pros to prove he has completed each round.
The 64-year old Lewis walked every hold for an estimated 3500 miles of golf in 2010. “I’m addicted; what can I say?” said Lewis. Lewis, is a member of the Four Seasons Resort and Club Dallas at Las Colinas Four Seasons Club Manager Rob Cowan said, “Nobody in the 27-year history of the Four Seasons has gotten more out of his membership than Richard.”
Lewis not only wanted to play 600 rounds, he wanted to play them well. His average score during 2010 was 78.5. Now the question…did he make his goal of 600 rounds?...yes, he hit that mark on December 26th but played on a bit more…he closed out 2010 with a record of 611 rounds played. How many holes in one did he make?...none. Be he did close out 2010 with a birdie on the final hole.
RE: Monthly Letter
Scientists are now learning that life is wiped out on earth about every 20 million years. Great…we will finally get the deficit paid off and we’ll all be wiped out! I heard one of the proposed budget cuts was for our representative to now play miniature golf! Speaking of golf and living forever, I will be turning 50 years old on the 9th and to celebrate I am going to play 50 holes of golf. It should make for a long frustrating day celebrated with family and good friends.
Last month I reported that we have seen an upturn. I still hold to this but as in other previous bumps we have to get and maintain momentum. This month we have seen a little flattening again. The USD index was down two tenths of a percentage point. Down for the first time in 27 months – but essentially flat. Unemployment in San Diego the single most significant number rose nearly 1 full percentage point in June to 10.4%, the highest mark for 2011. However, tech employment was up slightly. Merger and acquisitions activity in San Diego nearly tripled in the first quarter of 2011 over the same quarter last year. The number of patents granted rose sharply in San Diego. The growth of patents serves as a good indicator of the level and pace of innovation in the region (and future jobs and space requirements).
Just as a reminder, as things slowly pick up, we want to make it as easy as possible to make a deal. On our end, let me assure you we are hustling on deals “like our hair is on fire” . From the property perspective, we ask that the vacant spaces are light (lights all work, windows are not cracked and are clean), bright (space is unobstructed, electricity is on, lenses are clear – not yellow ) and white (walls clean and preferably fresh white paint – no holes or damage, ceiling tiles white and unstained). On owners end, turn documents (LOI’s and leases) around quickly. “Time kills all deals” . We are seeing deals fall out because owners take to long to respond or sign.
Maybe it is turning 50 or maybe it is the dog days of summer but this month I am going to keep the letter short and share some graphics with you rather than commentary.
First follow this link to Google Trends for Real Estate-Rentals. Granted this chart reflects residential rentals but search activity closely parallels that for commercial.
www.GoogleTrendsforRealEstateRentals.com
Second, below you will see my own proprietary chart which charts market activity. To be healthy we want to be over 250 and prefer to be over 300. As you will note breaking through that magical “250.” line is the start and stop that I have been reporting all year.
Outgoing FDIC Chair, Sheila Bair summed up the situation best when she said; “The fact that so many residential and commercial properties are currently underwater goes a long way to explaining the continuing weakness of the small business sector, which is so important to the creation of new jobs.” “Almost half of the liabilities of nonfarm noncorporate businesses are secured by real estate, both residential and commercial.”
“The large and persistent declines in real estate values in many areas of the country have hurt both the demand for small business products on the part of their Main Street customers as well as the ability of small businesses to borrow against the real estate collateral they own.”
Years ago I remember banks giving away toaster ovens when you opened an account. The problem seems to have occurred when they started loaning out money like it was an ATM machine. Soon Wal-mart will be giving away banks as your free gifts when you buy a toaster oven!
Lest you think I am crazy to play 50 holes of golf in one day, I still have my eye on the Guinness Book of World Records for the most golf in a year…enjoy this month’s story.
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
Richard Lewis set out to play 600 rounds of golf last year to get his name in the Guinness Book of World Records. The Guinness Book of World Records required Lewis to sign in and out with golf pros to prove he has completed each round.
