Blog Archive

Monthly Letter

“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 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,

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,

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,

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,

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,

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,

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, 

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!!


sea monkeys adWhen I was a kid, I eagerly awaited my monthly issue of Boy’s Life Magazine. I would devour the stories and projects and adventures of others. Then I would read the ads in the back. I would beg my parents to buy me the pet sea monkeys. I had visions of little friendly sea horses or mermaids that I could play with. My parents would explain that there was no such thing as sea monkeys, and it was a rip-off. But I would not relent (I was a good salesman even then). Finally, my parents ordered them. When they arrived, we followed the directions and low and behold we had purchased a pack of tiny (more like microscopic) brine shrimp. You can imagine my disappointment! I have to say this is one of the great lessons my parents taught me. Since then I pay very little attention to advertising and try to be a good critical thinker. So, lesson be had…do not buy the sea monkeys!

We’ve all heard that we only use about 10% of our brains. In fact, we use 100% of our brain and the problem is that we face overload quickly, so where we focus our attention is key – goals, to-do lists, financial plan, etc.… Every day, a sea of decisions stretches before us. Some are small and unimportant, but others have a larger impact on our lives! We don’t always make the right decisions but if we apply sound critical thinking skills, we can sift through the sea of data and achieve our goals. Fewer sea monkeys and better real estate deals. Here is a five-step process that might help you.

  1. Formulate your question. In other words, know what you are looking for.
  2. Gather your information. There is plenty of data out there. The better you refine #1 above the easier this becomes.
  3. Apply the information. You do this by asking questions. What concepts are working? What assumptions exist? Am I being told the truth? Don’t fall for the sea monkeys!
  4. Consider the implications. If you follow the path will you be happy? You hear owing apartments is a good plan – do you want to deal with backed-up toilets in the middle of the night? You want a fully triple-net deal – can you afford a long zero income vacancy when you have to re-tenant?
  5. Explore other points of view. Ask yourself why so many people are drawn to the policies of the opposing political candidates.

I have talked about this before, but we have a bubble in the cost of education and the giant burden of student debt (more than auto and credit cards combined!). The cost of a four-year degree has shot up 15x in the past 40 years. If car prices jumped as much as tuition, a base model Toyota Corolla would cost $90,000 today.

On the positive side, large universities like UC San Diego fuel our regional economy. UCSD has more than $5 billion in annual revenue and .2 billion in annual sponsored research. A recent Tripp Umbach report cited UCSD as contributing about $16.5 billion in annual impact in California. That’s more than the entire revenue of the State of Arizona!

In our day to day battlefield, we continue to see constant crosswinds. Deals continue to happen but not as many as we should see at this point in the economy. We have seen the first rise in mortgage defaults since the financial crisis. But just as that happens rates fell – so stay tuned. We at CDC also had a couple of firsts. We were in escrow representing a buyer and the seller decided they didn’t want to sell. Well, you can’t just do that. A buyer can sue for specific performance. In our case, a settlement was arranged, and a new property was found. In another case, we represented the seller and the Buyer had signed contracts in escrow, but no deposit arrived and no communication – crazy – but we’re back working with several new buyers. These are not the kind of “First” we like to have!

Unemployment fell again in San Diego to a 20-year low of 2.7% in September. There are still more jobs than the number of unemployed San Diegans. This is a positive sign for leasing and sales.

Investment volumes overall are trending lower this year compared to 2018. Being a critical thinker, you must realize that 2018 had a large increase in merger-and-acquisition activity which helped to supercharge last year’s numbers.

Because of the low unemployment numbers and job growth, there seems to be an insatiable demand for housing. However, the other sector that is just blossoming right now is healthcare. We have an aging population. By 2030, the population of people over the age of 65 will double and approximately 6 out of 10 boomers will be managing one or more chronic conditions.

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

Nick’s Numbers
San Marcos – Current Market Statistics:


San Marcos Retail stats


San Marcos Office stats


San Marcos Industrial stats


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,

On my recent trip to France, I had the good fortune to visit the Chateau that Leonardo da Vinci spent his later years living and tinkering. This inspired me to read Walter Isaacson’s biography on de Vinci. I was inspired by this quote and think Leonard would have done as well in our time as in his own.

