San Diego Economic Forecast Conference - Commercial Real Estate

As part of its ongoing association with Beacon Economics, MetroIntelligence authored the commercial real estate section for the recent San Diego Economic Forecast Conference, which took place on September 20th at the Hilton San Diego Bayfront Hotel.

If you'd like to read the section in its entirety, as a service to current and potential clients, we've made it available for free on our Web site (a $175 value). So next time you have consulting needs, please be sure to contact us to discuss how we can help. Don't be shy!

Please also register on our Web site to keep updated on future reports and presentations.

Click here to download the report.

Click here if you'd like to register for updates.

Here were some of the major findings from our report:

• Having reached a cyclical trough in the second quarter of 2011, the San Diego office market should slowly begin to improve, with vacancies falling below 17% and rent growth squeaking out a small gain of nearly 1% by the end of the year.
• With the county’s retail market finally on the rebound by the second quarter of 2011, look for economic vacancies to fall by 80 basis points to 8.4% by the end of 2011 as rent growth rises by just over 1.5%.
• Because San Diego’s industrial/warehouse market is so closely intertwined to the local economy, its rebound will likely trail those of the office and retail sectors, with vacancies not falling below 12% until the third quarter of 2011 and rent growth remaining under 5% per quarter until the end of 2012.
• Based on commercial building permit values, many building owners are investing in additions or alterations to existing properties; for new development, the strongest rebound in the second quarter of 2011 was for future office properties, followed by sporadic growth in the retail sector and declines for new industrial properties.
• With interest rates for 10-year U.S. Treasury bonds recently trending down towards 2%, cap rates during the second quarter of 2011 for all commercial property sectors look quite competitive by comparison, ranging from 6.4% for industrial/warehouse properties to about 7.8% for the office and retail sectors.

San Diego Economic Forecast Conference materials now online

Even if you missed the San Diego Economic Forecast Conference on Sept. 20th at the Hilton San Diego Bayfront Hotel, you can still get conference materials! Beacon Economics regularly provides these materials free of charge on their Web site after the conference, so if you have consulting needs, please be sure to contact them. Don't be shy!

Click here to download Christopher Thornberg's presentation on the California & U.S. economy.

Click here to download Brad Kemp's presentation on the San Diego region.

And finally, click here to download the conference book in its entirety (includes both the commercial and residential real estate sections authored by MetroIntelligence).

Lessons from Apple's Steve Jobs

Like many others of my generation, I grew up with Apple products from the Macintosh to the iPad. When I bought my last car, I made sure it offered a direct connection from an iPhone or iPod to the stereo system, and I regularly give iTunes gift cards to family members under 25. When my parents got sick of the constant viruses and software updates to run their standard-issue PC, even when approaching age 70 they decided on an all-Apple format for their home office.

In other words, this is a company which has become so pervasive that it’s cut across almost all the lines which often separate consumers – gender, age, ethnicity, religion, language and, to an extent, income – while in the process managing to shake up several legacy industries and creating one of the world’s most valuable companies. Now that Apple CEO Steve Jobs is shifting gears to become the company’s non-executive chairman, I started thinking about rare it is to have a business visionary like Jobs and what the building industry might learn from his success.

1. Jobs is a perfectionist, once reportedly forcing his team to pull an all-nighter to replace headphone jacks on the first iPod because they didn’t “click” enough to confirm a connection. I remember being in a meeting several years ago with a sales duo from a previous employer, and when questioned about some bad data in a database, instead of acknowledging the issue, one of them said, “Well, when you build the perfect house, we’ll provide the perfect database.” Can you imagine Jobs answering that way?

2. Jobs was ruthless with his own products, killing off promising technologies (such as a Palm Pilot clone) when there were better designs down the road (such as the iPhone). So, although there are certainly economies of scale when building the same floor plans and elevations in different markets, the downside of that myopia may mean tired, boring designs at a time when the foreclosure pipeline is full of them at a significantly cheaper price.

