March 2018 Monthly Letter

The Blog
Page 4

antelope on the open plainWell, things have picked up speed and we are running fast (sometimes like a hamster on a wheel, other times like the Antelope on the open plains).

The USD Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County rose 0.6 percent in November, 1.4% in December and another 1.4% in January. December’s sharp rise was fueled by a huge gain in building permits, along with strong gains for online help wanted advertising, and the outlook for the national economy.

January’s gain was the second straight strong increase in the USD Index and the 15th month in a row where it had not fallen. The gain pushed the USD Index to an all-time high of 151.1, surpassing the previous high of 150.8 which was reached in May and June of 2000. Given the strong performance of the USD Index, particularly in the last two months, the outlook for the local economy is positive at least through the end of 2018.

If you are interested in reading perhaps the best 2018 Forecast Report, you will want to read, Emerging Trends in Real Estate by PWC and the Urban Land Institute.

I have mentioned in the past about storm water run off and the clamping down by state and local officials on tenants and owners. There is a free workshop being offered on March 7th from 8:30 to 4:45 of San Marcos City Hall. For more info email; .

Another free tip is the Escondido Report It App (you can download from the App store) or Google it online. On the app (or website) you can report (take a picture) the problem (pothole, shopping cart or code violation) and the city will be on it (Sorry Escondido Only so far).

Well as things pick up speed in the market, it is important to stay focused on the fundamentals. The first lesson is actually an African proverb that explains that every morning the Antelope wakes up knowing that it must be faster than the fastest Lion and every morning the Lion wakes up knowing it must be faster than the slowest Antelope Honest to God, I tell people all the time that I am a salesman and I am unemployed every morning when I wake up. And I know that I have to run fast if I am going to eat or at least not be eaten.

The second lesson is to have vision. Now listen carefully to the definition of vision. Vision is the picture of the future that makes you passionate. Get a vision!

The third lesson is to have character. Now your whole life you have probably either been accused of being a character or told to have good character. But here is a working definition you can live by; “Character is the accumulation of all of your habits”. Have good character, it is what you are judged by.

And finally, a little about real estate. We live in an unprecedented time. We are in a time like the Renaissance or the Industrial Revolution. When Christopher Columbus discovered the New World, the fear was that the world was flat. Now with the advent of almost unlimited bandwidth, cell phones and other wireless networks, the internet and online collaboration, the new fear is that the world may indeed be flat. You get paid minimum wage to work hard and you get paid huge sums to work smart.

The next ten years will see labor costs continue to come under pressure as cheaper and smarter work forces are found In China and India. These are not reasons to panic but instead be smarter, have a vision and run faster. Let me give you an example of what I mean and a glimpse of the future. If today in the US, we have 90 smart people and 10 not so smart people. In China we have 100 smart people and 900 not so smart people. Realistically, our competition is 1 on 1 to cater to those 910 people. We just have to be smart enough to adapt and sell to them. I am reminded of the salesman who was sent to Africa to sell shoes. He wired back that there was no market, the people didn’t wear shoes and had no money. The company sent a second salesman and he wired back that the market was unlimited because the people had no shoes! The way around in a flat world is to be smart.

While on the subject of smart, let me tell you about the future of San Diego. World class weather, the beach and outdoor life style will continue to attract the best and the brightest in the world to San Diego. The high cost of land and the low cost to manufacture off shore will cause San Diego’s manufacturing to continue to dwindle. The gap has to be filled with knowledge workers. Yes, I know we are bringing jobs back home under the Trump administration, but it won’t be long until those jobs are replaced by robots and drones and artificial intelligence. (I just hope I can run fast enough to retire by then!). It is important, however, to understand how the real estate economy works;

  1. JOBs – Think Industrial, Research & Development buildings – for every hard-employed job (manufacturing/knowledge worker) you employ 7 support services (retail, doctor, accountant),
  2. Houses or Condo’s follow jobs – got to have somewhere to live,
  3. Retail – shopping follows rooftops (although Amazon is disrupting this),
  4. Office – services (financial, insurance, medical, real estate follow the houses and retail).

You probably have heard that the three most important things about real estate are; location, location, location. Well, it is not really true. Here is the fact. Buy real estate where more people are moving in than moving out. I am confident that although it may ebb and flow, the smart people of the world want to live in San Diego. You’ve got one leg up on them because you are already here, but you are going to have to stay smart to stay here.

And now for the test…

  1. Name the five wealthiest people in the world.
  2. Name the last five Heisman Trophy winners.
  3. Name five people who have won the Nobel or Pulitzer Prize.

How did you do?

My point is, none of us remembers all the headliners of yesterday. And these are no second-rate achievers. They were the best in their fields. But the applause dies. Awards tarnish. Achievements are forgotten. Accolades and certificates are buried with their owners.

Here is another quiz. See how you do on this one…

  1. Name a few teachers who aided you on your journey through school.
  2. Name three friends who have helped you through a difficult time.
  3. Think of five people you enjoy spending time with. Easier?

The lesson;

The people who make the difference in your life are not the ones with the most credentials, the most money, or the most awards. They are simply the ones that care about you.

God Bless you and remember when you wake up in the morning, run fast and be passionate – we’re in the field running hard for you because we care about you! (I hope you enjoy the things that go through my head before I go to sleep…)

Things that go through my head before I fall asleep.
If you attempt to rob a bank you won’t have any trouble with rent/food bills for the next 10 years, whether or not you are successful.

Do twins ever realize that one of them is unplanned?

What if my dog only brings back my ball because he thinks I like throwing it?

If poison expires, is it more poisonous or is it no longer poisonous?

Which letter is silent in the word “scent”, the s or the c?

Maybe oxygen is slowly killing you and it just takes 75-100 years to fully work.

Every time you clean something, you just make something else dirty.

The word “swims “upside-down is still “swims”.

Intentionally losing a game of rock, paper, scissors is just as hard as trying to win.
100 years ago, everyone owned a horse and only the rich had cars. Today everyone has cars and only the rich own horses.

The doctors that told Stephen Hawking he had two years to live in 1953 are probably dead.

If you replace “W” with “T” in “What, Where and When”, you get the answer to each of them.