The 64-year old Lewis walked every hold for an estimated 3500 miles of golf in 2010. “I’m addicted; what can I say?” said Lewis. Lewis, is a member of the Four Seasons Resort and Club Dallas at Las Colinas Four Seasons Club Manager Rob Cowan said, “Nobody in the 27-year history of the Four Seasons has gotten more out of his membership than Richard.”
Lewis not only wanted to play 600 rounds, he wanted to play them well. His average score during 2010 was 78.5. Now the question…did he make his goal of 600 rounds?...yes, he hit that mark on December 26th but played on a bit more…he closed out 2010 with a record of 611 rounds played. How many holes in one did he make?...none. Be he did close out 2010 with a birdie on the final hole.
Thursday, June 30, 2011
July 1, 2011
July 1, 2011
RE: Monthly Letter
Happy 4th of July! We are so fortunate to live in a country that allows us to be free to pursue our happiness. Despite these trying times and the choppiness of Democracy at work we should be so proud and confident of our young great nation!
During the early years of WWII Nazi submarines, operating in wolf packs, roamed the frigid waters of the North Atlantic with impunity sinking an alarming number of British military and merchant ships. Hitler was confident that his U-boats could blockade England and eventually starve the British people into submission.
In the summer of 1940, while the Battle of Britain was being played out over London, the Germans unmercifully sank over 300 British military and merchant ships. Prime Minister Winston Churchill, fearing the negative impact these devastating losses might have n the nation’s morale, ordered the information withheld from the public. In an effort to reduce the appalling number of causalities lost at sea, Churchill instructed the British Royal Navy to begin a study to determine what, if anything could be done to save more lives during sea rescue.
While interviewing the survivors an interesting discovery was made. To their complete astonishment, the researchers noted that the survival rate for the younger, presumably more physically fit sailors was remarkably lower when compared to the older shipmates. The study concluded that the older sailors had a significantly higher survival rate due to the fact that they had overcome more adversity and therefore, had developed greater confidence in being rescued than the younger, less experienced sailors.
History is replete with examples of people who felt like quitting but didn’t, only to realize incredible accomplishments. Just before those great accomplishments, you like would have heard them say, “I hate this!, This sucks! When will things turn around?!...” Well I am here to tell you that we have turned the corner. Although the press is talking a “double dip” we are not seeing it. We are definitely seeing continued activity but not much momentum.
As Gary London says, we are in the “search and rescue” phase with investors and tenants looking for bargains and opportunities while anticipating the economic upswing. I like to call it a “wobbling economy”, like a child who crawls then wobbles, then walks and eventually runs.
This summer we have three significant milestones to work through so we can keep “wobbling.” First, the end of QE2. The QE2 program is scheduled to end in June and the Fed says there won’t be a QE3. I think we are going to get a stealth QE3 by way of the Fed reinvesting in maturing bonds, release of the strategic petroleum reserve to keep oil prices down (oil is a proxy for interest rates), and possibly the lowering of the tax rates on corporate profits held overseas (over a trillion dollars!) Second, the battle over the debt ceiling. This showdown has as much to do about the ceiling and spending as it does about the Presidential elections in 2012. Republicans won’t compromise for fear of the Tea Party splintering off and doing what Ross Perot did in 1992, splitting the vote. Knowing this, the Democrats will likely try to force the hand. In the end we are likely to see tension and then compromise which will mean higher taxes and less spending (see below.) Also, don’t let it be lost on you that the Presidential election cycle is now in play. This likely means that we won’t see any meaningful fed rate increases until the first quarter of 2013. My advice – Go Long! Borrow all you can get from stingy lenders now.
The third milestone facing us this summer is the debt crisis in Europe. Lest you think this is not our problem, think again. European banks have about 90% of the exposure to places like Greece but through reinsurance, US banks have about 50% of the European banks exposure. And remember us taxpayers back up the US banks. So guess what? It may not be Greek to you but it may be 50% of you to the Greeks!
As mentioned above one sure thing is the government spending is going to decline. What and where will we likely see this outcome?
