What to do in a bifurcated real estate market?

The Blog

“This is precisely the time when artists go to work. There is no time for despair, no place for self-pity, no need for silence, no room for fear. We speak, we write, we do language. That is how civilizations heal.”

~ Toni Morrison

In 35 years in the business, I have seen a lot of crazy things, but the current market is befuddling. The word I like to use is that we are in a bifurcated market. The economy is in a strange place right now. The current environment is encapsulated in a chart that Nick shares below this month. The chart shows the homeownership rate spiking to its highest point in a decade alongside the mortgage delinquency rate also at a decade long high. How is that possible?

We are seeing this same bifurcation in our daily activity. We are seeing dozens of tenants not paying rent, going out of business, or asking for a forbearance. This is flowing through to owners who are struggling with cash flow and loan payments. At the same time, there is little inventory for sale, and we are seeing multiple offers on some sale deals. Some of this is caused by a backup of 1031 buyers, a lot because of unnaturally low interest rates, and some because of buyers who think this is their last chance to buy. In recent weeks, we have seen landlords clamping down on tenant delinquencies and this is causing more tenants to start throwing in the towel.

We are seeing office tenants who have been working from home (WFH) that are not renewing and instead deciding to make WFH permanent We are seeing restaurants, nail salons, and dry cleaners just whither on the vine. There is a wave of silent failure sweeping over 80,000 permanently shuttered businesses from March 1 to July 25th. Thirty-one percent of owners reported lower sales in the past three months.

Yet, the home improvement industry is booming, rich from refi money, new home sales, and people working from home. It appears, however, that consumers with extra money in their pockets skipped the mall and shopped at big boxes instead. According to Retail Metrics, mall-based retailers have seen their earnings plunge 256%! Yet Walmart and Target report record-breaking sales!

So, what is a person to do? In the past, I have said we profess to innovate, adapt, and overcome. I still hold to that motto. But this month I’m going to talk a little about motivation. I believe that one of the outcomes of COVID-19 seems to be dumbing us down. I call it “COVID Stupid.” I’m not talking about a mask or no mask here. I am talking about people’s lack of attention, attention to detail, and inabilities to get a job done. Bringing things to a stop has seemingly caused the inability to get things going again. I hear and see people saying, “I know what to do, but I just don’t do it!”

Here’s the thing, motivation isn’t something you’re born with. It is something that you create. This is especially important right now during quarantine as we are all in a Groundhog Day existence. Our bodies and brains are craving change and achievement because every day feels the same. So, this is not only important to reach your goals but also improve your sense of wellbeing. Remember, it is never too late to create.

Another symptom of “COVID Stupid” is free-floating hostility. Unfortunately, we have always lived with a level of angst in our society. Discourse has always been there. The problem today is technology makes it so easy, and so public and so fast. Here too, I have a story and a solution.

I am back running after breaking my toe but I have had this pain in the ball of my foot. I went to the chiropractor and explained the situation. Of course, he cracked this and pulled that, and I am now much better and back on the road. But what he told me was the real magic. He explained that once the muscle tightened the only defense it had for the next injury was to get tighter until finally, you are just one tight ball of a mess. The cure? Stretch and be flexible. Hmmm…sounds like the cause and cure of “COVID Stupidity!” Relax, be flexible, stretch outside your comfort zone!

Nick’s Numbers

housing outcomes rapidly diverging

Please give me a call or email me if you would like an analysis of your properties’ value or to discuss what you should be doing with regards to the Coronavirus pandemic and its impacts on your business, tenants, or property (Nick Zech, 858-232-2100, nzech@cdccommercial.com).

Have a great month ahead. Be creative, flexible, and motivated, I know the Team at CDC is. Hope you enjoy the story…

The Greedy King

Once upon a time, there was a very Greedy King who loved eating cream puffs. He ate them for breakfast, lunch, and tea – even dinner! In fact, he ate so many that all the bakeries ran out of pastry and the dairies out of cream.

So, the Greedy King ordered that every store in the land become a bakery or dairy. There were to be no more grocery stores, no hardware stores, and no clothing stores. You can imagine how dreadfully inconvenient it all was!

Very soon the King grew so fat that he started bulging out of his clothes – but because there were no clothing stores, he couldn’t buy any new ones. Then one day he sat on his throne, and ‘crunch!’ it collapsed under his weight. But there were no furniture stores, so he couldn’t have it mended.

‘You must go on a diet,’ said the doctor. ‘And eat fresh fruit every day.’ But of course, there were no grocery stores. The King began to realize how foolish he had been. He called back the storekeepers and told them to start their businesses again.

And after that, the King only allowed himself one cream puff a day, which he ate for dessert after supper!


“I will teach you in a room. I will teach you now on Zoom. I will teach you in your house. I will teach you with a mouse. I will teach you here and there.
I will teach you because I care.”

The San Diego real estate market continues to feel the impact of the coronavirus. Leasing, deal flow, and rents have all cooled off. It is hard to see if there is a light at the end of the tunnel or if it’s a train bearing down on us! Social distancing, further COVID flare-ups, and schools holding virtual classes in the fall all weigh on the continued uncertainty. We all thrive under a degree of predictability. Unfortunately, COVID-19 seems to be uncertainly on steroids! Alas, if you thought you didn’t have another emotion left to share in our war-torn, battle fatigue state…there will be 117 new emojis released to the world this fall!

I ended up taking running off for July. It started because we were traveling. San Diego wasn’t hot enough or COVID enough for the 4th of July, so we went to Phoenix to look at a property. We then drove up to see our new grandbaby in Utah. When I got back, there was lots of work to catch up on plus it was hot. Then it was easy to sleep in…and have an extra glass of wine at night. Then it was easy to not get started because all my races and trips had been canceled. To add insult to injury, I stubbed and broke my toe while moving around my office to quickly. This is the essence of depression, which is defined as the inability to create a future.

I then realized, my July reflected what our Country and each of us is going through. We hit the pause button, tried to get busy but stubbed our toe and now are being stymied at every turn causing a malaise or depression.

So how do we get out of this rut and overcome fear, uncertainty, and confusion? You must develop goals. I am reminded of the advice a doctor gave to a 400lb man who appeared helpless, asking where he could start. The doctor replied he could start by attaching the TV remote to the TV and walking over to it every time he needed to change channels!

