Monthly Letter for April 2008

April 1, 2008

Re: Monthly Letter

Dear Clients:

Ok folks, time to shift gears. We warned about this slow down in our monthly letters last year and this years’ Gold Report (www.cdccommercial.com/GoldReport2008 ). We laid out strategies. No reruns today, we’re looking ahead. Let’s explore what’ll really make you happy in the weeks and years ahead (besides being 100% leased, abundant capital, low cap rates if you’re selling, and high cap rates if you’re buying!). Warren Buffet probably sums it up best when he says; “Success is getting what you want and happiness is wanting what you get”.

Happiness? Why bring “that” up in this insane market? Because most of you are like me with a secret split personality; sometimes happy, sometimes not – sometimes happier. The signals are out there: Bear market and recession ahead, national politics and world jihad adding fuel to the fire.

According to a recent report by the UN; Americans are the most productive workers in the world, thanks mainly to technology. With that thought in mind, some of you have been receiving this monthly letter by email and in writing. With this writing you will only receive it by email, unless you don’t have email or have requested otherwise.

Employment picked up slightly in San Diego in February adding 4100 jobs and bringing the county unemployment rate down to 5% from 5.2%. That’s above last February’s 4.3%, but when I took Econ 101 – 5% was considered equilibrium!

What went little noticed is that Craig Venter moved back to town. Venter is the world renowned gene discoverer and founder of Synthetic Genomics. The company, based in La Jolla, is now hiring all kinds of “knowledge workers”. This is like having Irwin Jacobs moving Quallcom here before the world carried cell phones. This is just another example of how San Diego will continue to evolve as a knowledge based economy (do you think it’s because smart people like good weather?).

Speaking of deep thinking; you have heard the Zen question about the tree falling in the forest, but if no one is there did it make a sound? In today’s market I would re-ask it to you; “If a seller doesn’t want to sell or a buyer doesn’t buy and there is no deal, then is there a price decline?

I don’t know the answer to that for sure, but I do know that we can be thankful that the federal government reauthorized the terrorism risk insurance program in the end of December. This should provide stability and health in the insurance and property markets and the economy as a whole.

Bismark said that people never lie so much as after a hunt, during a war or before an election year. So while all the liars line up this election year let me tell you a couple of facts. 1) The surplus of receipts to expenditures for social security will begin its decline in 2009 and by 2017 will become a deficit. 2) In 2011 the Bush tax cuts will expire unless extended (that’s a big tax increase without the tax increase that the politicians are talking about).

Most importantly let’s get out and tell the Feds, everyone in Congress and whoever sits in the White House come 2009, that we want an end to the bubble and bust cycle in financial markets. Encouraging reckless gambling and then bailing out the worst and biggest gamblers is no way to run an economy!

Again from Mr. Buffet, “I may have more money than you, but money doesn’t make the difference…I would rather have a cheeseburger from Dairy Queen than a $100 meal…the difference between you and me is that I get up everyday and have a chance to do what I love to do”.

I think I may have found happiness!

Regards,

Don

Don Zech

CDC Commercial
Real Estate Services

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