“Everyone has their own experience. That’s why we are here, to go through our experience, to learn, to go down those paths and eventually you may have gone down so many paths and learned so much that you don’t have to come back again.”
-The Artist formerly known as Prince
Myself, I have always found that experience is that thing I get about a minute after I needed it!
Retail real estate experts continue to insist that e-commerce is more of an opportunity than a threat to brick-and-mortar retailing, bolstering marketing outreach and customer engagement. On the surface it may seem that retailers’ fear of e-commerce competition has passed. For example, Simon Property Group (the country’s top retail center owner) recently released a report arguing that “mall shopping has a smaller environmental impact compared to online shopping” and cited the following statistics:
- Online shopping has an environmental impact that is 7 percent greater than mall shopping if shoppers bought the same number of products at a mall as they did in an online store;
- Thirty-three percent of online purchases are returned versus 7 percent of brick-and-mortar purchases;
- Physical retail generates five times more jobs than online shopping for the same value of sales.
So why have so many physical retailers been closing up shop? Retailers are pouring “high investments” into e-commerce, determining their physical stores are too big to sustain, according to Howard Davidowitz, chairman of Davidowitz & Associates, Inc., a national retail consulting and investment banking firm headquartered in New York.
“E-commerce is growing 12-13 percent per year, physical stores 2-3 percent per year, meaning there are less available dollars for physical retailers. That’s why we have store closures,” says Neil Stern, senior partner at retail consulting firm McMillian Doolittle.
Another area that we need to see hard work and creativity is from government (although unlikely in an election year). Monetary policy (The Fed & interest rates) are only able to do so much. We need our politicians (leaders?) to take leadership, be creative and provide for strong fiscal policy (taxes and regulation). Sam Zell was speaking at an economic round table recently where he said his greatest concern is that “this is the first recession since World War II where there’s more debt in existence since before the recession. So instead of marking to market, as the world has always done to recover from difficult periods, we’re not marking to market at all. We’re just rolling up more debt.” While the private sector is in better shape debt-wise than sovereign states, the latter “are all broke,” he said. “I’m not so sure I can remain optimistic about the private sector.”
While on the subject of politicians, fiscal policy and taxes, I thought you would find this Presidential Candidate tax calculator to be quite interesting to see what you might pay under various candidates.
In San Diego, office vacancy rates have dropped almost a half a percentage point to just over 12% in the first quarter. Average asking rents have increased by over 4%. Unemployment has dropped to 4.7% (down from 5.4% a year ago). Healthcare, tourism, defense and biotech lead the way for countywide growth.
Lest I sound too optimistic, but not to be a canary in the coalmine, there are some caution signs on the horizon; cranes on the horizon to be specific – though they mark new construction they also tend to come near the end of the cycle in S.D., election-year – notoriously not good years for our economy, tenant space demand is declining – even though we have positive absorption, doctors and general contractors are buying property – counter cyclical, and the Miami condo market is once again over built (always seems to be a boom bust market).
Real estate isn’t risky if you don’t do risky things but debt is cheap and people are loading up on it again – countries, companies and people.
Life stagnates without challenges – bring us your challenges! We like to use our experience and creativity to help solve your problems. Hope you like the story . . .
On January 24, 1975, 17-year old Vera Brandes, then Germany’s youngest concert promoter, walked on stage at the Opera House in Cologne. This was to be the most exciting day of Vera’s life. She had convinced the American pianist Keith Jarrett to perform a one-night concert. At Jarrett’s request, Brandes had selected a Bosendorfer 290 Imperial grand piano for the performance. However, there was some confusion by the opera house staff and instead they found another Bösendorfer piano backstage – a much smaller baby grand – and, assuming it was the one requested, placed it on the stage. Unfortunately, the error was discovered too late for the correct Bösendorfer to be delivered to the venue in time for the evening’s concert. The piano they had was intended for rehearsals only and was in poor condition and required several hours of tuning and adjusting to make it playable.
The instrument was tinny and thin in the upper registers and weak in the bass register, and the pedals did not work properly. Jarrett arrived at the opera house late in the afternoon and was tired after an exhausting long drive from Zürich, Switzerland, where he had performed a few days earlier. He had not slept well in several nights and was in pain from back problems and had to wear a brace. When he found the wrong piano in place, Jarrett walked out of the concert hall. He went outside to sit in his car. Vera called and called to try and get the correct piano but it was too late. She went outside and stood in the rain and begged Keith Jarrett not to cancel the concert. Jarrett looked outside his car and saw this rain soaked bedraggled teenager and took pity and said, “Never forget – only for you”. So several hours later, he sat at the unplayable piano and the concert began. Within minutes it became clear that something magical was happening. Jarrett was avoiding the upper registers. He was sticking to the middle of the keyboard.
Consequently, Jarrett often used ostinatos and rolling left-hand rhythmic figures during his performance to give the effect of stronger bass notes. He stood up to pound on the keys so as to get enough volume out of the undersized piano to reach the patrons in the back row. ECM Records producer Manfred Eicher said: “Probably [Jarrett] played it the way he did because it was not a good piano. Because he could not fall in love with the sound of it, he found another way to get the most out of it. The audience loved it! Audiences continued to love it because the Cologne piano concert by Keith Jarrett is the best-selling solo album in jazz history, and the all-time best-selling piano album, with sales of more than 3.5 million.
Jarrett had been handed a mess and maybe not at first, but eventually, he embraced it and soared. Sometimes we all need to remember how our frustrations can be turned around and made into our most creative moments. Despite the obstacles, Jarrett’s performance was enthusiastically received by the audience and the subsequent recording was acclaimed by critics. It remains his most popular recording and continues to sell well, decades after its initial release. The album was included in Robert Dimery’s 1001 Albums You Must Hear Before You Die.