If 2/2/22 falls on a Tuesday, we’ll just call it “2’s Day”. (It does fall on a Tuesday).

general george washingtonGeorge Washington gave some great advice that we can still use today, in his farewell address of 1776:
“Don’t blow the tax payer’s cash on tanks, don’t elect the same guy more than twice and don’t let the nations politics devolve into partisan bickering.”
Well let me tell you that the year has gotten off to a quick start with optimism and resolve, not just here at CDC but seemingly through the market place and the economy. I used to refer to the economy/market being like pushing a ball up a hill now the ball is rolling down the hill.
Optimism is based on several factors:
  • The continued strong economy, which should be boosted by tax reform that was extremely kind to the president’s profession.
  • Property fundamentals that generally fall between positive and robust.
  • Continued strong capital flows that enhances liquidity and support record-high property values, while low acquisition yields seem immune from the slow rise in long-term interest rates.
  • Perhaps most important, the uncharacteristic restraint exercised by the market this deep into a recovery.
The market’s discipline is the foundation for those who dare to wonder if today’s cycle is different from those in the past. Cycles don’t normally last this long, and typically after a few years with good returns the market starts to overheat. Construction is overextended, capital flows forces equity players to chase ever-riskier deals that rely on unrealistic income assumptions, and hot competition forces banks to be more aggressive in lending, increasing leverage and cutting coupons. As we start 2018, however, the red flags normally associated with the late cycle are the exception rather than the rule.
The real estate investment sector has been very robust the last five years with billions of capital invested in this sector. The new tax bill and pro-growth policies in Washington will produce higher GDP growth of 3.5% – 4%+ and with it higher interest rates. Net lease assets are the most susceptible to higher interest rates and interest rate risk. Asinterest rates increase, cap rates will follow, and the values will suffer declines in value.
There are 15 risks inherent in investing in CRE as follows:
  • Cash Flow Risk – volatility in the property’s net operating income or cash flow.
  • Property Value Risk – a reduction in a property’s value.
  • Tenant Risk – loss or bankruptcy of a major tenant.
  • Market Risk – negative changes in the local real estate market or metropolitan statistical area.
  • Economic Risk – negative changes in the macro economy.
  • Interest Rate Risk – an increase in interest rates.
  • Inflation Risk – an increase in inflation.
  • Leasing Risk – inability to lease vacant space or a drop, in lease rates.
  • Management Risk – poor management policy and operations.
  • Ownership Risk – loss of critical personnel of owner or sponsor.
  • Legal, Tax and Title Risk – adverse legal issues and claims on title.
  • Construction Risk – development delays, cessation of construction, financial distress.
  • Entitlement Risk – inability or delay in obtaining project entitlements.
  • Liquidity Risk – inability to sell the property or convert equity value into cash.
  • Refinancing Risk – inability to refinance the property.
All investors that own CRE should perform a detailed and systematic review of the above risks and their potential effect on their assets.
The Federal Reserve could have a big impact in 2018. Jerome Powell, the next Fed chairman is expected to continue on the path of gradually tightening monetary policy. It is hard to determine the exact impact of rising rates but it is pretty safe to assume that as rates rise so will cap rates.
So, you might ask how this might affect you? Let me give you a simple example;
Today you own a property that has;
                $55,000 a year net income and 5.5% CAP today gives you;
                $1,000,000 in property value.
                CAP rates move up by .5% with $55,000 a year net income
                6% CAP tomorrow gives you;
                $916,000 in property value.
                CAP rates move up by 1% with $55,000 a year income.
                6.5% CAP tomorrow gives you;
                $846,000 in property value.
Now assume you bought that $1 million with 30% down and 70% loan and CAP rates rose by 1% (5.5% to 6.5%). Your $300K of equity just got cut in half ($1,000,000 – $846,000 = $154,000. Leaving you $146,000 of equity). So, a 1%-point rise in CAP rate wipes out 50% of your equity.
Raise rent. In the example above if we move the rent up by $10,000 a year and CAP rates moved up to 6.5% you would still have a property worth $1,000,000. So…rent must rise to keep your value whole in a rising CAP rate environment.
Here are a few of my random observations for the month;
  •  Home equity hits all time high – the home ATM is back!
  •  Health Care is moving from being about coverage to being about affordability. CVS buys Aetna. goes public.
  • Wal-Mart Stores drops the word “stores” from their name. Bring it on Amazon.
  • In 2015, Wal-Mart paid 6.4 billion in taxes and Amazon paid $1.6 billion (but had more sales). Watch out Mr. Bezos, the tax man is coming.
  • Bitcoin is a window into the exuberance there is for yield and what an overheated market can look like . I thought a telephone number and social security number were unique numbers, I wouldn’t think to pay $18,000 for one!
If you like these “glimpses” you might also enjoy this List of Niche Real Estate Concepts by Economist Gary London that may be here today and gone tomorrow.
So as we at CDC scurry abut trying to battle the forces of evil and get deals done, I thought you might enjoy the modern day Noah story…

It is the year 2018, and Noah lives in the United States. The Lord speaks to Noah and says: “In one year I am going to make it rain and cover the whole earth with water, until all is destroyed. But I want you to save the righteous people and two of every kind of living thing on the earth. Therefore, I am commanding you to build an Ark.”

In a flash of lightning, God delivered the specifications for an Ark. Fearful and trembling, Noah took the plans and agreed to build the Ark.
“Remember,” said the Lord, “You must complete the Ark and bring everything aboard in one year.” Exactly one year later, a fierce storm cloud covered the earth and all the seas of the earth went into a tumult. The Lord saw Noah sitting in his front yard weeping.
 “Noah.” He shouted, “Where is the Ark?”- “Lord please forgive me!” cried Noah. “I did my best but there were big problems. First, I had to get a permit for construction and your plans did not comply with the building codes. I had to hire a civil engineer because I can’t build the Ark without filing an environmental impact statement on your proposed flood, over the entire Earth.
They didn’t take very kindly to the Idea that they had no Jurisdiction over the conduct of the Creator of the universe.
Then the Army Corps of Engineer demanded a map of the proposed new flood plain. I sent them a globe. Right now, I am trying to resolve a complaint filed both with the ACLU and the Equal Employment Opportunity Commission that I am practicing discrimination by not taking godless, unbelieving people aboard! The IRS has seized all my assets, claiming that I’m building the Ark in preparation to flee the country, to avoid paying taxes. I Just got a notice from this state that I owe some kind of user tax and failed to register the Ark as a recreational water craft. Finally, the ACLU got the courts to issue an injunction against further construction of the Ark, saying that since God is flooding the earth, it is a religious event and therefore unconstitutional.

“The reason that guru is such a popular word is because “Charlatan” is so hard to spell.”
~ William Bernstein

The word “Charlatan” is derived from the Italian word ciarlare which means “to babble”. One of the benefits of keeping ones eye on history is that you discover, more often than not, that the handwringers and doomsayers are usually wrong.

On January 1, 2018, it has become officially illegal to sell the original “bright idea” in California. The incandescent bulb, innovated by Thomas Edison more than a century ago, is banned in the Golden State and will be in the rest of the U.S. in 2020. While the light goes out you will now be able to “light up” that is, recreational pot will be legal in California as of January 1. In the meantime, the birthrate is so low in Japan and the boom of seniors so high, that adult diapers have out sold baby diapers for the last 6 years running. What is coming of this world . . .