• Expect more private ownership of freeways and other means of transportation.
• Slower retail spending due to higher taxes, high unemployment, less
reductions in retail prices through imports (cheaper dollar.)
• Office space by government and agencies and funded non profits will decline.
To further President Clinton’s famous admonishment, “It’s the economy stupid”, I would tell the world (especially those in real estate), “It's about jobs!” Despite the decline in the outlook in the National economy, San Diego is up 11,400 jobs over last year. Unemployment is at 9.6 in May which is below the 10.1% it stood at last year at this time. Furthermore, the University of San Diego (USD) Index of leading economic indicators for San Diego has recorded its 22nd gain in 25 months (with the other 3 months unchanged.) We just need two ingredients to keep up this slow wobbly recovery – more jobs and more consumer confidence. A jobless recovery is a lie as much as saying that taxes are revenue enhancements. We have an unemployment crisis!
Also on the positive front, we have seen a continued positive upturn in the number of inbound sign calls since March (a good proxy for market activity.)
As we celebrate the birth of our Nation and the proverbial dollar, we pray for more employment and dollars in all of our pockets; I thought you would enjoy this story about our lowly Dollar Bill – Happy 4th!
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
The Dollar Bill
On the back side of the One Dollar bill, you will see two circles. Together, they comprise the Great Seal of the United States. The First Continental Congress requested that Benjamin Franklin and a group of men come up with a Seal. It took them four years to accomplish this task and another two years to get it approved.
If you look at the left-hand circle, you will see a Pyramid. Notice the face is lighted, and the western side is dark. This country was just beginning. We had not begun to explore the west or decided what we could do for Western Civilization. The Pyramid is uncapped, again signifying that we were not even close to being finished. Inside the capstone you have the all-seeing eye, an ancient symbol for divinity. It was Franklin's belief that one man couldn't do it alone, but a group of men, with the help of God, could do anything.
'IN GOD WE TRUST' is on this currency. The Latin above the pyramid, ANNUIT COEPTIS, means, 'God has favored our undertaking.' The Latin below the pyramid, NOVUS ORDO SECLORUM, means, 'a new order has begun.' At the base of the pyramid is the Roman Numeral for 1776. (MDCCLXXVI)
If you look at the right-hand circle, and check it carefully, you will learn that it is on every National Cemetery in the United States It is also on the Parade of Flags Walkway at the Bushnell, Florida National Cemetery, and is the centerpiece of most hero's monuments. Slightly modified, it is the seal of the President of the United States, and it is always visible whenever he speaks, yet very few people know what the symbols mean. The Bald Eagle was selected as a symbol for victory for two reasons: First, he is not afraid of a storm; he is strong, and he is smart enough to soar above it. Secondly, he wears no material crown. We had just broken from the King of England. Also, notice the shield is unsupported. This country can now stand on its own. At the top of that shield you have a white bar signifying congress, a unifying factor. We were coming together as one nation. In the Eagle's beak you will read, ' E PLURIBUS UNUM' meaning,'one from many.'
Above the Eagle, you have the thirteen stars, representing the thirteen original colonies, and any clouds of misunderstanding rolling away. Again, we were coming together as one. Notice what the Eagle holds in his talons. He holds an olive branch and arrows. This country wants peace, but we will never be afraid to fight to preserve peace. The Eagle always wants to face the olive branch, but in time of war, his gaze turns toward the arrows. They say that the number 13 is an unlucky number.
This is almost a worldwide belief. You will usually never (or seldom) see a room numbered 13, or any hotels or motels with a 13th floor. But think about this:
13 original colonies
13 signers of the Declaration of Independence
13 stripes on our flag
13 steps on the Pyramid
13 letters in Annuit Coeptis
13 letters in 'E Pluribus Unum
13 stars above the Eagle
13 bars on that shield
13 leaves on the olive branch
13 fruits, and if you look closely,
13 arrows
And finally, if you notice the arrangement of the 13 stars in the right-hand circle you will see that they are arranged as a Star of David. This was ordered by George Washington who, when he asked Hayim Solomon, a wealthy Philadelphia Jew, what he would like as a personal reward for his services to the Continental Army, Solomon said he wanted nothing for himself but that he would like something for his people. The Star of David was the result. Few people know that it was Solomon who saved the Army through his financial contributions but died a pauper.