3. Jobs tapped the best experts in their fields, such as architect I.M. Pei to design the NeXT logo or naming retailing icon Mickey Drexler to the board prior to launching the hugely successful chain of Apple retail stores. In other words, casting your net beyond your tried-and-true Rolodex, the golf course or even the next HBA/BIA meeting may boost your business in ways you hadn’t thought possible before. Step away from what I call “the big bowl of beige!”

4. Jobs never stopped studying, whether it was admiring the bodywork of European cars when designing a computer case or obsessing over the collateral used by Sony to decide on the right fonts, design and paper weight for his own brochures. Although the building industry is somewhat unique in that you can actively walk through your competitor’s products, there are also lessons to be learned from the fields of retail, fashion and entertainment.

5. Less really is more. The iPod wasn’t the first music player on the market, but it was clearly the simplest, relying on a single scroll wheel instead of a hodgepodge of confusing buttons. Today’s well-designed home doesn’t need to be huge or busy or grand. It just needs to prove that it can meet the needs of a busy resident with thoughtful touches.

6. Despite his enfant terrible reputation, Jobs used the carrot a lot more than the stick, and it was due to his personal enthusiasm that the Mac design team worked 90-hour weeks for three years to make it ‘insanely great.’

While some may disagree with his methods, it’s almost impossible to argue with the results.

BuilderBytes' MetroIntelligence Economic Update for 9/19/2011

Please click here to see the edition of BuilderBytes for 9/19/2011 on the Web. In this issue of the MetroIntelligence Economic Update, I covered how action by the world's central banks lifted investor sentiment (at least temporarily), the unemployment rate for August, consumer prices, industrial & manufacturing figures, consumer sentiment and the latest comments from the Philadelphia Federal Reserve Business Outlook Survey.

Want to subscribe to BuilderBytes so you don't miss future editions! Send a request to info@builderbytes.com.

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

September column for Builder & Developer magazine now online

My column for the September 2011 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "Is Your PR Strategy Up to Date?," I wanted to review how rapid changes in social media continue to impact today's PR strategies. Although many builders and associates are far beyond the curve on this issue, they can quickly catch up!

From the column:

...although social media is becoming a clear priority among U.S. companies, the building industry remains somewhat disjointed. Whereas Lennar has clearly made strides across the social media spectrum – to the point of setting up separate Facebook, Twitter and YouTube accounts for multiple divisions – some other large builders make little or no mention of their social media efforts even on the home pages of their own Web sites. At the same time, while company blogs remain largely nonexistent, useful mobile applications directing buyers to active projects continue to proliferate...

To read the entire column, click here.

To read the entire September 2011 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 9/15/2011

Please click here to see the edition of BuilderBytes for 9/15/2011 on the Web. In this issue of the MetroIntelligence Economic Update, I cover why California Economist Christopher Thornberg doesn't see a double-dip recession, the rise of mortgage applications, prices for U.S. imports and exports, the producer price index, retail sales and business sales & inventory levels.

Want to subscribe to BuilderBytes so you don't miss future editions! Send a request to info@builderbytes.com.

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Last Call to Register for the 2011 San Diego Economic Forecast Conference

FINAL WEEK TO REGISTER!

Hear some of the state's most reputable forecasters as they deliver a new outlook for the U.S., California, and San Diego economies: Is a 'double-dip' recession on the way in 2011 or 2012? What's around the corner for consumer spending, home prices, and employment? How will the slow down in the national economy affect San Diego's recovery? Featured Forecasters Christopher Thornberg Founding Partner Beacon Economics Brad Kemp Director of Regional Research Beacon Economics

The Re-Regulation of Wall Street: Expert Panel Battles over the regulation of Wall Street are heightening in Washington. What sort of regulations are being proposed? How will they affect the banking and financial industry? Can proposed regulations really prevent a repeat of the abuses that occurred prior to the 2008/09 recession? Or do they miss the mark completely? Will regulation help or hurt businesses ability to acquire new capital? Are there dangerous unintended consequences? Featured Panelists Brian Cartwright Latham & Watkins Former General Counsel U.S. Securities and Exchange Commission Julie Johnson North Highland Former Senior Capital Markets Specialist FDIC Robert D. McTeer National Center for Policy Analysis Former President Federal Reserve Bank of Dallas

Special discount available through MetroIntelligence, which produced the sections for the conference book on commercial and residential real estate: Use discount code metrosd to save $30 on registration.