With that random assortment of facts, here is my “charlatan” list of predictions, musings and other babble that you should keep an eye on for 2018;

  • Voicification of the internet (hello Siri, Cortana, Alexa, Google home, etc.)
  • North Korea – no easy happy ending.
  • Continued meltdown in Hollywood.
  • Interest rates – up.
  • Fraternities/Sororities – crash (where else is the raunchy behavior of Hollywood, DC, media taught).
  • Bitcoin – see tulip mania.
  • Labor cost – biggest pressure on business & inflation.
  • Inverted yield curve – watch out recession, here we come
  • Pension meltdown – read the children’s book “The King has no clothes”.
  • NFL players accept a tax which is used to pay for cameras on every law enforcement officer – instant replay in the hood.
  • Disney buys CNN – ATT merger goes through with Time Warner.
  • New network big three – Disney, Netflix, Google.
  • Healthcare turmoil continues – only solution is Siri & Alexa providing .99¢ diagnosis when you lick your phone screen.
  • Syria – the real U.S. – Russian showdown.
  • Movie theaters offer scent, shake, wind – something you can’t get from Netflix.
  • Artificial Intelligence – it is real, it is coming and will be part of your life like the internet and cell phone.

Did you know that the Federal government owns or leases 5,066 bathrooms occupying nearly 1.7 million square feet of the governments 1.9 billion feet of office space? Forty-five of them are listed as historic landmarks (really what makes a bathroom historic?). Uncle Sam owns 16,570 parking lots, 17,000 warehouses, 766 hospitals, 2427 schools. Billions are wasted on unused or unneeded Federal property. Once the government owns something it becomes costless because it is off the books. This is a huge lost opportunity cost. Many of these properties can be turned into apartments & offices. Redevelopment instead of paying for upkeep of old empty buildings. This is like the government’s ownership of the wireless spectrum which they started to auction off in 1994 – a move that added nearly $60 billion to the Treasury and gave us Wi-Fi and cell phones.

Early reports of Christmas sales were very positive with Mastercard reporting shoppers spent over $800 billion during the season, more than ever in history!

While retail sales have boomed, the material impact of the internet on the shopping center has continued to evolve what is or is not a successful tenant roster. Electronic stores, department stores and clothing stores have given way to restaurants with live music, escape rooms, urgent care facilities, gyms. The internet hasn’t killed the shopping center, but it is changing its tenant mix.

In San Diego, the unemployment rate has dropped to a low 3.7%. The USD Burnham-Moores Index of Leading Economic Indicators for San Diego rose in September and October. The outlook continues to be positive but slower growth through most of 2018. Two things of interesting note; (1) 16 to 17% of San Diego tenant businesses work from home (Inside Prospects), 2) In 2017 in California 105,000 more people moved out of CA then moved in – this is never a good sign.

Many have asked about my take on the new tax reform and its effect on commercial real estate. Well here you go…Depends;

  1. Depends on what the corporations do with their repatriated money.
  2. Depends on what the millennials do with the $1000 – $5000 less taxes they will be paying.
  3. Depends if the new pass through tax deduction really works in real estate LLC’s.
  4. Depends on how much impact the $750,000 max loan interest deduction has on housing (because the housing industry feeds commercial space needs – office – industrial – retail).
  5. Depends if real estate investors/developers start using carried, interest structures more since it wasn’t eliminated.

I recently read that there are three common factors in those that live to be over 100 years.

#3 – genes – but not as big a factor as you would think.
#2 – lifestyle – not smoke, not fat, exercise, preventative testing & screening.
#1 – the number of people you love in your life! – by far the single biggest factor.

We wish you a Happy New Year and a long and prosperous life and may you also find that the technology in your life makes it easier and happier… I hope you enjoy the story.

Don Zech
CDC Commercial

A toothpaste factory had a problem. They sometimes shipped empty boxes without the tube inside. This challenged their perceived quality with the buyers and distributors.

Understanding how important the relationship with them was, the CEO of the company assembled his top people. They decided to hire an external engineering company to solve their empty boxes problem.

The project followed the usual process: budget and project sponsor allocated, RFP, and third-parties selected. Six months (and $8 million) later they had a fantastic solution – on time, on budget, and high quality. Everyone in the project was pleased. They solved the problem by using a high-tech precision scale that would sound a bell and flash lights whenever a toothpaste box weighed less than it should. The line would stop, someone would walk over, remove the defective box, and then press another button to re-start the line. As a result of the new package monitoring process, no empty boxes were being shipped out of the factory. With no more customer complaints, the CEO felt the $8 million was well spent.

He then reviewed the line statistics report and discovered the number of empty boxes picked up by the scale in the first week was consistent with projections, however, the next three weeks were zero! The estimated rate should have been at least a dozen boxes a day. He had the engineers check the equipment, they verified the report as accurate.

Puzzled, the CEO traveled down to the factory, viewed the part of the line where the precision scale was installed, and observed just ahead of the new $8 million-dollar solution sat a $20 desk fan blowing the empty boxes off the belt and into a bin.

He asked the line supervisor what that was about.

“Oh, that,” the supervisor replied, “Bert, the kid from maintenance, put it there because he was tired of walking over every time the bell rang.”


cdc commercial christmasThe four stages of life:

  1. You believe in Santa Claus.
  2. You don’t believe in Santa Claus.
  3. You are Santa Claus.
  4. You look like Santa Claus.

As commercial real estate brokers, we are asked to wear a lot of hats and be a lot of things to a lot of people. As great salespeople it is our job to find middle ground and consensus. Unfortunately, in this digital age of 1’s and 0’s and Fox or MSNBC, the middle ground perspective has almost dissolved. As leaders and deal makers we must be among the leading few not the mediocre many.

This year we have seen more challenges than most – a surprise election, nuclear threats in Iran and North Korea, natural disasters in Houston, Florida and Northern California, a polarized people and press.

As many of you know each year I write this holiday letter to express my thanks for working with a great community of owners, tenants, and community leaders. I also like to leave you with a story of hope for the coming year. This year I would encourage all of you to soldier on, but I would like to challenge all of you to use your “salesperson toolbox” outside of the workplace to try and find more middle ground in our community. Use your skills and gifts to defuse hate, find consensus, give compliments and help others feel appreciated. At a time when we are worried about artificial intelligence and big data putting us and our clients out of business, you need to realize that technology and your relationship with it will facilitate unthinkable opportunity and growth or keep you on the wrong side of average (If you haven’t read it, I would highly recommend you read, “The Whole New Mind” by Daniel Pink – I have never dog eared a book more!).