“His ability to combine art, science, technology, the humanities, and imagination remains an enduring recipe for creativity. So, too, was his ease at being a bit of a misfit: illegitimate, gay, vegetarian, left-handed, easily distracted, and at times heretical. Florence flourished in the fifteenth century because it was comfortable with such people. Above all, Leonardo’s relentless curiosity and experimentation should remind us of the importance of instilling, in both ourselves and our children, not just received knowledge but a willingness to question it—to be imaginative and, like talented misfits and rebels in any era, to think different.”

As we prepare for Thanksgiving house guests and wrapping up the year and using our critical thinking skills to achieve our goals for 2020, we want to thank you for your business. I hope you enjoy the Zen Story.

Zen Houseguests

Treat your thoughts as if they were houseguests in your mind. They come and then they go. Sometimes they are fun, and sometimes you can’t wait for them to depart – but eventually, they always leave; sometimes they do make a mess of things though.

Thoughts are fleeting and have no real home in your head. Memories hang around, but thoughts are transient states that ebb and flow through your consciousness.

Sometimes we become obsessed with a thought, a worry, an expectation and it seems like we just can’t get away from this unwanted guest, but that is all it is, an unwanted thought. Realizing that your thoughts are not you and that they are just a flash that will soon fade. This takes away a lot of stress and worry.

A thought is just an electrical burst in your brain but is not part of your brain. Think of a lightbulb – apply electricity and the bulb glows bright, but the bulb is not electricity, neither is a thought you – it’s just a guest.

Watch your thoughts; they become words.

Watch your words; they become actions.

Watch your actions; they become habits.

Watch your habits; they become your character.

Watch your character; it becomes your destiny.


happy autumnWall Street is flirting with reclaiming record highs, but a rocky ride may be ahead as stock volatility has been 25% higher in October on average since 1928 according to Goldman Sachs.

The U.S. Treasury market is flashing a classic recession signal called the “inverted yield curve.” This is where short term rates (3 months to 2 years) are at a higher rate than 10 year or 30-year rates (no reward for long term risk!). There have been 12 recessions since the end of WWII and seven of them were proceeded by an inversion of the yield curve. Will this time be different? Maybe. Thanks to negative bond yields (yes, investors are paying someone to take their money!) in Germany and Japan foreign investors are buying more U.S. Treasuries which drives those rates down. In the meantime, our economy is plugging away at a 2% GDP growth rate. So, let me get this right, our economy is chugging ahead, and we have an abundance of people wanting to invest in our country – what could be wrong? However, I think it would be safe to say this has been the longest, weakest recovery in history – economic prosperity has never been so poor! (Quickly, let’s put to rest the myth that the longer the recovery goes, the greater the likelihood of a recession. Recoveries don’t stop because of length!)

My concern continues to be, not interest rates, but instead the reduction of the balance sheet (debt reduction). I think debt reduction is great, but it comes with pain just like interest rate hikes. I think the Fed raising rates and reducing the balance sheet is an unwise two-variable experiment. If you assume as Morgan Stanley does, every $200B of balance sheet reduction is equivalent to another .25% rate increase.

San Diego’s August jobless rate hit 3.4%. That is lower than the 3.6% in July and 3.5% last August. It is also lower than 4.2% for the state and 3.8% for the Nation.

The most jobs were added in government followed by business services (architects, research, etc.) and construction – a good sign for housing and infrastructure.

Speaking of service businesses and government, California Senator Robert Hertzberg is proposing to expand the sales tax to services (initially 5% now pared down to 2%). This would be levied on all business to business transactions – we’re talking accountants, lawyers, broker commissions, architectural drawings, etc. Enough already!

A couple of observations from my trip to France (yes, I finished the marathon, drank fine wine and ate amazing food!). Having a strong dollar sure made things more affordable. As many of you know it is common practice not to tip in Europe. Did you know that tipping came out of reconstruction and slavery? The railways did not want to pay the former slaves who were porters and wait staff, so they encourage tipping instead. What hit me was that without sales tax and a tip, my bill was regularly 30% less than I expected. So, despite France being “expensive”, I found the bottom line to be equal or less many times. So, are we reaching a “tipping point” in the U.S.? With restaurant owners facing $15 per hour wages plus tips in the front of the house, is there now unequal pay between the front and back of the house? Will automation replace labor? Finally, the restaurant business is facing the battle of convenience vs. experience. Do you want it on your doorstep or like “Cheers, where everyone knows your name.”

