“I will teach you in a room. I will teach you now on Zoom. I will teach you in your house. I will teach you with a mouse. I will teach you here and there.
I will teach you because I care.”
The San Diego real estate market continues to feel the impact of the coronavirus. Leasing, deal flow, and rents have all cooled off. It is hard to see if there is a light at the end of the tunnel or if it’s a train bearing down on us! Social distancing, further COVID flare-ups, and schools holding virtual classes in the fall all weigh on the continued uncertainty. We all thrive under a degree of predictability. Unfortunately, COVID-19 seems to be uncertainly on steroids! Alas, if you thought you didn’t have another emotion left to share in our war-torn, battle fatigue state…there will be 117 new emojis released to the world this fall!
I ended up taking running off for July. It started because we were traveling. San Diego wasn’t hot enough or COVID enough for the 4th of July, so we went to Phoenix to look at a property. We then drove up to see our new grandbaby in Utah. When I got back, there was lots of work to catch up on plus it was hot. Then it was easy to sleep in…and have an extra glass of wine at night. Then it was easy to not get started because all my races and trips had been canceled. To add insult to injury, I stubbed and broke my toe while moving around my office to quickly. This is the essence of depression, which is defined as the inability to create a future.
I then realized, my July reflected what our Country and each of us is going through. We hit the pause button, tried to get busy but stubbed our toe and now are being stymied at every turn causing a malaise or depression.
So how do we get out of this rut and overcome fear, uncertainty, and confusion? You must develop goals. I am reminded of the advice a doctor gave to a 400lb man who appeared helpless, asking where he could start. The doctor replied he could start by attaching the TV remote to the TV and walking over to it every time he needed to change channels!
* How do you lose weight? Slowly.
* How do you establish habits? Slowly.
* How do you finish long races? Slowly.
* How do you accumulate wealth in real estate? Slowly.
* How do you overcome roadblocks? You slowly walk around them.
Goals improve your confidence. Goals require developing a plan. Goals require you to be active. Goals improve your confidence. Or as Mary Poppins once said, “Intelligence can wash away confusion (and uncertainty).”
Commercial Real Estate is all about jobs and employment. In January, national unemployment dipped to 3.6%. By April, it had jumped to 14.7%. We are now down to about 11%. As with the past recessions, the less educated have suffered the most. Those with a bachelor’s degree had an unemployment rate of 6.9% compared to 16.6% for those who didn’t finish high schools. Federal lawmakers tried to create a bridge with paycheck protection and other programs. The problem is that bridge may not be long enough or strong enough. New jobless claims in late July were at 1.4 million! Just to put that in perspective, in the Great Recession the worst week we saw was 665,000 claims.
Because I am paid to be an optimist let me also share some positive and interesting news.
- San Diego had another record quarter of venture capital funding with $1.2 billion funded and no end in sight. 93% of the funding is in the Life Sciences. Venture capital supports real estate decisions and additional jobs allowing companies to grow.
There were more homes sold through June of 2020 than thru June 2019. Imagine if there had been no COVID! - Amazon is introducing “smart carts” that will track your basket. Dash carts will allow you to avoid lines and check out.
- Wal-Mart is adding health clinics. These “clinics” will host doctors, dentists, and optometrists. Medical check-up $30, cleaning $25, or $1 per minute to talk about your anxieties.
- Uber cops – yes, in a day where we are de-funding the police, private security guards are using Uber-like networking so that the closest one can respond to your personal needs or a call because your Ring camera has detected a problem at your property.
- San Diego was ranked #19 in the nation on a list of tech-attractive regions according to a report by brokerage company CBRE.
- Last year Amazon did a 2.6 million square foot lease in Otay Mesa, but they also just completed a 530,000-SF foot warehouse in Poway for delivery in August.
Nick’s Numbers
So, a picture may be worth a thousand words but what these pictures show are Cap rates rising (values dropping), Loan delinquencies rising, and sales transactions plummeting. Call or email me to discuss your challenge or goal.
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, nzech@cdccommercial.com).
I am often asked what you pay a commercial broker for and why you should get paid to just look something up on an MLS service. Well, let me share a few:
- We know what is on the market.
- We know other brokers and can share information because we are trusted (some may say honor among thieves!).
- We know of things not on the market.
- We know how to put a deal together and get a deal done.
- We know cities, zoning, and what can be done and who to talk to, so as to get it done.
- We know vendors and service providers.
- We can help estimate costs to judge the feasibility and save considerable time, effort, and costs.
- We schedule and coordinate all the moving parts and solve the problems and obstacles that come up.
As your go-to Commercial Real Estate Broker, it is our job to go over, under, around, or through walls to get deals done for our clients. COVID is just one more obstacle.
So, this month we are going to try something new and share the results. Follow this link to answer our monthly survey. This month – “How long until the economy will recover?” If all works as planned, we will share the results next month.
Oh, and don’t worry, I am back running! The next goal is running to and up Mt Soledad. After that Mt. Woodson to the Beach. Great things happen when you have a goal and you get around the obstacles…hope you enjoy the story.
Never Judge a Book by its Cover
A lady in a faded gingham dress and her husband, dressed in a homespun threadbare suit, stepped off the train in Boston and walked timidly without an appointment into the Harvard University President’s outer office.
The secretary could tell in a moment that such backwoods, country hicks had no business at Harvard and probably didn’t even deserve to be in Cambridge. She frowned.
“We want to see the President,” the man said softly.
“He’ll be busy all day,” the secretary snapped. “We’ll wait,” the lady replied.
For hours, the secretary ignored them, hoping that the couple would finally become discouraged and go away. They didn’t and the secretary grew frustrated and finally decided to disturb the President, even though it was a chore she always regretted.
“Maybe if they just see you for a few minutes, they’ll leave,” she told him. He sighed in exasperation and nodded. Someone of his importance obviously didn’t have time to spend with them, but he detested gingham dresses and homespun suits cluttering up his outer office.
The President, stern-faced with dignity, strutted toward the couple.
The lady told him, “We had a son who attended Harvard for one year. He loved Harvard. He was happy here. But about a year ago, he was accidentally killed, and my husband and I would like to erect a memorial to him, somewhere on campus.”
The President wasn’t touched; he was shocked.
“Madam,” he said gruffly. “We can’t put up a statue for every person who attended Harvard and died. If we did, this place would look like a cemetery.”
“Oh, no,” the lady explained quickly. “We don’t want to erect a statue. We thought we would like to give a building to Harvard.”
The President rolled his eyes. He glanced at the gingham dress and homespun suit, the exclaimed, “A building! Do you have any earthly idea how much a building costs? We have over seven and a half million dollars in the physical plant at Harvard.”
For a moment, the lady was silent. The President was pleased. He could get rid of them now. The lady then turned to her husband and said quietly, “Is that all it costs to start a university? Why don’t we just start our own?”
Her husband nodded.
The President’s face wilted in confusion and bewilderment.
Mr. and Mrs. Leland Stanford walked away, traveling to Palo Alto, California, where they established the university that bears their name, a memorial to a son that Harvard no longer cared about.
- By Malcolm Forbes