I also learned a new lesson this year (in case you think an old dog can’t learn new tricks). I assume you are like me and open most calls or meetings with the proverbial ‘How are you doing?’ and like most of us give or receive a “good” or “fine.” I recently learned that if you move that same question to the end of the call, meeting or text message, you get an entirely different answer. People open up, you connect, people feel appreciated and you have more real friendships (It’s a hard habit to change but that is what 2018 is for!).

We at CDC Commercial want to thank all of you for the opportunity to do business with you and build our relationship.. In the meantime, let someone know how much you appreciate them. #grateful

Hope you enjoy the story….

Happy Holidays!

Team CDC Commercial

Don Zech, Nick Zech, Matt Orth, Cheryl Pace

An article in National Geographic several years ago provided a penetrating picture.

After a forest fire in Yellowstone National Park, forest rangers began their trek up a mountain to assess the inferno’s damage. One ranger found a bird literally petrified in ashes, perched statuesquely on the ground at the base of a tree. Somewhat sickened by the eerie sight, he knocked over the bird with a stick. When he gently struck it, three tiny chicks scurried from under their dead mother’s wings. The loving mother, keenly aware of impending disaster, had carried her offspring to the base of the tree and had gathered them under her wings, instinctively knowing that the toxic smoke would rise.

She could have flow to safety but had refused to abandon her babies.

When the blaze had arrived, and the heat had scorched her small body, the mother had remained steadfast.

Because she had been willing to die, those under the cover of her wings would live. “He will cover you with his feathers, and under his wings you will find refuge” (Psalm 91:4).

Being loved this much should make a difference in your life.

Remember you are loved and then be different because of it.

november 2017 monthly letterThe first Thanksgiving celebration lasted three days. Today, Plymouth Rock is only the size of a car engine. It has cracked three times over the years getting smaller each time…the effects of time.

We have all heard the adage that “time heals all wounds” and many have heard it turned around to say, “time wounds all heals.” Well, I am more inclined to tell you that “time kills all deals.” Although I have been in the business a long time, I have never seen a time where we have had so many deals taking so long for a variety of reasons.
  • Fast Food Restaurant – 3 years (yes paying option payments monthly) and still waiting for city and one property owner approval.
  • Sale of a restaurant/building as part of a larger development 4 ½ years. Waiting for city approval, land swap, lot line adjustment, buyout agreement of business.
  • Charter school buying a building – 3 years. Plans, permits, CEQA, traffic study, board approval (seller & buyer), price changes, doubling of TI costs due to regulations.
  • Raw land – 7 years. Rezone (4 years), marketing to find a buyer who can wait 2-3 years to get thru plans, permits, city requirements (undergrounding utilities – $1 mil, signal $250K, curbs, gutters, sidewalks – $1 mil).
  • 1500 SF clothing store into a 1500 SF space – 3 ½ months. Drywall, paint, stairs to a mezzanine, 2 months in plan check, 45 days to build (inclusion of multiple inspections of the threshold being a ½ inch too high and requests for engineering redo of the stairs and storage mezzanine).
On top of these frustrations, owners and tenants don’t understand why things aren’t going easier or faster because the economy is certainly doing better.
I saw a book last week that summed it all up for me. The title was “20-minute manager: managing time.” All I could think was that 30 years ago I read the “One Minute Manager” and it dawned on me that despite all of the technology at our disposal, managing our time is taking 20 times what it used to!
What I can tell you is that with the difficulties and delays in making deals, rents are and will rise. With rents rising we will (or need to) see wage growth and continued densification of space (more goods and people per square foot) to support increased prices and rents.
Well as we stand by and watch the swamp drain or become more muddy as the case might be, I am reminded of a quote I read many years ago from the populist movement of the 1890’s.
“If the farmer went to the capital fresh from the plow, among a crowd of lobbyists, he was as clay in the hands of the potter. If his constituents kept him there year after year, until he learned the ways of legislation, then he ceased to be a farmer and became a member of some other class, perhaps a stockholder in a great railroad, or manufacturing corporation, with interests in common with the opponents of the agricultural classes.”
Now as we face our own populist era and more specifically tax reform, we in the Commercial Real Estate field need to be wary and prepared because tax code change has always led to swings of wealth and recessions (remember 1979 windmill farms? Or 1987 crash after 1986 tax reform). I am worried about uncertainty over tax reform, uncertainty over a possible new Fed Chief, uncertainty if we do get a new Fed Chief. The biggest warning sign that I see though is the flattening of the bond yield curve (spread between 2 and 10 year bond yields). The spread predicts recessions and it hasn’t been any tighter than just before the 2007 Financial Crisis. On the other hand, the Campbell Real Estate Crash Index reports that the next 3-6 months are still friendly to the real estate market.
Here is a very good article from Costar and the Real Estate Round Table.Issues at hand:
  • Depreciation from 30 yr to 20 yr
  • Estate tax elimination
  • 1031’s?
  • Eliminate interest deduction
  • Reduce tax rate on pass-thru business income
Although life may be frustrating and time consuming, the American Dream is still worthy of pursuit and something to be thankful for. I hope you enjoy the story….
One stormy night many years ago, an elderly man and his wife entered the lobby of a small hotel in Philadelphia. Trying to get out of the rain, the couple approached the front desk hoping to get some shelter for the night.
“Could you possibly give us a room here?” the husband asked. The clerk, a friendly man with a winning smile, looked at the couple and explained that there were three conventions in town.
“All of our rooms are taken,” the clerk said. “But I can’t send a nice couple like you out in the rain at one o’clock in the morning. Would you perhaps be willing to sleep in my room? It’s not exactly a suite, but it will be good enough to make you folks comfortable for the night.”
When the couple declined, the young man pressed on. “Don’t worry about me; I’ll make out just fine,” the clerk told them. So, the couple agreed.
As he paid his bill the next morning, the elderly man said to the clerk, “You are the kind of manager who should be the boss of the best hotel in the United States. Maybe someday I’ll build one for you.”
The clerk looked at the couple and smiled. The three of them had a good laugh.
As they drove away, the elderly couple agreed that the helpful clerk was indeed exceptional, as finding people who are both friendly and helpful isn’t easy.
Two years passed. The clerk had almost forgotten the incident when he received a letter from the old man. It recalled that stormy night and enclosed a round-trip ticket to New York, asking the young man to pay them a visit.
The old man met him in New York, and led him to the corner of Fifth Avenue and 34th Street. He then pointed to a great new building there, a palace of reddish stone, with turrets and watchtowers thrusting up to the sky.
“That,” said the older man, “is the hotel I have just built for you to manage.”
“You must be joking,” the young man said.
“I can assure you that I am not,” said the older man, a sly smile playing around his mouth.
The old man’s name was William Waldorf Astor, and the magnificent structure was the original Waldorf-Astoria Hotel. The young clerk who became its first manager was George C. Boldt.
This young clerk never foresaw the turn of events that would lead him to become the manager of one of the world’s most glamorous hotels.