* How do you lose weight? Slowly.
* How do you establish habits? Slowly.
* How do you finish long races? Slowly.
* How do you accumulate wealth in real estate? Slowly.
* How do you overcome roadblocks? You slowly walk around them.

Goals improve your confidence. Goals require developing a plan. Goals require you to be active. Goals improve your confidence. Or as Mary Poppins once said, “Intelligence can wash away confusion (and uncertainty).”

Commercial Real Estate is all about jobs and employment. In January, national unemployment dipped to 3.6%. By April, it had jumped to 14.7%. We are now down to about 11%. As with the past recessions, the less educated have suffered the most. Those with a bachelor’s degree had an unemployment rate of 6.9% compared to 16.6% for those who didn’t finish high schools. Federal lawmakers tried to create a bridge with paycheck protection and other programs. The problem is that bridge may not be long enough or strong enough. New jobless claims in late July were at 1.4 million! Just to put that in perspective, in the Great Recession the worst week we saw was 665,000 claims.

Because I am paid to be an optimist let me also share some positive and interesting news.

  1. San Diego had another record quarter of venture capital funding with $1.2 billion funded and no end in sight. 93% of the funding is in the Life Sciences. Venture capital supports real estate decisions and additional jobs allowing companies to grow.
    There were more homes sold through June of 2020 than thru June 2019. Imagine if there had been no COVID!
  2. Amazon is introducing “smart carts” that will track your basket. Dash carts will allow you to avoid lines and check out.
  3. Wal-Mart is adding health clinics. These “clinics” will host doctors, dentists, and optometrists. Medical check-up $30, cleaning $25, or $1 per minute to talk about your anxieties.
  4. Uber cops – yes, in a day where we are de-funding the police, private security guards are using Uber-like networking so that the closest one can respond to your personal needs or a call because your Ring camera has detected a problem at your property.
  5. San Diego was ranked #19 in the nation on a list of tech-attractive regions according to a report by brokerage company CBRE.
  6. Last year Amazon did a 2.6 million square foot lease in Otay Mesa, but they also just completed a 530,000-SF foot warehouse in Poway for delivery in August.

Nick’s Numbers

So, a picture may be worth a thousand words but what these pictures show are Cap rates rising (values dropping), Loan delinquencies rising, and sales transactions plummeting. Call or email me to discuss your challenge or goal.

sales/acquisitions of $2.5M+ Properties

percent of CMBS marked as 30+ days delinquent by property type

risk premium for commercial property investments up since january

Please give me a call or email me if you would like an analysis of your properties’ value or to discuss what you should be doing with regards to the Coronavirus pandemic and its impacts on your business, tenants, or property (Nick Zech, 858-232-2100, nzech@cdccommercial.com).

I am often asked what you pay a commercial broker for and why you should get paid to just look something up on an MLS service. Well, let me share a few:

  1. We know what is on the market.
  2. We know other brokers and can share information because we are trusted (some may say honor among thieves!).
  3. We know of things not on the market.
  4. We know how to put a deal together and get a deal done.
  5. We know cities, zoning, and what can be done and who to talk to, so as to get it done.
  6. We know vendors and service providers.
  7. We can help estimate costs to judge the feasibility and save considerable time, effort, and costs.
  8. We schedule and coordinate all the moving parts and solve the problems and obstacles that come up.

As your go-to Commercial Real Estate Broker, it is our job to go over, under, around, or through walls to get deals done for our clients. COVID is just one more obstacle.

So, this month we are going to try something new and share the results. Follow this link to answer our monthly survey. This month – “How long until the economy will recover?” If all works as planned, we will share the results next month.


Oh, and don’t worry, I am back running! The next goal is running to and up Mt Soledad. After that Mt. Woodson to the Beach. Great things happen when you have a goal and you get around the obstacles…hope you enjoy the story.

Never Judge a Book by its Cover

A lady in a faded gingham dress and her husband, dressed in a homespun threadbare suit, stepped off the train in Boston and walked timidly without an appointment into the Harvard University President’s outer office.

The secretary could tell in a moment that such backwoods, country hicks had no business at Harvard and probably didn’t even deserve to be in Cambridge. She frowned.
“We want to see the President,” the man said softly.

“He’ll be busy all day,” the secretary snapped. “We’ll wait,” the lady replied.

For hours, the secretary ignored them, hoping that the couple would finally become discouraged and go away. They didn’t and the secretary grew frustrated and finally decided to disturb the President, even though it was a chore she always regretted.

“Maybe if they just see you for a few minutes, they’ll leave,” she told him. He sighed in exasperation and nodded. Someone of his importance obviously didn’t have time to spend with them, but he detested gingham dresses and homespun suits cluttering up his outer office.

The President, stern-faced with dignity, strutted toward the couple.

The lady told him, “We had a son who attended Harvard for one year. He loved Harvard. He was happy here. But about a year ago, he was accidentally killed, and my husband and I would like to erect a memorial to him, somewhere on campus.”

The President wasn’t touched; he was shocked.

“Madam,” he said gruffly. “We can’t put up a statue for every person who attended Harvard and died. If we did, this place would look like a cemetery.”

“Oh, no,” the lady explained quickly. “We don’t want to erect a statue. We thought we would like to give a building to Harvard.”

The President rolled his eyes. He glanced at the gingham dress and homespun suit, the exclaimed, “A building! Do you have any earthly idea how much a building costs? We have over seven and a half million dollars in the physical plant at Harvard.”

For a moment, the lady was silent. The President was pleased. He could get rid of them now. The lady then turned to her husband and said quietly, “Is that all it costs to start a university? Why don’t we just start our own?”

Her husband nodded.

The President’s face wilted in confusion and bewilderment.

Mr. and Mrs. Leland Stanford walked away, traveling to Palo Alto, California, where they established the university that bears their name, a memorial to a son that Harvard no longer cared about.

  1. By Malcolm Forbes

I used to eat a lot of natural foods until I learned that most people die of natural causes. During this pandemic, our Country has been forced to take a hard look at lifestyle, health, and essential goods. Our society, workplace, and family are being forced to draw lines between Fear and Fed Up. The world is clamoring to “feel safe.” Unfortunately, whether it is health, the stock market, the real estate market or just driving your car down the road, being risk-free is near impossible. Everyone needs to stay home, yet it is important to go out because of the sun. Sunlight will kill the virus but not if the virus kills you first by walking in the sunlight where you may be exposed to the virus.