RE: Monthly Letter
“Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.” -Dale Carnegie
Happy 4th of July! We are so fortunate to live in a country that allows us to be free to pursue our happiness. Despite these trying times and the choppiness of Democracy at work we should be so proud and confident of our young great nation!
During the early years of WWII Nazi submarines, operating in wolf packs, roamed the frigid waters of the North Atlantic with impunity sinking an alarming number of British military and merchant ships. Hitler was confident that his U-boats could blockade England and eventually starve the British people into submission.
In the summer of 1940, while the Battle of Britain was being played out over London, the Germans unmercifully sank over 300 British military and merchant ships. Prime Minister Winston Churchill, fearing the negative impact these devastating losses might have n the nation’s morale, ordered the information withheld from the public. In an effort to reduce the appalling number of causalities lost at sea, Churchill instructed the British Royal Navy to begin a study to determine what, if anything could be done to save more lives during sea rescue.
While interviewing the survivors an interesting discovery was made. To their complete astonishment, the researchers noted that the survival rate for the younger, presumably more physically fit sailors was remarkably lower when compared to the older shipmates. The study concluded that the older sailors had a significantly higher survival rate due to the fact that they had overcome more adversity and therefore, had developed greater confidence in being rescued than the younger, less experienced sailors.
History is replete with examples of people who felt like quitting but didn’t, only to realize incredible accomplishments. Just before those great accomplishments, you like would have heard them say, “I hate this!, This sucks! When will things turn around?!...” Well I am here to tell you that we have turned the corner. Although the press is talking a “double dip” we are not seeing it. We are definitely seeing continued activity but not much momentum.
As Gary London says, we are in the “search and rescue” phase with investors and tenants looking for bargains and opportunities while anticipating the economic upswing. I like to call it a “wobbling economy”, like a child who crawls then wobbles, then walks and eventually runs.
This summer we have three significant milestones to work through so we can keep “wobbling.” First, the end of QE2. The QE2 program is scheduled to end in June and the Fed says there won’t be a QE3. I think we are going to get a stealth QE3 by way of the Fed reinvesting in maturing bonds, release of the strategic petroleum reserve to keep oil prices down (oil is a proxy for interest rates), and possibly the lowering of the tax rates on corporate profits held overseas (over a trillion dollars!) Second, the battle over the debt ceiling. This showdown has as much to do about the ceiling and spending as it does about the Presidential elections in 2012. Republicans won’t compromise for fear of the Tea Party splintering off and doing what Ross Perot did in 1992, splitting the vote. Knowing this, the Democrats will likely try to force the hand. In the end we are likely to see tension and then compromise which will mean higher taxes and less spending (see below.) Also, don’t let it be lost on you that the Presidential election cycle is now in play. This likely means that we won’t see any meaningful fed rate increases until the first quarter of 2013. My advice – Go Long! Borrow all you can get from stingy lenders now.
The third milestone facing us this summer is the debt crisis in Europe. Lest you think this is not our problem, think again. European banks have about 90% of the exposure to places like Greece but through reinsurance, US banks have about 50% of the European banks exposure. And remember us taxpayers back up the US banks. So guess what? It may not be Greek to you but it may be 50% of you to the Greeks!
As mentioned above one sure thing is the government spending is going to decline. What and where will we likely see this outcome?
• Expect more private ownership of freeways and other means of transportation.
• Slower retail spending due to higher taxes, high unemployment, less
reductions in retail prices through imports (cheaper dollar.)
• Office space by government and agencies and funded non profits will decline.
