April 1, 2010
RE: Monthly Letter
Dear Clients:
Weren’t the Olympics just great to watch? (I think I’m going to open a curling stadium and bar in a closed big box!) Aside from raw talent, what makes these people champions while the rest of us are wannabes or spectators? In a word, it’s their will to win. They let nothing get in the way of their goals.
In April I will be celebrating my 25th year in the commercial real estate business. I’m not sure if it is because of my laser-like focus and champion desires or being too dumb to do anything else, but I will probably settle for the fact that I am just a plain old deal junkie. One thing that I certainly have learned is that you can’t control the state of the market you are in, but when you master your own state of mind and live in the state of constantly believing you’re about to uncover some great new opportunity or deal for yourself, you’ll maximize your own level of productivity in any kind of real estate market.
Last March the world looked like it might be coming to an end. The Dow had dropped to a low of 6547, and there seemed no end in sight. A year later the Dow has rocketed back 68 percent. There are still huge worries about jobs, deficits, and the government’s role in propping up a shaky financial system. But the market’s climb means that, for now, the world is betting on a sustained economic recovery. The question is when will the “Great Recession” turn into the “Great Rebound”? I think the Consumer Confidence Index tells the story well:
- 25.3 – Consumer Confidence Index last year – a record low.
- 46 – Consumer Confidence Index last month.
- 90 – Consumer Confidence Index that most economists consider as a healthy economy.
Staying focused on the positive, RBC Capital Markets and Retail LeaseTrac reported that the tide may be turning when it comes to retailers looking for space. For the first time in more than a year, the number of retailers planning openings in the next 24 months has increased. A sampling of those retailers looking to grow are:
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Close to home, Union Bank surveyed small business owners in
On the topic of banks, a flood of new bank failures will continue to keep our fragile market destabilized. The FDIC is closing four banks a week and could do so for up to two years according to some reports. The instability is stifling the borrowing environment and leading us to the edge of a double-dip recession.
As I have reported to many of you in conversations, the tenant market and demand for space is, “spitting and sputtering.” One day it seems like the good olde days, and by the following week we’re flat on our butts again.
This year’s health care debate brought new meaning to the term “March Madness.” My head is still spinning, but I am reminded that politics is like sausage making. From what I saw,
Historically, economic recoveries start with small businesses. Recessions and economic challenges spurred people to take the plunge and strike out on their own. The big obstacle now is the lack of credit available to the budding entrepreneur/ Olympian. To get a sustained recovery we need to get jobs; to get jobs we need small business formation; and to get small business formation we need credit. The recovery in employment is a key driver for consumer spending. When you get a job, you can go out to lunch, the restaurant owner can buy shoes for his kid, the retailer can hire a new worker to meet recovering demand, and so on. Or we can rely on government stimulus… (see story below).
“Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.
– Helen Keller
Regards,
Don
Don S. Zech
CDC Commercial, Inc.
Real Estate Services
A Stimulus Story
It is the month of August, on the shores of the
raining, and the little town looks totally deserted. It is tough times,
everybody is in debt, and everybody lives on credit.
Suddenly, a rich tourist comes to town.
He enters the only hotel, lays a 100 Euro note on the reception counter,
and goes to inspect the rooms upstairs in order to pick one.
The hotel proprietor takes the 100 Euro note and runs to pay his debt to
the butcher.
The Butcher takes the 100 Euro note, and runs to pay his debt to the pig
grower.
The pig grower takes the 100 Euro note, and runs to pay his debt to the
supplier of his feed and fuel.
The supplier of feed and fuel takes the 100 Euro note and runs to pay
his debt to the town’s prostitute that in these hard times, gave her
“services” on credit.
The hooker runs to the hotel, and pays off her debt with the 100 Euro
note to the hotel proprietor to pay for the rooms that she rented when
she brought her clients there.
The hotel proprietor then lays the 100 Euro note back on the counter so
that the rich tourist will not suspect anything.
At that moment, the rich tourist comes down after inspecting the rooms,
and takes his 100 Euro note, after saying that he did not like any of
the rooms, and leaves town.
No one earned anything. However, the whole town is now without debt, and
looks to the future with a lot of optimism..
And that, ladies and gentlemen, is how the United States Government is
doing business today.
–Jane Goulart