As you might have guessed, I am a contrarian. That is probably why I have not had any pizza in the last four months! Just like the role of commercial real estate, the role of food has not changed – we have just had to adapt quickly and figure out how to get food to people in a way that speaks to their needs. What we have seen in the market is a dramatic drop in deal activity (+/- 25%), however, we have only seen prices break about 1% – 1.5%. According to MIT researchers, the drop-in activity should equate to an 8% – 12% drop in prices. However, we have not seen it. This is causing a large gap between tenant/buyer and landlord/seller expectations.

The good news is that we are seeing some unfreezing in our market. Recent weeks have seen tenants out exploring and buyers moving ahead again. We can only hope that this continues. Unfortunately, we are coming out of the deep freeze and as the economy thaws, we will see the damage that has been done as well. I continue to be most concerned about a “W” recovery, where the economy starts looking better, and then there is a second downturn later in the year or next. Analysts from Moody’s have noted that after previous shocks including 9/11 and the 2008 financial crisis, it took 8-12 months before delinquencies rose appreciably.

Every deal we work on is a dance between risk and reassurance. Clients we want to help must have faith in us before they can believe in the value we create or the stories we tell. Let me tell you what we are seeing up close at the front. The SEAL Teams call it VUCA – Volatile, Uncertain, Complex, and Ambiguous environment.

  • Our inbound calls are down 50% but picking up in late June (We had 0 inbound sign calls in April!).
  • Some restaurants are failing but all are flailing. Many restaurants are walking dead (open but not profitable enough to stay so).
  • Churches and non-profits are marching forward with deals.
  • Many office tenants already talking about downsizing their space needs.
  • More deals with COVID caveats on opening, closing, or paying rent.
  • Lot’s more Zoom meetings and conference calls and webinars.
  • Everybody upgrading their technology skills; Zoom, DropBox, DocuSign.
  • More meetings, fewer people wearing face coverings.

So, in many ways, this pandemic has been a catalyst to shove the world forward. At CDC Commercial we feel like the rest of the world is catching up to where we have been for a while, which is forcing us to get out in front again. So, we have been focusing on things like social media marketing, Big Data Leads, new credit screening tools, Drones, and Matterport Tours. See an example here: https://www.youtube.com/watch?v=UIzXK20rjLQ&feature=youtu.be

Nicks Numbers

U.S. Composite Indices: Equal & Value Weighted

The chart above supports what Don said about price appreciation. Despite volume being off 22% in the 2nd Quarter, values were still up 3% – 5% on a year over year basis for the last 20 years.

Please give me a call or email me if you would like an analysis of your properties’ value or to discuss what you should be doing with regards to the Coronavirus pandemic and its impacts on your business, tenants, or property (Nick Zech, 858-232-2100, nzech@cdccommercial.com).

So, as you sit glued to your Twitter feed, Facebook account or TV network watching buildings defaced and statues toppled remember the old journalism adage, “If it bleeds, it leads.” Here are a few tips from Brent Gleeson, a former Navy Seal to help you navigate these volatile and uncertain waters ahead.

  • Embrace reality. But avoid obsessing.
  • Know the facts. Trust but verify.
  • Avoid knee-jerk decisions. Don’t dive in the bunker just yet.
  • Stay in your three-foot world. Control what you can, ignore what you can’t.
  • Communicate. If you can’t talk about everything, it’s not worth anything.
  • Build trust and accountability. In the absence of orders, take charge.

While one Lincoln statue is in the center of the news, I thought you might be interested in the story of this statue and the man on your $5 bill. I hope you enjoy the story…

Lincoln Statue

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 is 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 widespread 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:


and here:



“Wars in old times were made to get slaves. The modern implement of imposing slavery is debt.” – Ezra Pound 1885 – 1972

The whole world has changed and will continue to do so. There will be things you will love and things you will hate. It is your response that matters. It is how you adapt, innovate, and overcome that ensures your success or misery. First, let me wish all the fathers out there a Happy Father’s Day later this month. I got an early Father’s Day present when my #3 son (Austin not Nick) recently announced his engagement to his long-term girlfriend. Ah…the cycle of life continues.

As I have said many times over the years of writing this letter it is ALL about jobs. The U.S. unemployment rate jumped to 14.7 percent in April of 2020 (and 15% in San Diego County). When I wrote about our last “Great Recession” in 2009, unemployment was at 7.6%. The worst in recent history was 10.8% in November of 1982. In the “Great Depression” unemployment skyrocketed from 3.2% in 1929 to 25% in 1933 (note the length of time from crash to trough). So, if you ask me “when will we turn around”. I will tell you, “show me the jobs!”

The biggest concern that I have right now is that we have experienced a traumatic earthquake with plenty of losses and damage. However, the helicopters are out and dropping money from the skies and people are so dazed and busy picking up candy that they are failing to see the tsunami that is building offshore. Further obscuring our view of the tsunami, is the fireworks of the coming election. If you think this has been a bruising battle so far, hang onto your hat, the fireworks and surprising twists have not yet begun!

Closer to home, here at CDC, we have seen our inbound call volume cut in half. Leasing has slowed to a crawl. Surprisingly, investment sales have stayed steady but many more roadblocks. Lender financing is challenging. Buyers are trying to find what is an appropriate market value. Due diligence is tricky – what is appropriate for entering tenants’ office space to inspect? Most cities are closed or with limited access. Having meetings is a challenge (Zoom is great but there are times a deal does not get done without an in-person meeting). Through all of this, I have come to realize that this is just one more thing we as Brokers at CDC Commercial get paid to do. These are just more obstacles for us to overcome to get a deal done. Our job is to go through walls for our clients (or over, under, or around if that works!).

One thing over time that is true. Creativity and aggressive innovation — in the face of hardship — will fuel a turnaround. Right now, with unemployment rising, it is hard to remember that capitalism is a creator of jobs, companies, and industries.

History shows us that between some of our worst financial panics, U.S. capitalism has built transcontinental railroads, U.S. highway systems, and the internet. The creative side of the story is hard to see in today’s moment. We are in the middle of the crisis, and growth stories are just now putting down roots. Areas to keep your eyes open to are biotech, driver-less cars, fuel cells, unmanned aerial vehicles, stem cells, and regenerative medicine (that is growing back the liver you ruined in quarantine!).