To further President Clinton’s famous admonishment, “It’s the economy stupid”, I would tell the world (especially those in real estate), “It's about jobs!” Despite the decline in the outlook in the National economy, San Diego is up 11,400 jobs over last year. Unemployment is at 9.6 in May which is below the 10.1% it stood at last year at this time. Furthermore, the University of San Diego (USD) Index of leading economic indicators for San Diego has recorded its 22nd gain in 25 months (with the other 3 months unchanged.) We just need two ingredients to keep up this slow wobbly recovery – more jobs and more consumer confidence. A jobless recovery is a lie as much as saying that taxes are revenue enhancements. We have an unemployment crisis!
Also on the positive front, we have seen a continued positive upturn in the number of inbound sign calls since March (a good proxy for market activity.)
As we celebrate the birth of our Nation and the proverbial dollar, we pray for more employment and dollars in all of our pockets; I thought you would enjoy this story about our lowly Dollar Bill – Happy 4th!
Regards,
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
The Dollar Bill
On the back side of the One Dollar bill, you will see two circles. Together, they comprise the Great Seal of the United States. The First Continental Congress requested that Benjamin Franklin and a group of men come up with a Seal. It took them four years to accomplish this task and another two years to get it approved.
If you look at the left-hand circle, you will see a Pyramid. Notice the face is lighted, and the western side is dark. This country was just beginning. We had not begun to explore the west or decided what we could do for Western Civilization. The Pyramid is uncapped, again signifying that we were not even close to being finished. Inside the capstone you have the all-seeing eye, an ancient symbol for divinity. It was Franklin's belief that one man couldn't do it alone, but a group of men, with the help of God, could do anything.
'IN GOD WE TRUST' is on this currency. The Latin above the pyramid, ANNUIT COEPTIS, means, 'God has favored our undertaking.' The Latin below the pyramid, NOVUS ORDO SECLORUM, means, 'a new order has begun.' At the base of the pyramid is the Roman Numeral for 1776. (MDCCLXXVI)
If you look at the right-hand circle, and check it carefully, you will learn that it is on every National Cemetery in the United States It is also on the Parade of Flags Walkway at the Bushnell, Florida National Cemetery, and is the centerpiece of most hero's monuments. Slightly modified, it is the seal of the President of the United States, and it is always visible whenever he speaks, yet very few people know what the symbols mean. The Bald Eagle was selected as a symbol for victory for two reasons: First, he is not afraid of a storm; he is strong, and he is smart enough to soar above it. Secondly, he wears no material crown. We had just broken from the King of England. Also, notice the shield is unsupported. This country can now stand on its own. At the top of that shield you have a white bar signifying congress, a unifying factor. We were coming together as one nation. In the Eagle's beak you will read, ' E PLURIBUS UNUM' meaning,'one from many.'
Above the Eagle, you have the thirteen stars, representing the thirteen original colonies, and any clouds of misunderstanding rolling away. Again, we were coming together as one. Notice what the Eagle holds in his talons. He holds an olive branch and arrows. This country wants peace, but we will never be afraid to fight to preserve peace. The Eagle always wants to face the olive branch, but in time of war, his gaze turns toward the arrows. They say that the number 13 is an unlucky number.
This is almost a worldwide belief. You will usually never (or seldom) see a room numbered 13, or any hotels or motels with a 13th floor. But think about this:
13 original colonies
13 signers of the Declaration of Independence
13 stripes on our flag
13 steps on the Pyramid
13 letters in Annuit Coeptis
13 letters in 'E Pluribus Unum
13 stars above the Eagle
13 bars on that shield
13 leaves on the olive branch
13 fruits, and if you look closely,
13 arrows
And finally, if you notice the arrangement of the 13 stars in the right-hand circle you will see that they are arranged as a Star of David. This was ordered by George Washington who, when he asked Hayim Solomon, a wealthy Philadelphia Jew, what he would like as a personal reward for his services to the Continental Army, Solomon said he wanted nothing for himself but that he would like something for his people. The Star of David was the result. Few people know that it was Solomon who saved the Army through his financial contributions but died a pauper.
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