Click here to register.

BuilderBytes for 9/12/2011

In a new feature for BuilderBytes, the twice-weekly newsletter emailed to over 100,000 subscribers from Peninsula Publishing, I am now going to be covering recent economic statistics released through various sources since the last edition.

This latest feature is an extension of my current relationship as a regular columnist for the publisher's flagship title, Builder & Developer magazine. I had been wanting to create a regular newsletter that was different from the others which currently fill your inbox(es) for some time, and since BuilderBytes was in the middle of being re-designed, this was the perfect opportunity to begin my new contribution.

Entitled the "MetroIntelligence Economic Update," the purpose of the new section is to provide one-stop shopping for updates on the U.S. economy in terms of unemployment, housing, auto sales, consumer confidence, mortgage applications, etc. so you can react in real time for your own businesses. Each issue will include brief summaries of the update along with a link to the original source.

Please click here to see the edition for 9/12/2011 on the Web. In this issue, I cover economist Mark Zandi's review of the Obama jobs plan, unemployment claims, the U.S. trade deficit, consumer credit and wholesale inventories.

Want to subscribe to BuilderBytes so you don't miss future editions! Send a request to info@builderbytes.com.

Want to advertise in the newsletter and reach over 100,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

On Remembering 9/11

It's very easy for me to remember 9/11 for two reasons: besides the attacks in New York and at The Pentagon in 2001, it's always my younger brother's birthday. So for him, I'm sure, it's a bittersweet day -- one in which he celebrates his own birth today outside of Philadelphia, yet also can't forget the deaths of those in New York and Virginia as well as just 220 miles to the west, where United Airlines Flight 93 crashed to the ground near Stonycreek Township instead of into its intended target, the White House.

Two short months after 9/11/2001, I went to visit my older brother for Thanksgiving, who was living in mid-town Manhattan. While he personally didn't know anyone killed at the World Trade Center, he had in fact previously worked in the same section of The Pentagon that had been hit by the third plane.

I had been to NYC a few times before, but this time felt different -- quieter and more reflective. One afternoon, I felt compelled to take the subway down to visit Ground Zero, but neither my brother nor his fiance wanted to accompany me, so I went alone. Since the World Trade Center station was obviously closed, I deliberately chose a couple of stations earlier on the assumption that I'd have some time to get re-acquainted with Lower Manhattan at ground level before moving towards the site.

I was wrong. As I walked up from the subway steps to street level, I was greeted with the still-smoldering ruins of the collapsed buildings. But what I remember most is what I can only describe as the most depressing scent I've ever experienced before -- a combination of chemicals, smoke and death. It's something I hope to never smell again.

To shield the continuing recovery and salvage operation from public view, the city had installed solid plywood fencing around the entire site. For tourists hoping to grab a few shapshots of the carnage, on the fence the NYPD had stenciled "No Photos By Order of the NYPD" every few feet. I took no photos.

As I walked around the perimeter of the site, I noticed the damage to nearby buildings from falling debris -- a hole punched through the glass ceiling of a multi-story atrium here, a huge chunk of another building sliced off there. Throughout the area, family members and friends had posted hundreds of flyers with photos of potential victims and asking "Have You Seen Me?" on almost every available pole and bulletin board. Like the scent which hit me upon walking up from the subway station, this was a sight I would never forget.

Finally, near a wooden flatform area that had been quickly constructed as a sort of gathering place, there were multiple memorials to loved ones. It was at this point that I decided I had seen enough: I wasn't a local, and I had nothing to offer but my curiosity, so I returned to the subway station to return back to mid-town.

During the trip back, lost in my own thoughts, I had no doubt that the city would rebuild and the country would do whatever necessary to protect itself. Ten years later, although the physical and psychological wounds are taking time to heal, they are healing.