I recently read that the real estate cycle is like the five stages of grief: Denial, Anger, Bargaining, Depression, and Acceptance. While I agree wholeheartedly, I think these four quotes sum up the cycle ahead of us even better.

Stage 1: “You’re wrong about the market. My property’s worth more than you’re telling me it’s worth.”

Stage 2: “OK, I agree that the market has changed. But I still won’t sell my property unless you can get me more for it than what other people have already offered me for it.”

Stage 3: “We need to sell this property. Where do we need to price it to unload it?”

Stage 4: “I don’t think we’re ever going to see another great real estate market again.”

And Stage 4, of course, represents when we have probably hit the bottom of the market, and it is the best time to begin buying properties again.

And now from the other corner of our office, here are Nick’s numbers for the month;

Nick’s Numbers

Wow! I have a lot of charts this month, but they really tell a story and support what Don has written.

First, the commercial property price plunge by Green Street and Wolf Street.com. This is dramatic and rather startling – we have rolled back 5 years in a month or two.

Commercial Property Prices Plunge

Second is the London Groups chart that parallels Don’s stages of the real estate cycle.

Point of Maximum Financial Risk

Finally, the real estate life cycle chart should help serve as a map for your road ahead (we are blowing through some of these milestones quickly so be alert).

Real Estate Market Cycle

Please give me a call or email me if you would like an analysis of your properties’ value or to discuss what you should be doing with regards to the Coronavirus pandemic and its impacts on your business, tenants, or property (Nick Zech, 858-232-2100, nzech@cdccommercial.com).

Being as this is my fourth downturn, let me give you my first piece of advice. If you color your hair, stop it (at least now you can get it cut!). We need all that grey hair experience now! In an attempt to benefit from the collective whole of the over 3,000 readers of my monthly letter, I would like to ask you to e-mail me your ideas (what are you doing) and experience and successful strategies in these kinds of times. Help add to my list (10 things smart people did in the last downturn).

1.    Buy with positive leverage (cap rate higher than the interest rate).

2.    Buy A+ properties at distressed prices.

3.    Buy notes from lenders and foreclose and obtain an underlying asset.

4.    Buy freeway visible property

5.    Grow market share

6.    Sale Lease-backs to raise capital for Tenants





I will compile these and e-mail them back out (and post to LinkedIn). Remember, Together Everyone Achieves More (TEAM). The rallying cry now is to survive, to thrive! I hope you enjoy the story…

My Daddy’s Chair

A man’s daughter had asked the local minister to come and pray with her father.

When the minister arrived, he found the man lying in bed with his head propped up on two pillows. An empty chair sat beside his bed. The minister assumed that the old fellow had been informed of his visit.

“I guess you were expecting me,” he said.

“No. Who are you?” asked the father.

The minister told him his name and then remarked. “I saw the empty chair and I figured you knew I was going to show up.”

“Oh yeah, the chair.” said the bedridden man. “Would you mind closing the door?”

Puzzled, the minister shut the door.

“I have never told anyone this, not even my daughter,” said the man. “But all of my life I have never known how to pray. At church, I used to hear the pastor talk about prayer, but it went right over my head. I abandoned any attempt at prayer.”

The old man continued, “Until one day four years ago. my best friend said to me. ‘Johnny, prayer is just a simple matter of having a conversation with Jesus. Here is what I suggest. Sit down in a chair; place an empty chair in front of you, and with faith see Jesus on the chair, it’s not spooky because he promised, ‘I will be with you always’. Then just speak to him in the same way you are doing with me right now.'”

“So. I tried it and I have liked it so much that I do it a couple of hours every day. I am careful though. If my daughter saw me talking to an empty chair, she’d either have a nervous breakdown or send me off to the funny farm.”

The minister was deeply moved by the story and encouraged the old man to continue the journey. Then he prayed with him, anointed him with oil. and returned to the church.

Two nights later the daughter called to tell the minister that her daddy had died that afternoon.

“Did he die in peace?” he asked.

“Yes, when I left the house about two o’clock, he called me over to his bedside, told me he loved me and kissed me on the cheek. When I got back from the store an hour later, I found him dead.

“But there was something strange about his death. Just before Daddy died, he leaned over and rested his head on the chair beside the bed. What do you make of that?”

The minister wiped a tear from his eye and said, “I wish we could all go like that.”


Well, I was going to start off this month’s letter with an economist joke…but there was no demand… Maybe something more sobering from our own late great San Diego weatherman John Coleman, “The point to remember is that what the government gives it must first take away.”

The COVID-19 virus has careened around the globe. The pandemic will recede, but it will leave behind an economic disaster. I would tell you that we can now see the tunnel at the end of the light! The Great Lock Down is now leading us to the Great Re-set. The idea that laying on the couch to save the world is not the solution. We must have goals, as a country, and as individuals. As a runner, I know that the first rule of training is to have a goal. Working toward a target race can give you a tangible objective, a sense of purpose, and help fight the inertia to stay on the couch instead of going out for a run. Having sustained injuries (sometimes even life-threatening ones), I realize that you do fall back but then you improve. You do so by setting small goals, rebuild habits and sometimes being more creative (I dictate notes to myself on runs, I wore a snorkel in a triathlon because of my fear of the water). Sometimes you need the doctor or chiropractor to get you fixed. Sometimes you need to change your diet. In all cases, just like our future in the coming months, we must Adapt, Innovate, and Overcome! #beproductive.

Since I wrote my letter last month, we have lost 300,000 jobs in San Diego County! We moved from 4.8% unemployment to 20.6%. Costar reports that 17% of deals scheduled to close in April were called off. In San Diego that amounted to about $24 million in deals. Sellers have delayed disposition plans 1-2 quarters. Lenders are slowed as they mitigate risks in their portfolios. Plus, how do you value something if you are uncertain about rent being paid? The question is who is paying rent and how much. Who is forgiving rent and how much? Who is making their loan payment and who is not?

The questions to be asked and monitored now are;

  1. The percentage of tenants paying rent. The percentage paying full or partial rent?
  2. Months of lost income forecast?
  3. How long before leasing market returns and what rates will be when it does?
  4. Renewal probabilities for tenants?
  5. Which tenants will open first?
  6. What percentage of tenants will not re-open?