Zen teaching: “Always remember you are unique just like everyone else.”

stand togetherWe 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:

and here:


Don Zech MarathonAs many of you know or remember, I had a bit of a health scare last year at this time. I’m thrilled to report that a year later, the doctors have given me a clean bill of health, we’ve closed more deals than the previous year, my golf handicap is down 5 strokes and I have run 4 half marathons. I even had the honor to visit the Navy Seal Obstacle Course. The first thing I realized was that “America’s Finest” are stunningly gifted. They are world class athletes and I am proud to have them defending us. The second thing I realized was their success on the O-course is based on speed, force, strength (some bruises) but most of all a 100% commitment (That’s easy to give lip service to but you just try to jump at a rope from three stories with no net!).

Speaking of being proud and fit. I was excited to see Los Angeles announced as the host of the 2028 Summer Olympic Games. As in 1984, this will have a spillover effect into San Diego with many events actually being hosted here, not to mention tourism. In the immediate future, preparation to host the Olympics will proliferate and hasten the influx of funding for commercial real estate and infrastructure. Los Angeles (and Southern California) will finally be catapulted to being a world city (also called a global city or world center).

Speaking of visiting San Diego, passenger traffic at San Diego International Airport rose 5.3% from a year ago for the January-to-June period. For the month of July year over year, the passenger count was up 11.1%. Passenger traffic is a strong indicator of a healthy economy.

So Charles Schwab recently asked how much does it take to be wealthy in San Diego? The answer – $2.7 million.

The top five definitions of wealth among 500 San Diegans surveyed are:

  • Having a lot of money (30 percent)
  • Enjoying life’s experiences (25 percent)
  • Being able to afford anything they want (24 percent)
  • Living stress-free and having peace of mind (19 percent)
  • Having loving relationships with family and friends (13 percent)

While 36 percent of those surveyed say they are already millionaires or believe they can reach that level, the majority (64 percent) say they don’t have any hope.

When asked to compare two opposing ideas of wealth at a more personal level, San Diego residents lean into things that money can’t buy:

  • Fifty-seven percent say wealth is about having gratitude vs. having money (43 percent)
  • Sixty-six percent equate wealth with having good physical health vs. having lots of money (34 percent)
  • Seventy-four percent believe wealth is about spending time with family now vs. leaving an inheritance for them (26 percent)

Well the first step to becoming wealthy is to have a job and the economy is certainly helping that by adding another 209,000 in July. Locally, however, even though there was job growth, the restaurant industry had its first drop since 2010. This is largely due to the minimum wage increase to $11.50 an hour and influx of more efficient menu ordering (iPads, robots no table service etc…).

Speaking of jobs – Steve Jobs that is – it is hard to believe that he brought us the first iPhone just 10 years ago and the galactic shift it has caused in our lives over that period. Having just read his biography I was struck by how much of a pot smoking, persistent, charming jerk he was. Those around him used a term that came from Star Trek to describe him – they said he had a Reality Distortion Field (RDF). In Star Trek, the menagerie episode, the aliens created their own new world through mental force. In Job’s case he used it to distort peoples sense of proportion and scale of difficulty and make them believe that the task at hand was possible. He would also use RDF to appropriate other’s ideas and repurpose it as his own weeks later.

Now Apple is on to the iPhone 8 and driver-less cars. Projections are 54 million on the road by 2035. While countless companies are trying to prove that cars can drive themselves, I am more interested in what we’ll actually do while the car is driving us around. Self-driving cars will allow you to eat, talk on the phone and do your make up (or shave). Actually, people do that now so why wouldn’t we want help. Geez, I still remember my dad telling me a car radio was a distraction.

For those of you who like more number and details you should really enjoy the UCLA Anderson school/Allen Matkins, California Commercial Real Estate Survey and IndexThe Turn of the Cycle. For those who want a simple graphic of where we stand you need to go no further than the San Diego Housing Inventory and Price Index Charts below.


inventory total listings

Let me be the first to tell you that trees don’t grow to the sky and markets walk upstairs and jump out of windows.

Speaking of trees, we have a big problem in San Diego and you need to watch for it at your house and commercial properties. Insect and disease are hitting sycamores and willows throughout Southern California. I am talking about 100,000 willows in just the SD County Tijuana River Valley that have died. The shot hole borer beetle could kill could kill as many as 27 million trees in SoCal. That’s 8% of the regions trees. This starts having an effect on weather, property values, HVAC costs and wildlife. The replacement cost alone could be 36 billion. Watch for Oak Borer Beetle, Asian Citrus Psyllid, Glassy Winged Sharpshooter (oleanders), South American Palm Weevil. If you have trees – watch them, treat them and replace them if they die.

Now the “other green,” Pot. Despite Steve Jobs smoking lots of it and it becoming legal in California, owners need to take note. First, if you have a pot use on your property, it probably voids your loan and certainly makes you unable to finance or refinance one. Second, the San Diego appellate court recently affirmed a $175K judgement against a Landlord for allowing a dispensary on his property. The city attorney stated, “Landlords who rent to operators of illegal dispensaries have committed a crime and will be held accountable.”

The last words of Steve Jobs –

I have come to the pinnacle of success in business.

In the eyes of others, my life has been the symbol of success.

However, apart from work, I have little joy. Finally, my wealth is simply a fact to which I am accustomed.

