CDC Commercial Inc

September 2014 Monthly Letter

 “There are those in life that make it happen. There are those that let it happen. and there are those that wonder – what the hell happened!”

As school goes back into session, I am reminded that our economy is like high school – you survive it. Last week Fed Chairman Yellen said what I have been saying for months, unemployment rates don’t accurately reflect the underlying weakness that still exists in the economy. I recently read that we have the same number of jobs now as back in 2007. However, we have 10.7 million more people – so we are still 10 mil jobs short of 2007.

There has been a lot in the press lately about inversions . This is simply moving a companies’ country of operation from the USA to a different lower corporate tax based location. This may all be well and good until the jobs follow. Keep in mind that real estate appreciation is a very simple game based upon more people moving into an area than moving out. We have our own inversion problem in California with companies choosing Texas, Nevada and Arizona to relocate. Even in San Diego we are finding companies looking to move to North County to escape the city’s new linkage fees and the new mandatory minimum wage increase. In the meantime, Microsoft announced a layoff of 18,000 and the likelihood of 12,000 jobs from San Diego’s Nokia facility. If you ever wondered what the impact of a layoff really is think about this; Economists say for every hard job (engineer, scientist, etc.) it creates 7 additional jobs (accountant, lawyer, doctor, waiter). So 12,000 laid off equals 84,000 jobs. If those people were to all move and you used the ratio of 18 sf of retail needed per person then we would lose the need of 1.5 mil sf of shopping space (or the size of North County Fair)! And this is all before the threat of the internet to struggling retailers. Speaking of which, Amazon announced a 34% increase in sales while at the same time brick and mortar stores had minimal sales increases.

Speaking of making it happen, the team at CDC has been busy. I find it that our inbound call volume has dropped significantly in the last two months, yet we are working on as many if not more deals than ever. It is the makeup of the deals that is unusual. We are not seeing the traditional “new business formation” that we would ordinarily see at this stage. Instead we are seeing existing businesses struggling with doing more with less. More restaurant tenants but taking smaller spaces (3000 sf instead of 8000 sf). Non-profits and churches growing and reaching out into the community with grant money. I am finding our problem solving skills, creativity and know how are being used to the max as we help lease, reposition, buy and sell properties for our clients.

But in the end there is no substitute for hard work and detailed diligence. At CDC, we believe a little optimism, some adaptability and perseverance combined with a little luck equals success. It doesn’t hurt that we love what we do – some might consider that an unfair advantage!

Hope you enjoy the story…



The following is an actual question given on a University of Washington chemistry midterm. The answer by one student was “so profound” that the professor shared it with colleagues, via the Internet, which is, of course, why we now have the pleasure of enjoying it as well.

Bonus Question: Is Hell exothermic (gives off heat) or endothermic (absorbs heat)?

Most of the students wrote proofs of their beliefs using Boyle’s Law (gas cools off when it expands and heats up when it is compressed) or some variant.

One student, however, wrote the following:

First, we need to know how the mass of Hell is changing in time. So we need to know the rate that souls are moving into Hell and the rate they are leaving. I think that we can safely assume that once a soul gets to Hell, it will not leave. Therefore, no souls are leaving. As for how many souls are entering Hell, let’s look at the different religions that exist in the world today. Some of these religions state that if you are not a member of their religion, you will go to Hell. Since there are more than one of these religions and since people do not belong to more than one religion, we can project that all souls go to Hell. With birth and death rates as they are, we can expect the number of souls in Hell to increase exponentially. Now, we look at the rate of change of the volume in Hell because Boyle’s Law states that in order for the temperature and pressure in Hell to stay the same, the volume of Hell has to expand proportionately as souls are added. This gives two possibilities:

  1. If Hell is expanding at a slower rate than the rate at which souls enter Hell, then the temperature and pressure in Hell will increase until all Hell breaks loose.
  2. If Hell is expanding at a rate faster than the increase of souls in Hell, then the temperature and pressure will drop until Hell freezes over.

So which is it? If we accept the postulate given to me by Teresa during my Freshman year, “…that it will be a cold day in Hell before I sleep with you,” and take into account the fact that I still have not succeeded in having sexual relations with that woman, then #2 cannot be true, and thus I am sure that Hell is exothermic and will not freeze.

The student received the only “A” given.

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