At this point, we are recommending to landlords and tenants to “Blend and Extend” as the way to give help on rent forbearance and get a longer lease term.

The Commercial Real Estate recovery is going to trail the economic rebound (as it did in previous downturns). It will be an 18-30-month recovery, depending on the sector. Industrial and logistics will recover quickest -6 to 12 months, followed by multi-family in about 18 months, retail, food, and hotel face a longer recovery of up to 30 months.

Ten-year treasuries sit at about .6% today but I expect they will be about 1% by year-end and back near 2.5% in 2021 and continue to 3% by 2022 and 2023. CPI will follow a similar path starting at 1% this year and growing to 2.5% in 2021 and 3% in 2022. Keep this in mind when signing leases with fixed increases vs. CPI increases.

Nick recently attended a Costar webinar and will share some of what he learned below.

Nick’s Numbers

The Costar State of the Market webinar slide deck below comes to you thanks to Joshua Ohl, Managing Analyst at Costar, with additional data supplemented by Oxford Analytics.

The most important takeaways from this webinar are rents are expected to fall across all asset classes for the remainder of 2020, leasing activity will be lower with new vacancies likely to rise, and investments are expected to slow as pricing/cap rates decline. These highlights are covered in greater detail on the slide deck below.

These somewhat obvious facts aside, it’s shocking to see how rapidly available data and the resulting models have been changing. The State of the Market webinar was presented over a 4-day period, and by the 4th presentation…Oxford Analytics had already supplemented NEW data.

retail rent growth forecast


Please give me a call or email me if you would like an analysis of your properties’ value or to discuss what you should be doing with regards to the Coronavirus pandemic and its impact on your business, tenants, or property (Nick Zech, 858-232-2100, nzech@cdccommercial.com).

The short term seems a bit bleak. It is a certainty that Coronavirus will change how we shop, travel, and work for years. Only one-quarter of CFO’s surveyed expect to return to the same level of office use. Telemedicine has blossomed. Online grocery shopping is up 100%. Online education has exploded (what if test scores go up?). Office electricity charges are down 25% but residential trash (and electricity) has exploded. Staples and Costco are out of office chairs countywide! Airplanes (when we start flying again) will be loaded from back to front (which I always thought was more efficient anyway). Expect more digital events. Expect e-sports to blossom (something is better than nothing).

Beyond the pent-up demand (I think barbers and beaches might be busy 24/7 when things open up), crises often produce above-average numbers of divorces, marriages, and births – all of which create demand for housing. I don’t know how soon people will want to flock to small overly dense urban housing. Maybe the new COVID generation may seek happiness in the suburbs (or further out) with the security of fast internet, a low-interest mortgage, the joy of a yard, and the cocoon of a self-driving car.

If you want some mid-month reading, look me up and connect on Linkedin. Later this month, I will be posting some interesting material on jobs lost vs lives lost and jobs lost vs shopping space loss and a bit of random information about the pianist turned politician Ignacy Jan Paderewski

In the month ahead while you are busy adapting, innovating, and overcoming, I hope that you also remember that success is failure turned inside out. The silver lining to the clouds of doubt. I also hope you enjoy the story…

Paderewski Concert

Wishing to encourage her young son’s progress on the piano, a mother took her boy to a Paderewski concert. After they were seated, the mother spotted an old friend in the audience and walked down the aisle to greet her.

Seizing the opportunity to explore the wonders of the concert hall, the little boy rose and eventually explored his way through a door marked “NO ADMITTANCE.”

When the house lights dimmed and the concert was about to begin, the mother returned to her seat and discovered that the child was missing.

Suddenly, the curtains parted, and spotlights focused on the impressive Steinway on stage. In horror, the mother saw her little boy was sitting at the keyboard, innocently picking out “Twinkle, Twinkle Little Star.”

At that moment, the great piano master made his entrance, quickly moved to the piano, and whispered in the boy’s ear, “Don’t quit. Keep playing.”

Then leaning over, Paderewski reached down with his left hand and began filling in a bass part. Soon his right arm reached around to the other side of the child, and he added a running obbligato.

Together, the old master and the young novice transformed a frightening situation into a wonderfully creative experience. The audience was so mesmerized that they couldn’t recall what else the great master played. Only the classic “Twinkle, Twinkle Little Star.”


A month ago, I thought that this month’s letter would start out with an April Fools’ joke and a few celebratory comments about me having survived 35 years in the commercial real estate business. Instead, a black swan event has taken us from a health crisis to a global pandemic to a financial crisis. These are unsettling times. The news is moving very fast and it is jarring to see schools, restaurants and stores closed or to stand in lines with six feet of spacing just to get into Costco. As I am writing this the government is stepping in with its patchwork of patches.

By now, I am sure you have been overloaded with news, talking heads, misinformation, and information bulletins. I will attempt to take a different tack. First, I will tell you that every economic shock leaves a legacy. The Coronavirus will be no different. Second, unlike previous disruptions, we know how this one will end. There are over 35 companies (many in San Diego) racing to develop a vaccine and treatment remedies according to The Guardian. Between us slowing the spread of the virus and promise of a vaccine, the population will eventually develop herd immunity. But it will take time.

As mentioned above in April, I will be celebrating 35 years in the business. I thought a little outline of that history might give you some perspective on our current time.

I graduated college in 1983 to work for General Dynamics making nuclear-tipped cruise missiles at the height of the cold war. In 1987 Regan said, “Mr Gorbachev tear down this wall by 1997 it had happened. In 1985, I bought a house and started into the 100% commissioned world of commercial real estate with John Burnham & Co (now Cushman & Wakefield). There I was told that times had been slow for the last seven years. I put my head down, was Rookie of the year, got married and had our first child (Nick who now works here). And I kept running (now with my wife at my side).

Two years into the business, we had the stock market crash of 1987, followed by the Savings and Loan crisis followed by a slumping recession. I kept working (finishing in the top three most years), buying some rental property and having three more children and oh yes, I kept running.

In 1996, I started CDC Commercial as we crawled out of the recession. In an era before iPhones and the cloud, I was working from home and had a private cloud server and had my phone forwarding to me wherever I was. In 2000, we all faced a different virus – the Millennial bug! That turned out to be a big nothing. However, 9-11-2001 brought buildings and our economy to its knees. Besides still running, I went out and sold apartments I owned (because they were in demand) and I bought a large custom home at a 30% discount (because they weren’t in demand at the time).

