Monthly Letter for October 2017
Zen teaching: “Always remember you are unique just like everyone else.”
We seem to be living in a divided time unless you have just faced a natural disaster, then we seem to all band together regardless of color, politics or socio economics. In the past, we could escape to sports or Hollywood but alas even those have become politicized. After watching the “No Fans Left (NFL)” games last week, I was less surprised by the protests and backlash than I was by the amount of “Fake News.” One report was that the Steelers were suspended for three games. Another was that the L.A. Changers…I mean Chargers were on their way back to San Diego. So, is this Russian influence?
I am glad that we were able to survive the end of the world which was predicted for September 23rd. None the less, it has been disturbing to see the damage from hurricanes and earthquakes. God forbid what nuclear explosion or an EMP (Electromagnetic Pulse) could or would do. This is a good time in history to look at how and what your response can or would be to a cataclysmic event (can you secure your property? Tenant contracts available? Records backup? Insurance contacts available?) Think thru the scenarios and your responses to each.
Speaking of unwinding disasters. We all need to carefully watch the Fed to see how they are going to unwind its 4.5 trillion-dollar balance sheet. Or more simply said, time to pay off the credit cards. Or should we call it quantitative un-easing? Bottom line is that rates have to rise and that will cause some slowing. It isn’t the Fed raising rates as much as it is them selling the bonds the hold. The more they flood the market the higher rates have to go to attract enough investors.
The Fed says a tightening labor market has put pressure on wage costs (ie. higher wages). The Fed has hiked interest rates once this year and are expected to do so again. Yes Amazon (and others) use of automation looms as a long-term factor in restraining job and wage growth. Amazon has arguably done as much as the Chinese to kill jobs and keep a lid on inflation by enabling anyone with a cell phone to price or buy a product. Just as we are hearing about the end of the bricks and mortar mall, China’s Alibaba (their Amazon) is reported to be building its own 5-story shopping center called “more mall.” The idea is a mix of online, off-line, logistics and high tech all coming together. The new, “retail interactive store” is the wave of the future.
Commercial real estate price growth is expected to flatten in large markets but continue in smaller markets according to the latest quarterly report of the National Association of Realtors (NAR). Despite the rise in prices, investment sales volume is slowing down and the gap between ask and offer is widening (ie. people are offering less). Today, the negotiating process is tougher. Also, lender underwriting process is getting tougher and taking longer.
We are also noting on the leasing front that although vacancy continues to shrink deals are getting harder and harder. We are often in the situation where we have a square peg and a round hole. The tenant likes the building and needs 2500 SF but there is only 1300 SF. So we have to move the 1200 sf tenant next door. So, we end up doing two deals to get one. We are facing more and more situations where we have to move someone, find them temporary space while theirs is readied, sublease their old space etc.. If they want to build new, it is a 2-3-year process.. Often it seems a lot like pulling the thread on your sweater, the more you pull the worse the problem gets. This is how we try to be dealmakers not order takers. We pride ourselves on being excellent communicators and impeccably honest. We negotiate with confidence yet never forget the emotional implications of a sale or lease. We try to respond to challenges quickly, deliver disappointing news gently and never lose sight of those pesky details that can loom large if left undone. “Life stagnates without challenges…bring us your challenges.”
It was troubling that the NFL game in London last week had players standing for Hail to the Queen but taking a knee during the Star-Spangled Banner (perhaps they should have read this story or visited Lincoln’s statue in England!). Well before we tear down anymore statues or if you think you are unique or that this is a unique time in history, I hope that you enjoy the story and that you will be proud to be a red blooded American.
I haven’t told any stories from England since I got home but it seems like maybe we could all use a good story about a civil war statue, a good story about an American President, and a good story about the power of the common people against the rich and powerful, so I’m going to start with this one. It’s probably for the best that you’re reading this here because I haven’t managed to tell this story in person without crying.
I was in Manchester with a bit of time to spare on a cool, sometimes rainy morning that reminded me of home. Since I had a minute I turned on Pokémon Go on the off chance that there would be a Mr. Mime in range. As luck would have it there was one only two blocks away from my intended destination! The game led me to a small square and as I approached I could’ve sworn that it had an enormous statue of Abraham Lincoln right in the middle of it. Much to my dismay the closer I got, the more it looked like Lincoln. When I was close enough to read the inscription, I learned that it was in fact, a statue of Lincoln. What was a statue of Lincoln doing in a lonely square in Northern England?!
Then it got weirder.
There was a large blue sticker that was somewhat haphazardly stuck onto the base of the statue that said something along the lines of “talking statues of Manchester” and had a QR code with no further explanation. There was no question, I had to know what that QR code said! I immediately installed a QR scanner and no sooner had I clicked the shutter button then my phone rang. That was weird and more than a little creepy, but if they say one thing about me when I’ve gone it will be that I never passed on an adventure.
I answered the phone.
There was no preamble, no explanation, just a man’s voice saying, “to the working men of Manchester” he then continued in beautiful, archaic prose to praise the workers of Manchester and thank them for their courage and sacrifice. It seemed to be a letter and when it came to an end it was signed “Abraham Lincoln”. When he had finished uttering his name President Lincoln hung up on me. It was a tantalizing letter to a child of Lincoln’s far future standing alone in a rainy square, 4,500 miles away from home. President Lincoln did not bother to list the brave acts or to sum up the sacrifice. Why would he? The people of Manchester knew what they had done.
Luckily, after the phone call ended a screen popped up offering links to learn more. I stood in the drizzle, read an amazing story and wondered why I had never heard it before.
As you probably know during the Civil War the North imposed a Naval blockade on the South. The economic hardship that this caused was an important factor in the North’s victory. What I didn’t know was that the blockade also badly hurt the people of Lancashire, England. At that time, the mills of Northern England produced the fabric that clothed the world. Seventy five percent of all the cotton grown on Southern plantations was sent to Lancashire where it was spun, dyed, and woven.
A year into the war and the embargo found Northern England in real distress. Sixty percent of its mills were shuttered, thousands of people were without work. The desperate wealthy mill owners started lobbying the British government to send the British Navy to break the blockade and let the cotton through.
Then an amazing thing happened. The workers themselves organized a mass meeting in the Manchester Union Hall to discuss the matter and those working-class men, who had the very most to lose, chose to refuse cotton grown by enslaved hands. The blockade held and the men did indeed lose. In one town alone only five out of thirty-nine mills continued to operate. People went without fuel for heat, there was wide spread starvation, families lost their homes. And still–an ocean and a world away from a war in a place they had never seen–the people of Manchester chose to live and die by their values. They would not support slavery.
When the war ended, that letter came from President Lincoln and it was followed shortly after by ships loaded with food and supplies for the people of Lancashire from the people of America, in gratitude.
And that is how I ended up crying in the rain 4,500 miles from home, in a square named for Lincoln in a country that he never set foot in.
I also caught my Mr. Mime.
If you are interested in reading the letter you can do so here:
If you want to read more about the history you can do so here: