As we approach Halloween and the political season moves into full swing, I have determined that Halloween is a holiday created by politicians because they want to teach children to knock on other people’s doors and ask for a handout! Despite my opinion, the average household plans to spend $125 this year on candy, costumes and other Halloween related items. The fact that consumers are willing to spend more on discretionary purchases is a positive sign for the upcoming holiday shopping season.
The real estate and leasing industry was responsible for roughly one quarter of California’s approximately 4% output growth in the 2nd quarter of 2014. Business expansion ultimately leads to increased demand for commercial space. Employment continues, however, to be a mixed picture. San Diego jobless rate is 6.1% but that is up from 5.8% the previous month. Bottom line is that job growth is not keeping up with population growth. The other problem we face is the skills gap. The San Diego Workforce Partnership just released a study showing the current imbalance of demand vs. supply for workers in advanced manufacturing (machinists, software and aerospace engineers) is over 800 jobs (that is 800 great jobs going unfilled!). As I mentioned last month, these are hard jobs that create 7 other supporting jobs (retail, real estate, accounting, etc.). Many of these jobs are in the defense industry. Military and support activities represent 20% of the region’s GRP, making it San Diego’s most important economic driver.
Tourism is another shining star with visitor traffic up 4%. Spending by tourists is up 10% indicating a more positive national economy. Tourism supports 20% of the county’s jobs but as I have mentioned before, these are service jobs often paying poverty wages.
Poverty maintains a tight grip on San Diego County with a 15.2% of the population below the poverty line (Escondido 19.69%, Vista 15.8% and Oceanside 16.7%). Forty-one percent of those falling below the line are employed full or part time.
I am pleased to announce that last month we closed escrow on a 10,000 SF office building that was only partially rehabilitated. We have sold the building to Interfaith Community Services (ICS) who will be spending close to $1.5 mil to finish the rehabilition and convert the building to a veteran recuperative care center for veterans who otherwise would be homeless. I encourage you to contact me or Greg Anglea the CEO of ICS (ganglea@interfaithservices.org) if you can help with money or in-kind services.
So my take on the market is that we continue to teeter forward and mostly upward. The biggest issue is the lack of new business formation. This month I have included a couple of charts showing the amount of new space added to market (none), absorption-space leased, and vacancy for the I-15 market for office and retail. As you can see retail had an uptick and office a downtick.
As we keep our heads down filling vacancy, selling buildings, and helping to create more jobs, I hope you enjoy Halloween, some baseball and football this month with some potato chips and friends.
I hope you enjoy the story!
Potato Chips
A little boy wanted to meet God. He knew it was a long trip to where God lived, so he packed his suitcase with a bag of potato chips and a six-pack of root beer and started his journey.
When he had gone about three blocks, he met an old man. He was sitting in the park, just staring at some pigeons. The boy sat down next to him and opened is suitcase. He was about to take a drink from his root beer when he noticed that the old man looked hungry, so he offered him some chips. He gratefully accepted it and smiled at him.
His smile was so pretty that the boy wanted to see it again, so he offered him a root beer. Again, he smiled at him. The boy was delighted! They sat there all afternoon eating and smiling, but they never said a word.
As twilight approached, the boy realized how tired he was and he got up to leave; but before he had gone more than a few steps, he turned around, ran back to the old man, and gave him a hug. He gave him his biggest smile ever.
When the boy opened the door to his own house a short time later, his mother was surprised by the look of joy on his face. She asked him, “What did you do today that made you so happy?” He replied, “I had lunch with God.” But before his mother could respond, he added, “You know what?” He’s got the most beautiful smile I’ve ever seen!”
Meanwhile, the old man, also radiant with joy, returned to his home. His son was stunned by the look of peace on his face and he asked, “Dad, what did you do today that made you so happy?”
He replied “I ate potato chips in the park with God.” However, before his son responded, he added, “You know, he’s much younger that I expected.”
Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn life around. People come into our lives for a reason, a season, or a lifetime! Thanks for being in our lives.
Have lunch with God……bring chips!