In 2007/2008, we got hit by the Great Recession. I had two kids in college and two still to go. What to do? Kept working and yes, kept running. And one more thing, in 2009 I hired Nick. I told him this would be the best time to learn the business.

As many of you know (if not google Don Zech Heart), in 2016 I had a heart attack followed ten days later by cardiac arrest. Each event had a 99% fatality rate. Me, I just keep on working and running.

Meanwhile, last month I was supposed to run a marathon in Hong Kong (to get my 5th of 7 continents) and then jump on a cruise ship to tour Asia. Needless to say, we didn’t go. Instead, we closed escrow on our big custom home, moved to a fully furnished townhouse at the beach where I continue to work every day and oh yes, keep running! I have entered the Singapore marathon in December and have reserved a cruise to Antarctica to run the Antarctica marathon in 2022.

So, as you know, I love my stories and the moral to this one is, when the going gets tough, the tough get going and Luck is when preparation meets opportunity.

Real Estate is dependent upon gathering and social interaction. The United States is now largely a service economy (100 million employed). The Coronavirus is hitting the service economy hardest. The pundits are questioning if this will be a “V” shaped recession with a deep dive and steep recovery or a “U” shaped one where we dive down and stay mired for years before recovering. I believe it will be more of a “W” shape. We have had the dive, will get a little bounce, bump along the bottom a bit and then a steep recovery from there as confidence returns. I am going to speculate this will take about 18 months. What should you do? As in the story above, keep running and keep being productive (if you can’t work, clean the garage!)

Nick’s Numbers

This month in lieu of my Numbers, we have created a Covid-19 Resource Page for owners and tenants. Many of you have asked for or received requests for rent relief, are looking for government resources or financing or are simply looking to learn what others are doing. We have assembled this page and posted it to our Web Site and will continue to update it as we receive worthy information to pass on. Please feel free to share with others or give us your thoughts or resources that we can post for all.


Please give me a call or email me if you would like an analysis of your properties’ value or to discuss what you should be doing with regards to the Coronavirus pandemic and its impacts on your business, tenants, or property (Nick Zech, 858-232-2100, nzech@cdccommercial.com).

In the months ahead, we at CDC are here to help you find what is safe and where there is an opportunity. Many of you will want to discuss what to do and how to handle no pay and slow pay tenants. It is important during times like these to realize that these are the times when generational wealth is created. It is also a time for all of us to pull together and not a bad time to have a little sense of humor…hope you enjoy the story…

Why Worry?

In life there are only two things to worry about:

Either you are well, or you are sick.


If you are well,

there is nothing to worry about.

If you are sick,

There are only two things to worry about:

Either you get well, or you will die.


If you are well,

there is nothing to worry about.

If you die,

There are only two things to worry about:

Either you will go to Heaven, or you will go to Hell.


If you go to Heaven,

there is nothing to worry about

If you go to Hell,

You’ll be so damn busy shaking hands with your friends,

That you won’t have time to worry!


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.

base case rent growth forecast by market

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.

costar video discussing the san diego ca office market

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…

Today was the absolute worst day ever
And don’t try to convince me that
There’s something good in every day
Because when you take a closer look,
This world is a pretty evil place.
Even if
Some goodness does shine though once in a while
Satisfaction and happiness don’t last
And it’s not true that
It’s all in the mind and heart
True happiness can be obtained
Only if one’s surroundings are good
It’s not true that good exists
I’m sure you can agree that
The reality
My attitude
It’s all beyond my control
And you’ll never in a million years hear me say that
Today was a good day
Now read that from the bottom up.

“Valentine’s cards say stuff on them that we’d like to say ourselves, but we wouldn’t be caught dead saying.” – Mike age 8

Happy Lunar New Year and the year of the rat! I must tell you; I was scheduled to run the Hong Kong marathon on February 9th, but it was canceled this week due to the Coronavirus epidemic. This was to be my 5th Continent to race on – lots of training, lots of logistics and planning. Needless to say – disappointing. To add insult to injury, we received our masks this week and of course, they are made in China! Another thing that is growing logarithmically in China is lawyers. Ten years ago, there were virtually zero attorneys and now there are 250,000. That’s compared to about a 15% increase in the U.S. where we now have 1,338,678(sounds like an untapped U.S. export to me ☺!).

While I mourn the impact of the coronavirus on my travel and goals, you may be interested that the cure may come out of Inovio Pharmaceuticals, a San Diego based company that has already sequenced the virus and is testing the cure. You might be surprised but San Diego is the #1 metro for NIH (National Institute of Health) research dollars to research institutes. It is also the #3 life sciences hub according to Business Facilities Magazine (2015).

With Valentines Day and Cupid just around the corner, it made me think about cubic as in cubic square feet. The trend has already started in industrial warehouse, but I expect it may carry into office and retail. It isn’t just floor footage anymore but the total area that counts. We are seeing industrial buildings going as high as 36-foot clear heights! Robots, conveyor belts, and better fire suppression lead to smaller isles and higher rack storage leading to the new importance of cubic feet.

Whatever your gender might be or profess to be, we all need to go to the bathroom. Property and business owners should all know that single-use toilet facilities must be identified as “All Gender”. Assembly Bill #1732 dictates that all single-use restrooms in any business, public accommodation or government agency must immediately change identification symbols and comply with Chapter 11B of the California Building Code (CBC).

Speaking of the building code, for the past 30+ years, the statute has stipulated that a building permit was good for six months and extensions were up to administrative code (city). With severe labor shortages, project delays are more common. AB2913 extends the fuse on a building permit to one year and codifies one or more extensions for just cause.

The real estate industry has been hit by a rash of money wiring scams. On a recent deal, we saw and thwarted one, so I think it is time for everyone to be on the alert (these aren’t just some guy in Nigeria trying to get you to wire some money). We had someone try and spoof being the escrow company on a deal.

Here’s how these scams usually go down: a thief hacks into a real estate or title company’s computer system and then studies the transactions, from the language used to the format of the wiring instructions. When the scammer strikes, he or she will often pose as someone from the real estate or titling company to instruct the buyer to wire funds to them.

The buyer doesn’t have reason to question the request since it’s coming from what appears to be a legitimate entity that is part of the buying process.

