I Think The Market is Turning..or, Have I Gotten Used to the Bad Times?
So many things to talk about. There is so much happening lately that I’m trying to separate my thoughts. Jobless claims are up, but the Mid-west is being shredded by killer tornadoes. The Dow has recovered nearly all it’s losses from 2008, but the US has exhausted it’s credit line and we need to raise the debt ceiling. It seems that as bad as the bad news seems to be, we are either numb to it or we recognize the worst is behind us. After all, can it really get worse?
I inserted a chart from Starbucks first Qtr 2011 to illustrate a point that may relate to our Real Estate market. Starbucks Net Income is up a staggering 42%, despite nearly everyone I know telling me they are cutting back on their spending - because they have less to spend. And yet, the world needs their $4.00 Latte to go with their $4.00 a gallon gas.
The apartment market is in a similar dichotomy. Our expenses are up, our debt costs most likely to increase, our values clearly down and yet out occupancy is up and our net rents rising. Despite all the belly aching, we are doing better today than we could have hoped just 12 months ago.
I received my weekly Loopnet, Inc Market report via email today and glanced at the section where they report the 10 most active listings in the Metro-Phoenix market by “Click through’s”. The top listing is a parcel of Land in Scottsdale (with nearly 1,600 views in the past 30 days) the remaining 9 on the list were all multifamily listings (very encouraging). But here’s the surprising part… each of those listings had over 1,000 views each in the past 30 days.
One more observation: Yesterday I met a friend for lunch and the parking lot was packed..middle of the week. The restaurant was packed. We both looked at each other and said the same thing. “Wow, three years ago you called to make a reservation or chance not getting a seat. Last year you called to make sure the place was still in business before you drove there, and today the place is packed again.” Leaving the restaurant I looked across the parking lot at two vacant “For Sale” free standing restaurant buildings and empty retail space in the main buildings of the retail center. How crazy is that.
I’m encouraged. Cautious, but encouraged.
Hoping you see more signs of improvement through the haze of the collapse.
John