At this time, lying on the hospital bed and remembering all my life, I realize that all the accolades and riches of which I was once so proud, have become insignificant with my imminent death.
In the dark, when I look at green lights, of the equipment for artificial respiration and feel the buzz of their mechanical sounds, I can feel the breath of my approaching death looming over me.
Only now do I understand that once you accumulate enough money for the rest of your life, you have to pursue objectives that are not related to wealth.
It should be something more important:
For example, stories of love, art, dreams of my childhood.
No, stop pursuing wealth, it can only make a person into a twisted being, just like me.
God has made us one way, we can feel the love in the heart of each of us, and not illusions built by fame or money, like I made in my life, I cannot take them with me.
I can only take with me the memories that were strengthened by love.
This is the true wealth that will follow you; will accompany you, he will give strength and light to go ahead.
Love can travel thousands of miles and so life has no limits. Move to where you want to go.
Strive to reach the goals you want to achieve. Everything is in your heart and in your hands.
What is the world’s most expensive bed? The hospital bed.
You, if you have money, you can hire someone to drive your car, but you cannot hire someone to take your illness that is killing you.
Material things lost can be found. But one thing you can never find when you lose: life.
Whatever stage of life where we are right now, at the end we will have to face the day when the curtain falls.
Please treasure your family love, love for your spouse, love for your friends…
Treat everyone well and stay friendly with your neighbors.
NASA space pensYou have all probably heard the story of the infamous space pen. You know that one that taxpayers spent millions on so astronauts could write upside down and in weightlessness. Meanwhile, the Russians simply handed their cosmonauts pencils. More on this later… 
I recently learned a new word while reading a book. Well actually I was listening to a book on tape. Well, actually I am listening to it on my iPhone while I run (Geez… this is like trying to explain what a broken record means…). Anyway, the new word is Rashomon Effect. It means where the same event is given contradictory interpretations by different individuals involved. This seems to be the case with politics today and our daily news stream. 
The Rashomon effect is named after a 1950’s film – who knew they had fake news even back then!
Back in the 50’s, you interpreted the news and the facts around you with a thing called common sense. Today it is more like rare sense and common stupidity. My new goal is to make America think again!
If you are tired of the news and want the facts, you will find the site; to be an amazing collection of government facts and data. If you want their amazing 2017 Summary Report, you can learn about the state of our nation in numbers; (USAFACTS Summary 2017).
If you would like some market facts, I suggest you look at the front page at our website ( for market vacancy factors and lease and sale asking price trends (note: if you want to look at different variables – cities, days on market etc… then click just beneath the chart.
Well Washington has failed to reform health care and will now move onto the tax code. With that I am always reminded that recessions are not caused by time but by policy mistakes. Well, changing the tax code is fraught with opportunity! For commercial real estate two proposals are particularly worrisome. The first is to allow immediate expensing of the full value of improvements. Seems great on the surface – no taxes for the first few years of ownership. However, it will all end in a crash when the write off period ends. Immediate expensing will create a pattern of flipping properties for the tax shelter (sure brokers will be happy to collect more commissions on more turns). This is how bubbles happen and like Jack and Jill, how things come tumbling down.
The second proposal would be the elimination of the 1031 exchange. Although this idea has been floated many times before we need to remain vigilant because this is the kind of simple policy change that could negatively ripple through the whole economy.
Please know that we are here to help you sharpen your pencil to maximize your returns, fill your space needs and help you understand the facts. None other than Katie Couric recently said, “We need to be less judgmental and we need to listen,” Couric says. “It doesn’t mean you shouldn’t adhere to principles or fight for what you believe in. But you also need to acknowledge that people have different experiences and are coming from a different place.” And until Americans can agree upon some shared sense of reality, they will continue to be manipulated by distributors of fake news.
Hope you enjoy the Rashomon effect and the rest of the story…
Space Pens…the real story – care of Scientific America
During the height of the space race in the 1960s, legend has it, NASA scientists realized that pens could not function in space. They needed to figure out another way for the astronauts to write things down. So they spent years and millions of taxpayer dollars to develop a pen that could put ink to paper without gravity. But their crafty Soviet counterparts, so the story goes, simply handed their cosmonauts pencils.
This tale with its message of simplicity and thrift – not to mention a failure of common sense in a bureaucracy – floats around the Internet, hopping from in-box to in-box, and even surface during a 2002 episode of the West Wing. But, alas, it is just a myth.
Originally, NASA astronauts, like the Soviet cosmonauts, used pencils, according to NSAS historians. In fact, NASA ordered 34 mechanical pencils from Houston’s Tycam Engineering Manufacturing, Inc., in 1965. They paid $4,382.50 or $128.89 per pencil. When these prices became public, there was an outcry and NASA scrambled to find something for the astronauts to use.
Pencils may not have been the best choice anyway. The tips flaked and broke off, drifting in microgravity where they could potentially harm an astronaut or equipment. And pencils are flammable – a quality NASA wanted to avoid in onboard objects after the Apollo 1 fire.
Paul C. Fisher and his company, the Fisher Pen Company, reportedly invested $1 million to create what is now commonly known as the space pen. None of this investment money came from NASA’s coffers – the agency only become involved after the pen was dreamed into existence. In 1965 Fisher patented a pen that could write upside-down, in frigid or roasting conditions (down to minus 50 degrees Fahrenheit or up to 400 degrees F), and even underwater or in other liquids.
That same year, Fisher offered the AG-7 “Anti-Gravity” Space Pen to NASA. Because of the earlier mechanical pencil fiasco, NASA was hesitant. But, after testing the space pen intensively, the agency decided to use it on space flights beginning in 1967.
The cartridge is pressurized with nitrogen at 5 pounds per square inch. This pressure pushes the ink toward the tungsten carbide ball at the pen’s tip.
The ink, too, differs from that of other pens. Fisher used ink that stays a gel-like solid until the movement of the ballpoint turns it into a fluid. The pressurized nitrogen also prevents ir from mixing with the ink so it cannot evaporate or oxidize.
According to an Associate Press report from February 1968, NASA, ordered 400 of Fisher’s anti-gravity ballpoint pens for the Apollo program. A year later, the Soviet Union ordered 100 pens and 1,000 ink cartridges to use on their Soyuz Space missions, said the United Press International. The AP later noted that both NASA and the Soviet space agency received the same 40 percent discount for buying their pens in bulk. The both paid $2.39 per pen instead of $3.98.
The space pens’ mark on the Apollo program was not limited to facilitating writing in microgravity. According to the Fisher Space Pen Company, the Apollo 11astronauts also used the pen to fix a broken arming switch, enabling their return to Earth.

Since the late 1960s American astronauts and Russian cosmonauts have used Fisher’s pens. In fact, Fisher has created a whole line of space pens. A newer pen, called the Shuttle Pen, was used on NASA’s space shuttles and on the Russian space station, Mir. Of course, you don’t have to go to space to get your hands on a space and earthbound folks can own one for the low, low price of $50.00.


It seems that Jeff Bezos has experienced the same problem as many Amazon customers with having Echo ordering inappropriately:

Scene: Amazon’s Jeff Bezos’ trendy home earlier this month. He’s talking to his Echo.
Bezos: “Find me something to buy at Whole Foods.”
Echo: “Okay, buying Whole Foods.”

Bezos: “Oops.”

