July 1, 2008
Re: Monthly Letter
Dear Clients:
Happy 4th of July. I hope you are one of those consumers of the 150 million hot dogs that will be eaten over this weekend.
Having just come off a 10 day vacation, I have to say I don’t have a lot to report, but I certainly have a lot to get caught up on!
After having traveled both inside and outside of the country, I do think Sam Zell (real estate tycoon & billionaire) has it right not only when he says that “real estate markets are slowly recovering” but also when he speaks about International investors. “After they get through bashing George Bush, the very next question is, “Where’s my Visa?”. There is not another environment in the world that matches the US in terms of opportunity, creativity, acceptance of change, acceptance of failure”.
UCLA, Anderson Forecast reports that despite housing price drops, foreclosures will taper by early 2009. However, the office market is expected to add 2.4 million square feet with as much as 3.2 million proposed. Unfortunately San Diego is only expected to absorb 1 million square feet a year in the foreseeable future.
Grocery store sales have dropped 20% over the last 12 months. However, sales should strengthen in a slower economy and higher prices as consumers prepare more meals at home. McDonald’s is jumping on the coffee bandwagon by adding coffee bars in all of its restaurants.
On the investment side transaction volumes have dropped but pricing remained relatively stable, with about a 3 – 5 % price reduction. Where things go from here will be dependent on credit markets over the next few quarters.
I believe Fed Chairman Berninke’s strategy continues to be to cause enough confusion and regulation to cause markets to slow down, yet not require him to do as much with rates. This is why we face low rates with big spreads and stricter underwriting.
As I said in last month’s letter, tough markets make tough agents and we are finding our skills in great demand. As Floyd Whickman puts it, adversity can be an anchor or a rocket booster, depending on your attitude and your actions.
No matter where you stand on the Presidential election you have to appreciate the attached Pledge of Allegiance by Senator and former POW John McCain. Happy 4th!
Regards,
Don
CDC Commercial
Real Estate Services
“The Pledge of Allegiance” – by Senator John McCain
As you may know, I spent five and one half years as a prisoner of war during the Vietnam War. In the early years of our imprisonment, the NVA kept us in solitary confinement or two or three to a cell. In 1971 the NVA moved us from these conditions of isolation into large rooms with as many as 30 to 40 men to a room.
This was, as you can imagine, a wonderful change and was a direct result of the efforts of millions of Americans on behalf of a few hundred POWs 10,000 miles from home.
One of the men who moved into my room was a young man named Mike Christian.
Mike came from a small town near Selma, Alabama He didn’t wear a pair of shoes until he was 13 years old. At 17, he enlisted in the US Navy. He later earned a commission by going to Officer Training School Then he became a Naval Flight Officer and was shot down and captured in 1967. Mike had a keen and deep appreciation of the opportunities this country and our military provide for people who want to work and want to succeed.
As part of the change in treatment, the Vietnamese allowed some prisoners to receive packages from home. In some of these packages were handkerchiefs, scarves and other items of clothing.
Mike got himself a bamboo needle. Over a period of a couple of months, he created an American flag and sewed it on the inside of his shirt.
Every afternoon, before we had a bowl of soup, we would hang Mike’s shirt on the wall of the cell and say the Pledge of Allegiance.
I know the Pledge of Allegiance may not seem the most important part of our day now, but I can assure you that in that stark cell it was indeed the most important and meaningful event.
One day the Vietnamese searched our cell, as they did periodically, and discovered Mike’s shirt with the flag sewn inside, and removed it.
That evening they returned, opened the door of the cell, and for the benefit of all of us, beat Mike Christian severely for the next couple of hours, and then they opened the door of the cell and threw him in. We cleaned him up as well as we could.
The cell in which we lived had a concrete slab in the middle on which we slept, four naked light bulbs hung in each corner of the room.
As I said, we tried to clean up Mike as well as we could. After the excitement died down, I looked in the corner of the room, and sitting there beneath that dim light bulb with a piece of red cloth, another shirt and his bamboo needle, was my friend, Mike Christian. He was sitting there with his eyes almost shut from the beating he had received, making another American flag. He was not making the flag because it made Mike Christian feel better. He was making that flag because he knew how important it was to us to be able to Pledge our allegiance to our flag and country.
So the next time you say the Pledge of Allegiance, you must never forget the sacrifice and courage that thousands of Americans have made to build our nation and promote freedom around the world.
You must remember our duty, our honor, and our country
“I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.”
