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First let me say thank you to all the well wishers for my eventful August. I am glad to report that I feel great and am back working at my “normal” frenzied pace. I am also back to all my physical activities including golf (running is on hold for another month but I am walking 5 miles a day plus swimming daily).

I suppose I am throwing myself at work so I can be rich. I suppose it is a worthwhile endeavor since I just read of a study by the University of Michigan that found that the richer you are, the longer you’ll live.

Well it looks like more of us are working because the San Diego unemployment rate dropped from 5.3% to 5%. This equals the national rate. For the month, the area gained 500 jobs in retail but lost 1500 in restaurants. Those retail jobs weren’t in the golf industry though, with the sale of golf balls and golf shoes being down 10% year to date Nationwide.

In a sign that the local area may be facing some turbulence, the USD Burnham Moores Center for Real Estate index slipped for the third consecutive month. It noted that there were only 28,000 jobs created locally in July compared to 40,000 last year. You may wonder why each month I focus on jobs and unemployment. Well after 30 years in the business, I can assure you that employment is the most direct indicator of the future of commercial real estate, construction and rent growth. Rule #1 in real estate: “Buy where more people are moving in than moving out.”

The most notable market trend I can report is that deals seem to be taking a longer time to get done again. I can’t tell you yet if it is people’s lack of confidence or continued bureaucracy and regulation. We currently have escrows that are 2-3 years old and lease deals that have taken 6-12 months! recently read that in the 1990’s, regulation cost a small mom & pop business $10,000 a year. Today that is $115,000. Compliance has become the fastest growing expense in business. On the topic of regulation, January 1, 2017 the implementation of AB 802 will begin (unless we are able to postpone or repeal it). Otherwise, we will be saddled with a law of questionable integrity and benefit that includes the following troubling elements;

  • Mandatory energy benchmarking and public disclosure of results by commercial and multi-family buildings of 50,000 square feet or greater on a regular, but unknown, basis going forward.
  • Non-compliant owners are now subject to civil penalties ranging from not less than $500 and no more than $2,000 for each day owner is out of compliance. (AB 802, unlike AB 1103, has very specific language related to penalties and fines.)
  • Parties to a CRE transaction no longer have a right to confidential energy use benchmarking data to help make leasing or purchasing decisions. Owners and tenants no longer have a right to privacy of confidential operating data. (Both of these rights were extinguished in the repeal of AB 1103.)
  • Owner are mandated to collect whole-building energy use data directly from the utility company for all meters serving the building including spaces, suites and meters serving tenant spaces – without and regardless of tenant authorization cooperation or agreed up lease terms.
  • Owners and tenants have absolutely no control over the management or further distribution of the private energy use data by the utility companies, the state of California or any third party with access to the published data.
  • Tenants are not mandated to provide to owner the additional occupancy characteristics required for accurate and comprehensive benchmarking analysis through the required reporting tool – energy star portfolio manager.


Another reason to work hard and save your money is that according to Moshe Vardi of Rice University half of workers jobs across the world will be replace by machines by 2025. Lest you be worried that our longevity and happiness is solely revolving around our jobs and money, I will point out that Harvard recently released a study that shows the single biggest contributor to happiness across all demographics, rich-poor alike, is good relationships. Social connections are good for us (loneliness kills). Not the number of friends but the quality of close relationships. We at CDC want to thank you for the close relationship we have with so many of you. Oh, and play more golf with friends ….


Do you know who, in 1929, was:
  1. President of the largest steel company?
  2. President of the largest gas company?
  3. President of the New York Stock Exchange?
  4. The greatest wheat speculator?
  5. President of the Bank of International Settlement?
  6. The Great Bear of Wall Street?
These men should be considered some of the world’s most successful men, at least they found the secret of making money. Now, more than 55 years later, do you know what became of these men?
  1. The president of the largest steel company, Charles Schwab, died a pauper.
  2. The president of the largest gas company, Howard Hopson, was insane.
  3. The president of the New York Stock Exchange, Richard Whitney, was released from prison to die at home.
  4. The greatest wheat speculator, Arthur Cooger, died abroad insolvent.
  5. The President of the Bank of International Settlement shot himself.
  6. The Great Bear of Wall Street, Cosabee Rivermore, died by suicide.

The same year, 1929, Arnold Palmer was born, he would go on the win the Masters four times, the U.S. Open once and the Open Championship twice. In 1960 at the U.S. Open at Cherry Hills, Denver he ordered a half iced tea and half lemonade. A woman sitting nearby overheard him and ordered “that Palmer drink,” thus giving the beverage its name – an Arnold Palmer. The King of Golf left behind a dynasty, will be remembered forever and played golf to his dying day.

Conclusion: stop worrying about business and play golf!


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