The Four Stages of Life:
1. You believe in Santa Claus,
2. You don’t believe in Santa Claus,
3. You are Santa Claus,
4. You look like Santa Claus.
If you had told me last Christmas that I would be walking into convenience stores with a mask on, I would have assumed I had turned to a life of crime. Nor would I have believed you that I would go to Phoenix for the 4th of July, stay in a hotel to do due diligence on a shopping center named “Little Corona” all during a COVID pandemic! Oddly what I was scheduled to do was travel to Hong Kong in February, run a marathon, and get on a cruise ship to travel throughout Asia – so much for that plan!
As brokers and agents, we all have plans. But as Mike Tyson said, “Everybody has a plan until they get punched in the mouth.” Fortunately, as salespeople we are resilient and spend our daily lives absorbing body punches and creatively solving people’s problems and overcoming hurdles all in the name of the almighty dollar. Having been in the business 35 years, I suggest to you that when you experience years like this, rather than comparing where you are to where you thought you would be, measure your status according to where you need to be. You might discover you’re in much better shape than you realized.
Here are some of our takeaways as we close out the year and move into 2021.
- Despite continued regulatory burden from COVID-19, leasing activity is picking up – but it is uneven.
- Despite the number of transactions tumbling, CRE pricing is rising.
- Office leasing has fallen to 20-year lows as users “wait and see.”
- Industrial shows no sign of slowing.
- Renewals will dominate the leasing market next year.
- City bureaucracy has always been a problem with deal making but has gotten worse with antiquated, non-digitized, un-supervised workers slowing the permitting process.
- Sublease space is starting to flood the market with rents .30-.90¢ psf less than market.
While on the sublease subject, I have an interesting observation. Although, as mentioned, sale prices have not come down, nor have asking rents. However, if sublet rents are .30-.90¢ psf lower does that not indicate a value decrease of $60-$180 psf? (.30 x 12 mo = $3.60/6% cap rate = $60 psf).
Nick’s Numbers
This month’s Chart illustrates the rise in sublet space that Don speaks to above.
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).
As in my past Holiday Letters, I will still encourage you to be passionate about your life’s work. However, someone pointed out to me that passion is a noun and love is both a noun and a verb. So, this year I am going to encourage you to be a verb not a noun – take action.
Love is something you bestow on others. Love is an action. Passion is something you have. At the end of your day are you the sum of what you have or the sum of what you did. Just remember in the end, you don’t get to take anything with you (coffins don’t have pockets). Time is the most valuable asset that you possess. Don’t over think – just get out there and do it!
Regardless of what 2021 throws us, remember to exercise often, eat lean and green, take deep breaths often, love life and work.
Have a Happy Holiday and a loving and prosperous New Year…I hope you enjoy this month’s story.
A farmer had some puppies he needed to sell. He painted a sign advertising the 4 pups and set about nailing it to a post on the edge of his yard. As he was driving the last nail into the post, he felt a tug on his overalls. He looked down into the eyes of a little boy.
“Mister,” he said, “I want to buy one of your puppies.”
“Well,” said the farmer, as he rubbed the sweat off the back of his neck, “These puppies come from fine parents and cost a good deal of money.”
The boy dropped his head for a moment. Then reaching deep into his pocket, he pulled out a handful of change and held it up to the farmer.
“I’ve got thirty-nine cents. Is that enough to take a look?”
“Sure,” said the farmer. And with that he let out a whistle. “Here, Dolly!” he called.
Out from the doghouse and down the ramp ran Dolly followed by four little balls of fur. The little boy pressed his face against the chain link fence. His eyes danced with delight. As the dogs made their way to the fence, the little boy noticed something else stirring inside the doghouse.
Slowly another little ball appeared, this one noticeably smaller. Down the ramp it slid. Then in a somewhat awkward manner, the little pup began hobbling toward the others, doing its best to catch up…
“I want that one,” the little boy said, pointing to the runt.
The farmer knelt down at the boy’s side and said, “Son, you don’t want that puppy. He will never be able to run and play with you like these other dogs would.”
With that the little boy stepped back from the fence, reached down, and began rolling up one leg of his trousers. In doing so he revealed a steel brace running down both sides of his leg attaching itself to a specially made shoe. Looking back up at the farmer, he said, “You see sir, I don’t run too well myself, and he will need someone who understands.”
With tears in his eyes, the farmer reached down and picked up the little pup. Holding it carefully he handed it to the little boy.
“How much?” asked the little boy…
“No charge,” answered the farmer, “There’s no charge for love.”
