September 1, 2008
Re: Monthly Letter
Dear Clients,
Well as the Olympics wrap up, the kids go back to school, and the Presidential battle heats up, I must say I am looking forward most to football season. There seems to be no substitute for the joys created within our families, friends, co-workers and community as we rally behind the competition of our local high school, college and professional teams. As “our” teams compete we seemingly live and die by those pass completions, fumbles and goal line stances. We relish in the competition even if it is from the arm chair or sofa.
We as Americans need to pay attention to our competitive attitudes and make sure they are not stuck to only the sofa. As I watched the Olympics it was amazing to watch as many of the Worlds’ nations competed and routinely win medals. The Chinese with over a 25% increase in Gold medals from 4 years ago! The Spanish competing very evenly with our own NBA all star team. We’re starting to run out of time and excuses as the world gains on us. They copy our productive methods and then compete with us. We must always be improving.
The way out of this poor economic time is to innovate (to do this we must all be life long learners) and lead. To lead we must compete in global markets. We need to export Capitalism, “Buy American” was the cry of protectionist, but now we really want the world to “Buy American” not just the U.S. We’ve got to be smarter than the competition!
The National Education Association (NEA) in a recent report showed that a high school drop out earns about $260,000 less over their lifetime than a high school graduate. In our society that adds up to a loss of 1.6% of our GDP. If that does not concern you enough, how about the fact that 80% of individuals in prison don’t have a high school diploma!
Closer to home, I am seeing some interesting returns to the way things once were. Banks are now chasing deposits so as to have the capital to lend. Furthermore, banks are back to following the basic principals of banking – “don’t lend money to people who can’t pay it back.”. The car leasing market is also drying up as big car values plummet forcing more people back to owning their cars again.
High gas prices are having severe/significant impacts. First higher energy costs are acting as a tax or equivalent to an interest rate bump effectively slowing our economy across the board. Locally, we are seeing more businesses looking to locate closer to home. This trend will bode well over the long haul for the North County office market. With consumers trying to consolidate their driving trips, tenant mix and synergy are more important in retail centers than ever. Can you get the groceries, drop off the video and pick up tonight’s dinner all in the same center?
We’re hearing more and more stories of tenants struggling. Our recommendations are as follows:
1. Renew tenants early – make sure they stay committed to your location.
2. Offer incentives to renew – no increase for the first year or new carpet and paint.
3. Work to hold your rents – that way you won’t be stuck with low rents when things turn around.
4. On new deals be flexible with free rent, TI allowances, stepped rent.
In the middle of August, Alan Greenspan said the bottom of the real estate correction will occur in the first half of 2009 and the recovery process will then commence.
I believe that to be true. As I said in the beginning of the year, things will remain stagnant until after the election. After which the markets will start placing their bets and moving forward.
San Diego’s strong economic fundamentals and demographics make it an excellent market for long-term investment opportunities, as well as an attractive tenant location compared to other areas of the country…or for that matter, the world.
Given that school is starting, as is football, and my cry for us all to be life long learners and competitors in our marketplace, I thought you’d enjoy the story below.
Regards,
Don
CDC Commercial
Real Estate Services
What Would Happen If…
We Ran Our Football Teams As We Do Our Classrooms:
Everyone would have the right to equal playing times so that all could develop their athletic skills equally
Cooperation would be more important than excellence. Competition would be frowned upon.
Since star athletes are already talented, they would not need special coaching or conditioning. They could help teach other athletes since “to teach something is really to learn it”.
We could “coach to the middle”.
We would strive to develop well-rounded athletes. Thus, the star quarterback would take a turn sitting on the bench as a trainer. The student of lower analytical skills would get a turn as quarterback. The out-of-shape student who hates physical activity would get the opportunity to play running back.
Coaches would be expected to understanding when jobs, family trips or homework interfered with practice time by adapting game plans to accommodate much multiple interests.
Coaches would be assigned parking lot supervision duty immediately before and after games and during half-time. If athletes had questions about game plans, they could meet with coaches in the parking lot. Coaches would have to plan their plays before or during supervision duty.
Coaches could not demand too much of students lest they create stress or interfere with many other interests and priorities.
If the team had a losing season, new philosophies of coaching would be developed. Each new philosophy would discard all previous philosophies. It would require a two-hour training session and supply the coach with a pocket folder crammed with philosophy and objectives. Coaches could plan their strategies between supervision duties and games.
We Ran Our Classrooms As We Do Our Football Teams:
Teachers would walk into class enthused and fired up with the importance and relevance of what they were teaching.
Students would be in class because they wanted to learn and they would respect the teacher and put all their energy into the class. Class would be more important to them then their jobs or football practice.
Parents would jam the schools asking the teacher how to help their students excel.
Students wouldn’t dare miss class or skip doing homework lest they be dropped from the academic team.
Students would develop a sense of teamwork and cooperation fueled by their love of learning and challenging of each other. Students would take pride in their classes and demand that classmates give their best.
Students would clamor to be “student of the week” or make the honor roll. Other students, teachers and the community would enthusiastically and supportively be involved in student learning.
We would have rallies and bands and cheerleaders for National Merit Scholars and honor students, and they would not feel uncomfortable about receiving the attention because this would be every student’s dream.
Every night the 10 o’clock news would devote a full 10 minute segment to education issues and highlights. The morning radio stations would compete for the education audience.
Newspapers would devote several pages (or a whole section) complete with pictures to academic activities.
We would demand excellence in the classroom and teach cooperation and patience on the playing field.
Our society would clamor to build and equip learning facilities because everybody would recognize the value of well-educated citizens to the business community.
