In June of 1812, Napoleon with all of his generals plotting to invade Russia was strategy. Getting half a million soldiers to march into Russia was culture!
In a recent interview, a glass half full of water was placed in front of me. I was asked if I was a pessimist or an optimist. I proceeded to knock back the glass of water and responded, “I’m a problem solver.” These days it is easy to get bogged down in fear. However, it is important to notice something needs to be done and get it done. So many today might entertain a thought and consider it worthy of action but leave it for later (or never). It is easy to get bogged down in fear. At CDC Commercial we are working daily to cut through the “stuff” and get the job done!
We experienced Another Upbeat Year according to local economist Alan Nevin. His great report is linked below. Note, however, he does start out with the 12 plagues that we have experienced.
Vertex 2022 U.S. & California Economic Forecast
COVID-19’s second anniversary is upon us, now what? We have lost over 900,000 Americans and over 4,800 San Diegans who have died with COVID. We are experiencing challenges with child development as kids lag from two years of modified school and the lack of social contact. Behavioral health issues have increased dramatically while drug overdoses have spiked. The precautions we exercised due to COVID separated us. Social media exacerbated everything. If you spend five minutes on social media, you’ll see a chasm of divisiveness. Debates spin out of control creating another kind of separation. We live in a society of people who want the front of the bus, the back of the church and the center of attention.
On a regular basis, I am asked, “What’s going to happen when the Fed raises rates?” What I know is when the Fed starts to slow or drain its monetary liquidity, the clock starts ticking to the next corrective cycle.
History shows us what will happen. Once the Fed begins to hike interest rates, corrections in markets occur quickly– generally within 2-4 quarters. However, recessions and bear markets generally take a while longer and have sometimes been extended due to ongoing interventions. The current median time frame between the first-rate hike and the onset of a recession is 11 quarters.
Note: there are ZERO times in history where the Fed hikes rates that did not end negatively.
In the meantime, in the field or battlefield as it often seems, we are seeing lots of different activity. Commercial space is starting to get upcycled. We are seeing office space be converted to residential, shopping centers and office buildings being converted to biotech and lab space. All kinds of property being torn down for multifamily construction. In retail, we are seeing a resurgence of store inside of a store. Toys ‘R’ Us is back but within Macy’s. Sephora is expanding within Kohl’s and Bed Bath & Beyond is opening within Krogers.
Meantime, millennials are finally heading to the suburbs. Whether it is COVID that has flushed them out of urban markets or their biological clocks going off, millennials are going to urbanize suburbia! Look for more Amazon delivery and Uber Eats in the neighborhood and small pop-up shops in old downtowns and shopping centers. Look for more multigenerational housing (millennials using parents’ money to buy in return for living in the ADU (additional dwelling unit) or “Granny Flat.” Time for the gray wave to start moving into the millennial’s basement! (Payback is a bitch!).
NICK’S NUMBERS
Biotech is booming which is what is forcing the upcycling of properties to create more space.
I threw in an extra chart illustrating Don’s point about rate hikes and recessions.
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).
Former Federal Reserve Chief Ben Bernanke used to say the Federal Reserve was a hall of mirrors. He said this because the Fed listens to the market and the market listens to the Fed. It would seem we need some leadership…or maybe some culture instead of strategy. In the meantime, last month I questioned where all of the workers were. I am glad to report our research has found the answer to that AND why you and I are sooo tired. I hope you enjoy the story…
Are you tired?
I have run across some irrefutable statistics that show exactly why you are tired. And it’s no wonder. There aren’t as many people actually working as you may have thought, at least according to recent surveys.
The population of this Country is about 300 million. 85 million are over 60 years of age, which leaves 215 million to do the work. People under 20 years of age also total about 85 million which leaves 130 million to do the work.
There are about 30 million employed by the government, which leaves 100 million to do the work. There are about 5 million in the Armed Forces and about 23 million unemployed (as of April 2020) which leaves 72 million to do the work. 55 million have mental health issues and 15 million work in city and state offices leaving us with 2 million to get the work done.
Now it may interest you to know that there are 1,999,998 people in jail, so that just leaves two people to carry the load. That’s you and me and I don’t know about you, but I am sure getting tired!