The current issue of "The Economist" has a great story on the recovery of Lower Manhattan that brought back these memories of my visit in November of 2001, but there is definitely some good news:

Some 14m square feet (1.3m square metres) of office space was damaged or destroyed and 65,000 jobs were lost or relocated. Hundreds of businesses closed, some permanently. Yet ten years on, the area is doing well. According to the Downtown Alliance, its vacancy rate is one of the lowest in the country. The volume of apartment sales has increased by 151% since 2003. The resident population has more than doubled, to 56,000, since 2001. Six new schools have opened there since 2009. Last year almost 10m tourists visited. Many stay at one of the 18 hotels in Lower Manhattan, three times the number in 2001. Though many companies fled in the first two years after the attacks, today there are more downtown than there were in 2001.

The biggest change is at the site itself. After years of construction delays and paralysis, One World Trade Centre, formerly known as “Freedom Tower”, now tops 80 floors. It is beginning to dominate the downtown skyline as the twin towers once did. Still two years from completion, when it will reach 104 storeys, 1m square feet of it is already leased to Condé Nast, a publishing company. The 9/11 museum, meanwhile, will not open till next September; but visitors to the site will soon be able to see two of the steel trident-shaped supports from the original building, which survived and have now been enclosed in the museum’s glass atrium. Seeing them for the first time since they were salvaged from the pulverised buildings is powerfully impressive. Visitors will also be able to see and touch the 70-foot (21.3-metre) underground wall that mercifully held back the Hudson River during the attacks...

You can read the the entire article by clicking here.

No Nonsense Economics: "Volatility Returns with a Vengeance"

Economist Chris Thornberg with Beacon Economics told me he was working on a piece about the recent volatility in the stock market, and I think his latest post on No Nonsense Economics is a definite must-read. If you believe, as I do, that Chris' great talent is distilling complex economic issues into plain English -- whether during a speech or in a written essay -- I think he hits of a lot of reasons for this recent volatility right on the head.

Some excerpts:

Was the downgrade unprecedented? Absolutely. Logical? Absolutely not. A bond rating is an estimate of the chance that the borrower will not pay back their debt fully and on time. To justify a downgrade, one has to show why the probability of default has increased. Has the chance of a US default increased in recent months?

As for the amount of debt itself, despite the budget battles and ongoing gap between revenues and expenditures, overall net U.S. debt is still quite low for developed nations—somewhere on the order of 68% of current GDP once the holdings by the Social Security Administration are factored out. Given low interest rates, the current cost of servicing the nation’s existing debt is less than 10% of all expenditures. There is clearly no threat of a default in the near term, even if the debt ceiling had not been raised...

Another long terms issue is the underfunding of the major social insurance programs, particularly Social Security and Medicare/Medicaid. Are they underfunded? Absolutely. But as bad as these problems are, keep in mind that this only becomes a worry if one presumes that at some point in the future the U.S. government will forego payments on existing debt in order to fund current expenditures in these programs. But such a choice won’t be made for 10 or 15 years. Its hard to see anything that has occurred in recent months would have a reasonable impact on the assessment of such choices in the future...

The slow growth in the first quarter was largely due to an unusual pullback in spending on national defense and non-residential structures—spending that bounced back in the second quarter. July’s employment report was more positive, and since then initial claims for unemployment insurance have actually fallen. The primary driver of weak consumer spending in the second quarter has also been removed: Oil prices have fallen sharply—particularly since the stock market began to fall so rapidly. And Japanese cars are again starting to move into the market. Even the housing market—the source of bad news earlier in the year—is starting to show mild signs of life. Prices have risen a bit, as have permits for new residential construction...

While the problems in many European nations are profound, only Greece and Ireland have truly been pushed to the brink of default. In Greece’s case, it is due to years of bad government. They hid the rapid pace of debt accumulation through various nefarious accounting manipulations. The economy is stagnant and uncompetitive, driven there by massive government interference as well as one of the worst corruption problems in Europe. And there is their fundamental inability to raise revenues in a nation famed for its tax avoidance. As for Ireland, none of these factors are in place. There it is only because the government agreed to use public funds to prevent the collapse of the large Irish banks. That had become so heavily involved in the property bubbles in the US and UK.