Nick’s Numbers

Hi all, to piggyback on a couple of things my Dad mentioned. There was a great article in USA TODAY by Ken Fischer about whether America’s massive debt will doom us.

Here is a link .

On the topic of restaurants, almost all the numbers are positive (rents, vacancies, etc.), but the chart below (months vacant restaurants are on market) may be a hint of the future.

months on market

Please give me a call or email me if you would like more in-depth info (like a property valuation or analysis). Nick Zech, 858.232.2100, ). ~ Nick

Well as we head into a busy October, keep your eyes open for tipping points. I don’t like to re-use stories but this one is a classic and way to apropos so forgive me…

There was this elderly man who had a profitable little business selling hot dogs on a busy street corner in a major city. He wasn’t particularly well educated, but he sold great hot dogs and his customers loved him.

During the early morning rush hour, he’d wheel his mobile hot dog stand to position it near the exit of the central railway station in town. A year ago, he’d added a bacon and egg roll to his range and sold scores of them to this breakfast crowd every day. At lunchtime, he’d move his stand to a popular park where he had lines of regulars.

In the afternoon he’d be back at the station entrance and then later most nights he knew a great spot near a nightclub where patrons rushed him off his feet. He had even installed special lighting and a flashing neon sign. Even people driving by would stop.

He’d worked hard for years arid done well enough to put his only son through university who later became a management consultant with a large firm.

One day his son warned him that a recession was on the way. The old man asked his son what this meant. Being an educated man, his son gave a very detailed explanation of how the recession would severely impact every person in the community, particularly small business people like his father. There would be enormous unemployment; people would not be able to afford to spend money as they did now. He painted a gloomy picture of the future and warned his father that it would be wise to cut back on his expenses and “tighten his belt” financially and prepare for the worst. The old man didn’t know much about the economy or interest rates, but he trusted his son. After all, he was an educated man. Recession mentality kicked in …

The old man began to cut back on the number of sausages and bread rolls he bought. He didn’t want to get caught with stale rolls as business began to drop off. But it was hard to judge and some days he ran out of sausages and rolls earlier than he normally would. So, he went home early and spent more time worrying about this recession that was coming.

Soon he knew that what his son had said was right. He noticed that his takings were indeed falling. This depressed him more and so he tended to get out of bed later each day. After all, why get to the station so early when obviously more people would be eating at home rather than spending money on breakfast in the city. He decided that his bacon and egg rolls were too expensive for most people now. After all, they were twice the price of a hot dog, so he cut them from his menu and his sales continued to plummet.

Wow, his son was right, this recession was hitting hard!

He decided to save more money and not replace the batteries that powered his neon sign and lights at night. Now because he was in the dark, fewer people bought from him and soon he decided that it wasn’t even worth his time setting up at night. Eventually, he decided to sell off his equipment and his trolley. He was in luck though because the woman who bought his trolley didn’t seem to know how bad business was, or how severe the recession was going to be. He managed to unload the trolley for more than he thought he would get. Now day after day he stayed at home, depressed, and occasionally his son would visit him and they would discuss how bad the recession was, and how lucky the old man had been to have an educated son who had warned him in advance about this terrible recession.

So what’s the moral of this story?

Recession mentality starts in one’s own head. If you believe that a recession is coming and that times will soon be tough, then they will be for you. Like the old man in the story, you’ll start to change your successful behavior patterns and replace them with less resourceful habits. You’ll sleep in later. You’ll take longer lunch breaks, make fewer phone calls, generate less e-mail, and go home earlier.

