Ah, to have 2020 vision! “It’s the economy stupid.” Since 2010, total employment in the U.S. has increased by almost 20 million and is now approaching 160 million!
It used to be said that if America sneezes the rest of the world catches a cold. Today, if China sneezes the rest of the work may catch a deadly flu! Let’s hope that containment efforts work but I don’t know how long you can keep people away from shopping malls, schools closed and people home from work. If China’s lock down does not work, there is another unpalatable truth to face: The Corona virus may not be possible to contain. Then the world will have to switch tracks from containment to mitigating its effects. As we approach that phase I suggest you think of ways to harden your property, your business and your home (N95 mask, hand sanitizer, stop shaking hands, Clorox on hand, a few good books to read).
Well I have often thought that an out of control healthcare system might be the cause of the next crash. Now I worry that the Corona Virus might be the trip the leads to the fall. Just remember the sage advice I was once given, “when the tide goes out you want to know who still has a bathing suit!”
It seems odd that while the Fed pushes interest rates down so as to get inflation up to its 2% target, healthcare has seen a 20% increase in premiums in the last year. I am more concerned with the “Misery Index” which affect most of us, cost of housing, education and healthcare – all of which are up dramatically. One bright light in the healthcare industry is tel-medicine. It is now estimated that 90% of medical treatment can be done by tel-medicine. Think about an $80 call vs an $800 ER visit. Otherwise, inflation and a high misery index benefits the U.S. Government as they borrow cheap and pay back with inflated dollars (even worse with dollars that they pretend aren’t inflated!).
While I sit at my desk playing tag with my to do list, our society is swapping atoms for bytes. We are using less paper, wood, coal, gold, steel, etc.…(atoms) and moving more and more to the cloud, software and our cellphones (Bytes). We are de-materializing! As our lives keep turning into bytes, we can no longer ignore a futuristic technology that is being used by millions across the globe. I’m talking about blockchain (DON’T READ BITCOIN). While the real estate industry has been slow to implement blockchain applications, as the technology continues to be more ubiquitous, the process of buying, selling and leasing stands to never be the same again. From my perspective, it all boils down to three specific benefits:
- Security
- Transparency
- Speed/efficiency
How we buy and sell things, prove our identity, enter into and execute contracts and track the food or medicine we consume back to its origin are just a few use cases today. The contracts feature alone is particularly potent when you consider that almost everything, we do is a contract of sorts, whether written, spoken or implied. I expect smart contractors to be the wave of the future.
As I have mentioned before the Craft Beer industry adds $300 million to the local economy. That is only behind the military, tourism and Qualcomm. Of course I find it funny that we have a President who doesn’t drink beer, a Supreme Court Justice who purportedly loves beer and a Founding Father who told us, “Beer is proof that God loves us and wants us to be happy.” (Ben Franklin). So, you can imagine I was quite alarmed when I recently read that Global Warming might cause a beer shortage. Apparently, under the “business as usual” scenario called RCP 8.5 (where we use more coal because trends reverse due to current mitigation success), global production of barley could dip by 17%. That would suck – we have a heat wave, so you want more beer, but it costs more! On the positive side, San Diego is the #2 solar city in the nation for installed systems.
And now from the other corner of our office, here are Nick’s numbers for the month;
Nick’s Numbers
This month I thought I would give you a little look at how San Diego’s Office Market stacks up compared to the rest of the nation. Below is a graphic of Rent Growth Forecast by market. San Diego looks strong with a 4% Rent Growth against a 2% average growth expectation.
Also, if you have time, here is a link to a Video from CoStar discussing the San Diego office market. I think you will find it very educational.
Please give me a call or email me if you would like more in-depth info on Poway or other San Diego and North County sub-markets (Nick Zech, 858-232-2100, nzech@cdccommercial.com).
May your vision be 2020, your 🍺 be cold, and bytes not bite as you find happiness in life…hope you enjoy the story…