Amazon is killing a lot of businesses. In the process, it may also be killing inflation – they are squeezing prices of everything through their automation and efficiencies. Both factors that are bound to hurt commercial real estate. Although all of the focus this month has been on the Whole Foods purchase (never mind that Whole Foods has less than 3% of the grocery market), I think the breaking news was the roll out of Amazon Prime Wardrobe. Here the online retailer attacks the biggest problems of buying clothes; (1) the time it takes to shop, (2) the hassle of finding the right size, (3) returning stuff you don’t want (comes with pre-labeled return but you get a discount if you keep it all).
As we enter the second half of the year, I would like to take an assessment of where we stand and share some interesting data that I am seeing. First, I will tell you that we continue to be busy and are not experiencing any slowdown. Interest rate bumps have not affected most of our day to day investor/buyers. However, the think tanks and big data are pointing to a “slow-motion slow-down.” Low unemployment is generally good for commercial real estate (more workers – more space).
However, too low makes it tough to expand without a pool of workers. Slowing job growth may be the catalyst for the slowdown. E-commerce will continue to bring retail to its knees. Interest rates will continue to tick up which will put upward pressure on cap rates (and lower prices). With cap rates at record lows (I saw a 3.5% cap on a property in NYC!) it is hard to believe that there is much room for commercial real estate prices to run.
A couple of charts below help to illustrate my concerns.
commercial property price index
total deal volume by sector


consumer board consumer confidence index

If you really like charts, numbers and big data then you will really enjoy the Cycle Monitor by Dividend Capital Research and Glenn Mueller, PHD.

While recessions are inevitable, it will not be anywhere near the disaster of 2008 (and we probably won’t start seeing the “slow-motion, slow-down” until 2018). Rather we will more likely see a prolonged flat period. The recession of 2007-2009 was the closest thing to the great depression. My guess is the next recession will be more modest. Commercial real estate has nowhere near the excesses that were built up in the mid 2000’s. In the meantime, low unemployment, low cap rates, low vacancy rates, head down, work hard and enjoy the ride. Hope you enjoy the story…
Jeff Bezo’s Email to Employees on Amazon’s Purchase of Whole Foods
by Ryan Garcia
Today is a significant milestone in the evolution of the Amazon brand. Our offer to purchase Whole Foods will finally consolidate the largest online and off-line retailers where consumers end up spending way more than they intended. I actually didn’t even mean to buy Whole Foods but after downing a few too many boilermakers at the Echo mixer last night, I accidentally clicked BUY IT NOW instead of just putting the grocery chain in my cart for future consideration.
Oh well, you know what they say-you can’t log off Amazon without spending $13.7 billion. So true!
Further details about the merger will be forthcoming, but I wanted to call out a few major points before we have to go silent and get this approved by regulators.
  • Our corporate cultures or perfectly aligned. The New York Times revealed that every Amazon employee has cried at their desk, and I personally made a Whole Foods employee cry when they couldn’t correctly identify their process for ensuring single-source coffee beans throughout the roasting process. It was an uncomfortable 38 minutes for both of us, but I think an experience so many of you can relate to.
  • Improved Echo functionality. Whole Foods has maintained a laser-like focus on organic foods and sustainable facilities and I’m excited to bring that same vision to Echo. Starting next week, when customers ask their Echo to order non-organic food products that receive a 12-minute lecture on the benefits of organic and local source products while our top-notch product matching software will send them the closest available organic item. Users on our website will find the “Customers Also Bought…” section replacing unhealthy items with notes such as, “Cookies That Went Straight to Their Thighs” and “Beef Produced By Clearcutting Rain Forest.” Needless to say, those products will not be available for purchase.
  • Drone changes. All Amazon drone teams will immediately switch to bio-fuels rather than battery packs.
  • Senior leadership. Once the acquisition is complete, John Mackey will take a new position as financial analyst and social media community outreach for the Washington Post. Synergy!
  • Location changes. Since Whole Foods is headquartered in Austin, Texas, I’ve asked EM to build the first hyperloop route between our offices here in Seattle and the Blue Bubble of Texas. All Amazon/Whole Foods employees Will office in Austin for the one week of good weather they have in late February, and in Seattle for the one week of sunshine we have an August (or May… or October… or whenever). The remaining 50 weeks of the year are up to you. Because I believe all Amazon employees should be free to cry at their desk no matter where that desk is located.
  • Product expansions. Amazon will soon carry all of the 365-branded products Whole Foods has developed in all Whole Foods stores we’ll be adding aisles for garden equipment, household electronics, sportswear, handbags, pet supplies, golf clubs, video games, plumbing supplies, luggage, headphones, and climbing gear. To start.
  • Cruelty free. We will be adopting Whole Foods policy of only purchasing products that are certified cruelty free. Please note this does not apply to any software we developed ourselves.
I am beyond excited by the possibilities of this merger moving forward and I hope the team feels the same. The combination of our two companies will account for over 85% of all hipster purchases in the United States. I’m looking forward to capturing the remaining 15%.
Now, I need your daily status updates and you aren’t excused for being late for reading this.

According to her biography, Barbara Millicent Roberts grew up in the mythical town of Willows, Wisconsin. For a period of time she attended Willows High School but later moved on to Manhattan International High School in New York City. Over the years, she has had more than 40 pets including cats, dogs, various horses, a zebra, a lion cub, and a panda. She has held dozens of professional positions including doctor, pilot, astronaut, veterinarian, and flight attendant. Her taste in cars is legendary. Her favorite color is bright pink. That color has become known as Barbie Pink. On March 9th, the folks at Mattel celebrated Barbara Millicent “Barbie” Roberts’ 58th birthday. No matter what you think about this cultural icon, you have to admit that she’s looking good for her age.

The ubiquitous Barbie doll made its debut on March 9, 1959, at a toy fair in New York City. She was an instant hit. About 350,000 dolls were sold in the first year of production. Since then, it is estimated that more than a billion Barbies have been sold worldwide.

Negotiating the emotional minefield between whims and dreams is a difficult task for any parent (or consumer for that matter). The marketing machines of companies flash shiny objects in our eyes forcing us to make tough decisions, ones that don’t always leave us happy, satisfied or popular.

I once read that in a grocery store there are over 100 salad dressing choices. With so many to choose from we are never able to be satisfied since we can’t try all of them. Whereas with only 3 or 4 choices we can be sure of our favorite. Could this be the root of IN-N-OUT Burgers grand success?

I remember a bumper sticker that used to say “I want to be like Barbie…that bitch has everything.” Well before you become rich you must decide whether you want to be secure, comfortable, or rich. These are called core values, or the reasons you want to invest.

The first reason most people invest is because they want to feel more secure That’s why Social Security or a retirement plan is very popular with people whose core value is the need for security. Security is a very important aspect of investing. You don’t want to be a destitute out on the streets with nobody taking care of you.

Unfortunately, many people who are counting on government or their employer to provide for their retirement will be sorely disappointed. A person who invests to be secure or values security will always say, “Well, I have to have a roof over my head and I need to put food on my table.” Their whole orientation is security or survival.