As for Spain, Portugal, and Italy there are serious problems—but none of these nations is anywhere close to the brink of default. Spain and Portugal have relatively low levels of debt relative to their GDP. Italy has a huge amount of debt, but its economy is stronger than it looks on the surface—and it has a history of being able to handle such crises at the last moment...

Click here to read this lengthy post in its entirety.

August column for Builder & Developer now online

My column for the August 2011 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "Multi-Family Goes Green,"I wanted to discuss the ways in which multi-family developments, even though they're inherently greener than single-family homes, face their own set of unique challenges when building to green standards such as LEED and CalGREEN. At the same time, there are a couple of tax incentive programs which remain vastly under-utilized.

From the column:

...Fortunately, for builders and operators of multi-family projects, higher unit densities, smaller square footages and shared common areas or services make them substantially more sustainable than their single-family counterparts -- even before any green building techniques are employed. For example, a recent study funded by the EPA found that a typical apartment uses 38% less energy than a green single-family home. For those households looking to move from a typical single-family home in a far-flung suburb to a green multi-family building adjacent to mass transit options, the energy savings could exceed 70%...

To read the entire column, click here.

To read the entire August 2011 issue in digital format, click here.

Is Your PR Strategy Up to Date?

Over the past few months – and as a result of the spokesperson role I played with Hanley Wood Market Intelligence prior to founding MetroIntelligence – our team has also been slowly expanding more into offering public relations services for our clients. To jump-start this initiative, we decided to partner with ICON Imaging PR in Los Angeles, which was founded in 1997 by news veterans Sharon and Bob Jimenez, and leverages their deep local and national connections in real estate, politics and entertainment. The blog WestLALand is one of first efforts together.

Consequently, I wanted to review some of the ways in which companies are now reaching out to the media, the community, and their customers. From the perspective of Sharon, especially, a former Emmy-winning reporter who has worked with everyone from local real estate developers and independent film producers to state senators and even a two-time Presidential candidate, she would certainly agree that the PR world of today is a far different animal than it was even ten years ago.

Certainly the PR vehicle which continues to morph and evolve the most is that of social media, centered primarily around Facebook (and perhaps Google+), Twitter, YouTube and, for professional networking, LinkedIn. According to Sharon, when she was put in charge of making Rep. Dennis Kucinich a household name back in 2003, it was by leveraging nascent social networking platforms that the campaign was able to raise $10 million online – in large part because they could publish the candidate’s entire platform for potential supporters to see.

By the 2008 election cycle, the rise of Facebook, YouTube and blogging platforms gave rise to campaign-supported operatives who would continue to win debate points long after the actual broadcast had finished. Indeed, it was largely due to the pioneering efforts of the 2004 election that a young and ambitious junior Senator from Illinois named Barack Obama was able to harness the Internet’s power to gather both funds and volunteers, thereby bypassing not only traditional means of building support, but shunting aside presumed Democratic front-runner Hillary Clinton in the process.

Today, however, although social media is becoming a clear priority among U.S. companies, the building industry remains somewhat disjointed. Whereas Lennar has clearly made strides across the social media spectrum – to the point of setting up separate Facebook, Twitter and YouTube accounts for multiple divisions – some other large builders make little or no mention of their social media efforts even on the home pages of their own Web sites. At the same time, while company blogs remain largely nonexistent, useful mobile applications directing buyers to active projects continue to proliferate.

In theory, an active online campaign would position a builder as a thought leader to foster discussions on the economic, environmental and political policies which directly impact housing. If your goal is to get buyers to agree that a new home can offer superior energy efficiency and design, why not let them come to that conclusion on their own? Instead, more often than not, these pages are used to repurpose print ads and to discuss current promotions, which can often have the opposite effect on an ad-weary public.

In addition, having an attentive point person assigned to social media on a regular basis can solve minor problems while demonstrating that the company is serious about having a two-way conversation. For example, when a new buyer of a Shea Homes model complained about signage across the street which needed to be taken down from a sold-out community, it was gone almost immediately – much to the delight of the Facebook member. One can only imagine the positive network effect that single action may have on future sales – and at a very low cost.