Never heard of these scams?

There’s a reason for that. Business email compromise scams don’t get a lot of press, because usually, the parties involved want to keep it as private as possible. That means most people never get their money back!

Whether it be record stores, video stores or department stores, things keep changing and evolving. Landlords must continually re-invent themselves and their properties. In Miami, a Bloomingdales is being replaced with an athletic resort and beach club. This isn’t your normal 35,000 sf athletic club. No, it is 140,000 sf fitness, training, spa, basketball courts, indoor aquatic center and 40,000 sf outdoor beach club akin to a Vegas pool deck.

I’m telling you as much as people are cocooning and having Amazon deliver everything to the house, there is a pent-up demand for people to BEG! Yes, this is my new term (I haven’t copyrighted it yet!) it stands for; Browse, Experience, Get Out (BEG). People are getting tired of their screens and their couch and they are begging to get out. People are shopping on Amazon, but they want to get out and browse and see what others are wearing. BEG explains the rising popularity of Breweries and Wineries.

And now from the other corner of our office, here are Nick’s numbers for the month;

Nick’s Numbers

Poway – Current Market Statistics:


poway ca retail stats


poway ca office stats


poway ca industrial stats


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).

I can only hope that in the month ahead, your CRE BEG’s, your bathrooms have the right sign on them, and you enjoy the love of Valentines Day. I hope you enjoy the story…


A group of professional people posed this question to a group of 4 to 8-year olds, “What does love mean?” The answers they got were broader and deeper than anyone could have imagined.

Rebecca- age 8 – “When my grandmother got arthritis she couldn’t bend over and paint her toenails anymore. So, my grandfather does it for her all the time, even when his hands got arthritis too. That’s love.”

Billy – age 4 – “When someone loves you, the way they say your name is different. You know that your name is safe in their mouth.”

Chrissy – age 6 – “Love is when you go out to eat and give somebody most of your French fries without making them give you any of theirs.”

Terri – age 4 – “Love is what makes you smile when you’re tired.”

Danny – age 7 – “Love is when my mommy makes coffee for my daddy and she takes a sip before giving it to him, to make sure the taste is OK.”

Emily – age 8 – “Love is when you kiss all the time. Then when you get tired of kissing, you still want to be together and you talk more. My mommy and daddy are like that. They look gross when they kiss.”

Bobby – age 7 – “Love is what’s in the room with you at Christmas if you stop opening presents and listen.” (Wow!)

Noelle – age 7 – “Love is when you tell a guy you like his shirt, then he wears it every day.”

An author and lecturer once talked about a contest he was asked to judge. The purpose of the contest was to find the most caring child. The winner was a 4-year-old child whose next-door neighbor was an elderly gentleman who had recently lost his wife. Upon seeing the man cry, the little boy went into the old gentleman’s yard, climbed into his lap, and just sat there. When his mother asked him what he had said to the neighbor, the little boy said, “Nothing, I just helped him cry.”


Happy New Year! Welcome to the ’20s! In the 1920s, the Model-T’s were rolling off the assembly line while the economy continued to find ways to train workers while at the same time drive automation. Today, Amazon is in the thick of the same thing The company announced that it will spend $700 million to retrain its labor force of 100,000 in response to a growing labor shortage. The big story is that the strong labor market is pushing companies to make big investments not only in workers but also in technology.

Low unemployment raises all boats. It is the best tool we have to help the homeless and less privileged and raise wages naturally. J.P. Morgan Chase as part of a new initiative will no longer ask prospective employees to reveal if they have a criminal past during their application process. The company said this initiative allows for those with criminal backgrounds to receive the same consideration as any other applicant when their background has no bearing on job requirements (I assume that means they ask if your crime was robbing a bank!).

As mentioned, technology is advancing at warp speed on so many fronts. For example, the Apollo 11 computer had a processor which ran at 0.043 MHz The latest iPhone’s processor is estimated to run at about 2490 MHz This means that the iPhone in your pocket has over 100,000 times the processing power of the computer that landed a man on the moon 50 years ago.

That is interesting, but even more astounding is Google’s announcement that its new “quantum” machine needs less than 3.5 minutes to perform calculations that would take a traditional computer 10,000 years!

One thing I have learned over the years is that commercial real estate transactions can be messy. You cannot digitally solve for personality conflicts, egos, mental illness, greed, ignorance, sinkholes, new building codes, contamination, and the myriad of other challenges that we overcome on a regular basis. I suspect that while digital transaction platforms will be very beneficial and successful for those clean, straightforward, simple deals, the rest will require the expertise of a professional problem solver. And at the end of the day, that’s what we do here at CDC.

So, what is the outlook for the new year? Of course, there will be the usual chaos and mayhem, none of which you need to worry about if you focus on the truth, value and what you can control. Here is what we see in the year ahead.

Being an election year means that we will likely have more gridlock in Washington, The Fed will leave interest rates alone, not wanting to be seen as interfering with the election. Meantime, on Main Street, we will continue to see store closings. The nuance to this story is that last year we closed 150 million square feet of stores and only about 100 million square feet this year. However, this year we closed over 10,000 stores which are almost twice what was closed last year. So Big Boxes last year, small shops this year. Are we right-sized yet?

The passing of the USMCA (NAFTA 2.0) will be a boon for the U.S. economy and in particular San Diego. The auto, TV and medical instrumentation sectors will need production, warehouse, and logistics space on both sides of the border.

I say a recession is not likely and the stock market is certainly not pricing it in. I will let Nick and his number give you another look.

If you would like to see some of the best of the best, big ideas for 2020 here is a link to LinkedIn’s best of the best ideas shaping the year ahead.

LinkedIn’s Best of the Best Ideas Shaping the Year Ahead.

And now from the other corner of our office, here are Nick’s numbers for the month;

Nick’s Numbers

Happy New Year to all! According to Gallup polls, it is a 50/50 chance of a recession in 2020 (well actually 49% yes to 51% no). I thought it would be interesting to compare to 2007 polling when 57% said a recession was not likely and 40% said it was – two months later we were in the Great Recession!

Gallup also asked Americans to predict whether a recession was in the offing in 2001 when the dot-com bubble was bursting, and at that time 53% said it was likely.

Please give me a call or email me if you would like an analysis of your properties’ value (Nick Zech, 858-232-2100, nzech@cdccommercial.com).