The next level above security is to be comfortable. They say, “I just want…” They want the house, the second vacation house, or the extra car. They want to take a cruise every now and then. Their highest priority is the need to be comfortable.

The third core value that motivates people is wanting to be rich. Most people dream of becoming rich but if the dream of becoming rich disturbs any of the lower core value of security or comfort, they’ll forsake being rich.

They’ll dream of being rich but if it means giving up a safe, secure job, then being rich remains a dream. If it’s just too much trouble to become rich and they’re comfortable at the moment, then they won’t pursue becoming rich. Those are the three core emotional reasons why certain people chose certain investment paths. Money is just an idea. It’s a formulation of the mental, emotional, and spiritual ideas inside of you that determine what you ultimately become. In the end, you need to fight for the future you want.

Today Big Data is to commerce what oil was in the past. Data helps retailers interpret what consumers will buy and when and for how much. The data comes from everywhere. Indoor tracking systems like Bluetooth beacons or Philips lighting or facial recognition. From web browsing and app use. From transaction data aggregated by Visa and MasterCard. Even from Uber, who knows that riders spent 2 billion directly after getting out of an Uber. How about the father who got a call congratulating him on becoming a grandfather before his daughter told him she was pregnant – all courtesy of Big Data and browsing history!

In 1890, Samuel Warren wrote a paper called, “The Right to Privacy” and in it he cited “recent inventions and business methods” – including instant photography and tabloid gossip – “have invaded the sacred precincts of private domestic life.” In the paper, they called for the “right to be left alone” and what they called, “the right to one’s personality.”

Although technology may be making our lives more public than we want, loneliness seems to be an epidemic. The number of Americans who say they have no close friends has nearly tripled in the last decade. While technology offers us an easy way to keep in contact with friends and meet new people, technology encourages shallow conversations that can distract us from meaningful, real life interactions. Smartphones have transformed grocery lines from a chance for small talk with neighbors to an exercise in email checking. Starbucks has sealed the fate of the coffee shop as nothing more than a place of mutual isolation.

So what does this have to do with commercial real estate? Shopping centers? Office buildings? Well let me tell you. Successful real estate in the future is social real estate. Location, location, location brings new meaning in a social setting. The best location is where people will want to live, work and play. Shopping centers will be social centers.

Although you may buy your Barbie dolls now on Amazon, most of you still go to the grocery store to buy your groceries. The grocery store has been largely immune to the ravages of online shopping. But a war is coming. Beside the current intense competition of Vons, Ralphs, Wal-Mart, Target and Costco, you have the growth of niche players like Trader Joe’s, Whole Foods, and Sprouts. Soon you will see the growth of ALDI, LIDL and Grocery Outlet. Not to be outdone, Amazon is stepping up its grocery delivery business and is now rolling out stores that will just deduct your purchase from your credit card as your walk out the door – no cashier needed. To make things harder, struggling brick and mortar retailers such as dollar stores and pharmacies have increased their inventory of grocery items (can you image Amazon buying Rite-Aid or CVS? Amazon delivering your drugs and an Amazon store on every corner.)

Like the grocery business, our activity has increased but business has gotten harder to close. Although we are working hard to get rich we are trying to be happy being satisfied. We have ventured into the Big Data market and done a Barbie analysis of the San Diego market (I apologize ahead if you or your neighborhood is insulted).

San Diego Barbie from KGB Bob and Coe Show

La Costa Barbie – this princess Barbie is only sold at the brand new La Costa Forum. She comes with an assortment of Kate Spade handbags, a Lexus SUV, a long-haired dog named Honey, and a cookie-cutter house. Available with or without tummy tuck and face lift. Workaholic Ken sold only in conjunction with “augmented” version.

Rancho Bernardo Barbie – this modern-day homemaker Barbie is available with Ford Windstar minivan and matching gym outfit. She gets lost easily and has no full-time occupation or secondary education. Traffic-jamming cell phone included, headset sold separately.

Escondido Barbie – this recently paroled tattooed and nose pierced Barbie comes with a 9mm handgun, a desert/river ready lifted Chevy truck with dark tinted windows, and a methlab kit. This model is only available after dark and can only be paid for in cash, preferable in small, untraceable bills. Unless you are a cop, then we don’t know what you’re talking about.

Del Mar Barbie – this yuppie Barbie comes with your choice of BMW convertible or Hummer H2. Included are her own Starbucks cup, credit card, and a country club membership. Also available for this set are Shallow Ken and Private School Skipper. You won’t be able to afford any of them.

Santee Barbie – this pale model comes dressed in her own Wrangler Jeans, two sizes too small, a NASCAR shirt, and Tweety Bird tattoo on her shoulder. She has a six-pack of Coors Light and a Hank Williams, Jr CD set. She can spit over 5 feet and kick mullet-haired Ken’s ass when she is drunk. Purchase her pickup truck separately and get a confederate flag bumper sticker absolutely free.

La Jolla Barbie – this collagen injected, rhinoplastic Barbie wears a leopard-print bikini outfit and drinks cosmopolitans while entertaining friends at the beach house. Percocet prescription available.

Lakeside Barbie – this tobacco-chewing, brassy-haired Barbie has a pair of her own high-heeled sandals with one broken heel from the time she chased Beer-Gut Ken out of Lemon Grove Barbie’s house. Her ensemble includes low-rise acid-washed jeans, fake fingernails, and a see-through halter top. Also available with a mobile home.

Leucadia Barbie – this doll is made of actual tofu. She has long, straight, brown hair, archless feet, hairy armpits, no makeup, and Birkenstocks with white socks. She smokes good sinsemilla buds and prefers that you call her “Willow.” She does not want or need a Ken doll, but if you purchase two Leucadia Barbies and the optional Volvo wagon, you get a coupon for a free wheat-grass smoothie at any Whole Foods Market.

National City Barbie – this Barbie now comes with a stroller and infant doll. Optional accessories include a GED and bus and trolley pass. Gangsta Ken and his ’79 Caddy were available, but are now very difficult to find since the addition of the infant.

Chula Vista Barbie – this Spanish-speaking-only Barbie comes with a 1984 Toyota with expired temporary plates and three baby Barbies in the back seat, but no car seats. The optional Ken doll comes with a pickup truck loaded 10-feet high with mattresses. Green cards are not available for Chula Vista Barbie or Ken.

Hillcrest Barbie/Ken – this versatile doll can be easily converted from Barbie to Ken by simply adding or subtracting the multiple “snap-on” parts. Bonus: free rainbow flag with proof of purchase sticker.


1 2 3 4 5 6 7 18
Vacancy Rate


RSS San Diego Business Journal

Search our Website

Copyright 2013 CDC Commercial, Inc. | Lic. #01857155
Translate »