Some tips:

• Use social media to position your company as a thought leader.
  
• Cross-promote all of your social media efforts as much as possible.
• Blogs can provide more flexibility than traditional social networking platforms such as Facebook, Twitter or YouTube.
• Assign an internal or external point person to ensure that your social media efforts are updated regularly.

Beacon Economics launches new non-blog feature

Beacon Economics, an important client and partner to MetroIntelligence, has recently launched a new feature called 'No Nonsense Economics.' Written in the inimitable stylings of Beacon founder Chris Thornberg and other analysts, they insist it is 'not a blog.' Fine, so let's call it the 'non-blog.' Whatever the nomenclature, the purpose of the new feature is to provide 'independent analysis that helps interpret the numbers and the noise of the 24-hour news cycle.'

Here's the first post about the purpose of the new feature:

No Nonsense Economics is a new feature from Beacon Economics where you can read new and regular insights from Founding Partner Christopher Thornberg, as well as from other Beacon analysts and guest authors, about what is happening in today's economy.

Not a blog, No Nonsense Economics will be a place where our experts can deliver timely comment on major developments in the economy from important data releases to legislation and public policies to long and short-term trends.

We titled this No Nonsense Economics because that is what we intend to give you - independent analysis that helps interpret the numbers and the noise of the 24-hour news cycle. We hope our insights will help you to understand the up, down, and sideway movements of the economy... and even assist you in making better decisions...

For other posts from No Nonsense Economics, click here.

November 3, 2011: Riverside/San Bernardino Economic Forecast Conference

Save the date: Thursday, November 3rd at the Riverside Convention Center!

Join MetroIntelligence, Beacon Economics and the University of California at Riverside's School of Business Administration for the 2011 Riverside/San Bernardino Economic Forecast Conference. Come hear some of the state's most reputable forecasters deliver a new outlook for the U.S., California, and Inland Southern California economies. Full program details coming soon.

Special discount available through MetroIntelligence: Use discount code metroie to save $25 on registration.

Click here to register.

Conference attendees will receive the following:

• 2011 Riverside-San Bernardino Economic Forecast Book - a data-packed analysis of the region's economic indicators
• Sections on residential and commercial real estate authored by MetroIntelligence Principal Patrick Duffy
• Quarterly updates to the forecast for one full year
• Chance to interact with forecasters and speakers
• Prime networking opportunity
• Breakfast buffet
• Hosted self-parking

Special discount available through MetroIntelligence: Use discount code metroie to save $25 on registration.

Click here to register.

San Diego Economic Forecast Conference

Save the date: Tuesday, September 20th at the Hilton San Diego Bayfront in downtown San Diego!

Join MetroIntelligence and Beacon Economics for the 4th annual San Diego Economic Forecast Conference, presented with the generous sponsorship of Silvergate Bank. Come hear some of the state's most reputable forecasters deliver a new outlook for the U.S., California, and San Diego economies. Full program details coming soon.

Get answers to the following questions:

• What's around the corner for the U.S., California, and San Diego economies?
• How will the slow down in the national economy affect San Diego's recovery?
• Battles over the re-regulation of Wall Street are heightening in Washington. What sort of regulations are being proposed? How will they affect the banking and financial industry?
• Can proposed regulations really prevent a repeat of the abuses that occurred prior to the 2008/09 recession? Or do they miss the mark completely?
• Will regulation help or hurt businesses ability to acquire new capital? Are there dangerous unintended consequences?

Special discount available through MetroIntelligence: Use discount code metrosd to save $30 on registration.

Click here to register.

Conference attendees will receive the following:

• 2011 San Diego Economic Forecast Book - a data-packed analysis of the region's economic indicators
• Sections on residential and commercial real estate authored by MetroIntelligence Principal Patrick Duffy
• Quarterly updates to the forecast for one full year
• Chance to interact with forecasters and speakers
• Prime networking opportunity
• Breakfast buffet
• Hosted self-parking
  

Special discount available through MetroIntelligence: Use discount code metrosd to save $30 on registration.

Click here to register.