Finally, Charlie Munger, who along with Warren Buffet has created a multi-billion-dollar empire has shared a dozen pieces of his most valuable advice. I think it applies to the stock market, the real estate market, and just plain old life.

  1. “Those who keep learning will keep rising in life.”
  2. “Knowing what you don’t know is more useful than being brilliant.”
  3. “One of the greatest ways to avoid trouble is to keep it simple.”
  4. “People calculate too much and think too little.”
  5. “We have three baskets for investing: yes, no, and too tough to understand.”
  6. “A great business at a fair price is superior to a fair business at a great price.”
  7. “Success means being very patient, but aggressive when it’s time.”
  8. “The big money is not in the buying and the selling, but in the waiting.”
  9. “You must force yourself to consider opposing arguments. Especially when they challenge your best-loved ideas.”
  10. “Don’t drift into self-pity because it doesn’t solve any problems. Generally speaking, envy, resentment, revenge, and self-pity are disastrous models of thought.”
  11. “Invert, always invert.” – It can often be useful to look at a problem in reverse. What do you want to avoid? Act in a manner that reduces your chances of failure, and you will find your path to success.
  12. “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts…slug it out one inch at a time, day by day. At the end of the day…if you live long enough…most people get what they deserve.”

Well, you are now loaded up with advice for the new year. Let’s go out and make it a great one! I hope you enjoy the story…

The Deacon

It was Christmas Eve Service. His name was Bill. He had wild hair, wore a T-shirt with holes in it, jeans, and no shoes.

This was literally his wardrobe for his entire four years of college. He was brilliant, kind of esoteric and very, very bright.

He became a Christian while attending college. Across the street from the campus was a well-dressed, very conservative church. They wanted to develop a ministry to the students but were not sure how to go about it.

On Christmas Eve Bill decided to go there. He walks in with no shoes, jeans, his T-shirt, and wild hair. The service had already started and so Bill started down the aisle looking for a seat. The church was completely packed, and he couldn’t find a seat.

By now, people were really looking a bit uncomfortable, but no one said anything. Bill got closer and closer and closer to the pulpit, and when he realized there were no seats, he just squatted down right on the carpet. (Although perfectly acceptable behavior at a college-fellowship, trust me, this had never happened in this church before!).
By now the people are really uptight, and the tension in the air is thick.

About this time, the minister realizes that from way at the back of the church,

a deacon is slowly making his way toward Bill. Now the deacon is in his eighties, has silver-gray hair, and a three-piece suit. A godly man, very elegant, very dignified, very courtly. He walks with a cane and, as he started walking toward this boy, everyone is saying to themselves that you can’t blame him for what he’s going to do. How can you expect a man of his age and of his background to understand some college kid on the floor?

It takes a long time for the man to reach the boy. The church was utterly silent except for the clicking of the man’s cane. All eyes were focused on him. You couldn’t even hear anyone breathing. The minister couldn’t even preach the sermon until the deacon did what he had to do.

And then they see this elderly man drop his cane on the floor. With great difficulty, he lowered himself and sat down next to Bill and worshiped with him so he wouldn’t be alone.

Everyone choked up with emotion. When the minister gained control, he said, “What I’m about to preach, you will never remember. What you have just seen, you will never forget”.

Be careful how you live. You may be the only truth and values some people will ever see.


Christmas: what other time of the year do you sit in front of a dead tree and eat candy out of your sox?

The world today is divided about what is going on and how to move forward. We live in a time of political division and personal distraction. We have political and media and technology systems that reward extremism. We have a system that is increasingly punishing moderate viewpoints. For brokers who strive daily to find middle ground, this makes our jobs every increasingly more difficult. We have so much in common as a society, it is hard to believe that we let such little differences be what separates us.

I think we live in a society that says you don’t have to sacrifice any of your culture to fit in. When, in fact, the American Way is to sacrifice some of your culture and adopt some of everyone else’s culture to become that melting pot experiment called America. Like at the Holidays when meat and vegetables and seasoning that transform into a gastronomical delight when you blend their textures and flavors.

So, as we wish you, our client family, Happy Holidays, we challenge you to remember that FAMILY is really an acronym that stands for – Forget About Me I Love You.

Additionally, in this politically distracting year ahead I further challenge you to “Make Decency Cool Again.”

Nick’s Numbers

First, I would personally like to wish all of you a Happy Holiday! When you are gathered with family and friends and they ask you about the real estate market, you can tell them it is all about employment – jobs mean occupied real estate. Unemployment is at 2.8% which is below California’s 3.7% and the U.S. 3.3%. And job growth (and real estate) are great – see the chart below.

nicks numbers chart

Please give me a call or email me if you would like more in-depth info on San Marcos or other San Diego and North County sub-markets (Nick Zech, 858-232-2100, nzech@cdccommercial.com). 

Finally, I always talk about being passionate about this business. You know, “it is what you are passionate about that gets you out of bed in the morning!” Well this year, I challenge you to ask yourself if you are a bricklayer or are you building a Cathedral. Happy Holidays and my you Prosper in the New Year!

Hope you enjoy the story…

When four of Santa’s elves got sick, the trainee elves did not produce toys as fast as the regular ones, and Santa began to feel the Pre-Christmas pressure.

Then Mrs. Claus told Santa her Mother was coming to visit, which stressed Santa even more.

When he went to harness the reindeer, he found that three of them were about to give birth and two others had jumped the fence and were out. Heaven knows where.

Then when he began to load the sleigh, one of the floorboards cracked, the toy bag fell to the ground and all the toys were scattered.

Frustrated, Santa went in the house for a cup of apple cider and a shot of rum. When he went to the cupboard, he discovered the elves had drunk all the cider and hidden the liquor.

In his frustration, he accidentally dropped the cider jug, and it broke into hundreds of little glass pieces all over the kitchen floor.

He went to get the broom and found the mice had eaten all the straw off the end of the broom.

Just then the doorbell rang, and an irritated Santa marched to the door, yanked it open, and there stood a little angel with a great big Christmas tree.

The angel said very cheerfully, ‘Merry Christmas, Santa. Isn’t this a lovely day? I have a beautiful tree for you. Where would you like me to stick it?’

And thus, began the tradition of the little angel on top of the Christmas tree.

Not many people know this.

May your Christmas be Merrier!!


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