But it needn’t be that way …


my daughter gets marriedWhat a whirlwind! My daughter, who has been dating a very nice young man for the last five years, asked us to go on a family trip to Vancouver at the beginning of the month. The night we got there they surprised all of us by announcing they were getting married the next day! She had brought two wedding dresses (bought on Amazon) and had the mothers say yes to the dress that night. We went on a seven-mile hike the next day, got changed at a nearby campground, walked to the edge of a fairy tale mountain lake where a minister appeared (because they had given him a Geo pin to locate the site). It’s no longer retail that is being revolutionized by technology even the institution of marriage is changing (who gets China and Silver and Crystal anymore?). Today, 40% of couples now meet online (my daughter, of course, met her husband sky diving!).

Upon getting back from the whirlwind weekend, I promptly had a birthday and ran a duathlon the next day. For the first time I was first in my division (yes, you guessed it – I was the only one in my age group!) The field seems to be getting younger and younger – it couldn’t be me getting older!

Flummoxed – def. completely unable to understand. Utterly confused or perplexed.

Yes, that is my word for the month and completely describes my position on politics, the economy, and the real estate market. Unemployment low? Check! Interest rates low? Check! Earning up? Check! What could possibly go wrong/

I think the process we may be in the midst of is a change of cycle where Central  Banks and governments are unlikely to be able to disguise their actions, because both monetary tools and fiscal policy have been exhausted (remember the story – the King has no clothes? Somebody has to tell them they have no money!). This change of cycle may not bring a recession but instead, a Japanese style stagnation as debt continues to rise while economic and productivity growth weaken. Pay attention – liquidity if falling.

Here is what we are seeing up close and personal in the market. Are we busy? Check! Are people looking at space to lease or investments to buy? Check! Are we seeing multiple offers in some cases? Check. Are we making money? Not sure yet??? Everyone seems to want their deal done yesterday but when push comes to shove there seems to always be a reason to push things out until tomorrow. So, if we don’t close all that we have been carrying over and collecting for the last six months it could be a catastrophe. If we close most everything, we are working on it will be one of our best years.


Another flashing light – U.S. mortgage debt hit a record this month, eclipsing the 2008 peak. With the latest rate cut, just watch those ATM machines dispense money again. Despite low rates and high debt levels, housing starts fell almost 1% in June (single-family up 3.5%; multi-family down 9.2%). I don’t think the housing market will be the primary cause of our next economic collapse, but it could be part of the bursting of an everything bubble – retail apocalypse, trade war, bond bubble, the credit bubble, and student loan bubble. More than 45 million U.S. borrowers owe $1.7 trillion in student loan debt – more than auto loans and credit card debt combined!

Nick’s Numbers:

Hi all, this month I would like to share two interesting views. First a very interesting chart of the Total Market cap of all stocks to the US GDP. You really don’t want to see it over 100% and certainly not trying to breach 150%. The last time it did so was 2008. It is often called the Buffett Indicator because it is said that he uses this tool to measure the markets value.

the ratio of total market cap to us GDP

The second is the CoStar Composite Price Indices released in July. It is based upon more than 212,000 repeat sales since 1996. The CCRSI offers the broadest measure of commercial real estate repeat sales activity. Industrial led and Retail lagged but all ships were rising in this economy.

us composite indices


Please give me a call or email me if you would like more in depth info (like a property valuation or analysis). Nick Zech, 858.232.2100, ). ~ Nick

Well by the time you are reading this, I will have celebrated my 33rd wedding anniversary. My now married daughter will be massively in debt as she goes off to law school and I will be running a marathon in France (my fourth Continent in my quest to run a marathon on all seven continents). The whirlwind continues and I remain Flummoxed —or as my favorite running bumper sticker says “26.2 miles… what could possibly go wrong?” Hope you enjoy the story…

Daughter: Daddy, I am coming home to get married. Take out your checkbook. Dad, I’m in love with a boy who lives far away from me. I am in Australia and he lives in the UK. We met on a dating website, became friends on Facebook, had long chats on WhatsApp, he proposed to me on Skype and now we’ve had two months of relationship through Viber.

“Dad, I need your blessings, good wishes and a big wedding.”

Father: “Wow! Really? Then get married on Twitter, have fun on Tango, buy your kids on Amazon and pay through PayPal. And if you are fed up with your husband…sell him on eBay.


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Vacancy Rate


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