Commercial Real Estate

In the USA, I'm guessing we're in the 7th or 8th inning of this cycle but a plunger awaits the foreigners who lent to Chinese Developers. Oh the unintended consequences of Central Planning (first the RE bust in the USA 7-8 years ago and now China):

bloomberg.com/news/articles/2015-04-22/china-wall-of-exported-junk-developer-debt-falls-on-global-funds
Click to expand...

OMG, somebody who agrees with me. Anything done by government central planning will go bust, and real estate lending is the epitome of government central planning. Just ask Barney Fag.
 
In the USA, I'm guessing we're in the 7th or 8th inning of this cycle but a plunger awaits the foreigners who lent to Chinese Developers. Oh the unintended consequences of Central Planning (first the RE bust in the USA 7-8 years ago and now China):

bloomberg.com/news/articles/2015-04-22/china-wall-of-exported-junk-developer-debt-falls-on-global-funds
Click to expand...

OMG, somebody who agrees with me. Anything done by government central planning will go bust, and real estate lending is the epitome of government central planning. Just ask Barney Fag.
Click to expand...

I know right? I'm just as shocked as you are that someone address agreed agrees with you.
 
In the USA, I'm guessing we're in the 7th or 8th inning of this cycle but a plunger awaits the foreigners who lent to Chinese Developers. Oh the unintended consequences of Central Planning (first the RE bust in the USA 7-8 years ago and now China):

bloomberg.com/news/articles/2015-04-22/china-wall-of-exported-junk-developer-debt-falls-on-global-funds
Click to expand...

OMG, somebody who agrees with me. Anything done by government central planning will go bust, and real estate lending is the epitome of government central planning. Just ask Barney Fag.
Click to expand...

I know right? I'm just as shocked as you are that someone address agreed agrees with you.
Click to expand...

tYIJPLZ.gif
 
Yes it appears to again be based upon unrealistic underwriting assumptions. The late stage euphoria is troubling as investors are once again thinking they can buy a whole office building, move all of the tenants out, put a million or two in renovations, and then it up to one or two big tenants at significantly higher rents.

Well that worked nicely early in the cycle but it could get ugly when someone is in the process of clearing a building or is in the middle of renovations and then cycle turns.

As for Central Planning, it never works out well. The Soviets tried it, the Cubans are still mostly trying it, and it was probably most disastrous under Mao. I would emphasize, though, that there needs to be rules and laws to referee Capitalism since in football (life always comes back to football), imagine what a shit-show it would be without refs or sensible rules (more like the XFL?).

Unfortunately, some in Congress have aggressively interpreted the Commerce Clause in the Constitution rather than understanding that the Founders sought to make interstate commerce regular (rather than see states enact tariffs / protectionism) which has led to more Federal meddling than there should be.

Commercial real estate is the hidden bubble
Click to expand...

 
All those cranes on the Seattle skyline remind me of the ramps to nowhere along I-5 when a big boom ended here suddenly in the 70's
 
A friend still in the biz recently told me he counted a record 57 cranes.

But what happens if we even have a garden variety recession and Amazon stops hiring or only hires to replace people leaving? Even worse, if we get stagflation like the 70's, gas prices will go up again so people will be less likely to order from Amazon.

Peak Birth Years for the millennials were 1989 and 1990 so those kids are already 25 and 26 so each day they are moving towards their peak household formation years (30-40) while apartments keep breaking ground with trouble gathering on the horizon.

All those cranes on the Seattle skyline remind me of the ramps to nowhere along I-5 when a big boom ended here suddenly in the 70's
Click to expand...

 
Seattle growth isn't about traditional household formation. It's about creating the type of housing future foreign workers want as they arrive to take all those new tech jobs... or what the wealthy Chinese and Arab students want to live in as they study Engrish at "Seattle College"
 
There might be some of that but have you walked around Cap Hill or SLU lately? Tons of tech millennials crawling everywhere (not that that's a bad thing) and I know about a half dozen people who have moved here to work for Amazon, FB, and Google...anecdotally, even more.

Seattle growth isn't about traditional household formation. It's about creating the type of housing future foreign workers want as they arrive to take all those new tech jobs... or what the wealthy Chinese and Arab students want to live in as they study Engrish at "Seattle College"
Click to expand...

 
Every day. Yes many of them are domestic tech imports but there are more foreign kids with cash, paying all cash, than I can get my head around. Seattle is changing in a dramatic, permanent way. Fast.
 
You should see SF. This place is insane right now, it's not real life. Or maybe it's the future, which is exciting to some extent, but mostly alarming.

I'm talking huge money all over the place, skyscrapers going up at an alarming rate for luxury housing starting around 10k a month. Minimum wage is about to be 15 dollars (yay! mom will be proud!), the robots are already replacing the humans, it's millenial utopia.

Sounds like Seattle isn't far behind, or at the very least, following the blueprint to the end of the world as we know it.
 
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The bubble isn't the glitz and glamour of downtown coastal cities. I watched two of those booms before I left Seattle

The bubble is the millions of square feet of strip malls and office parks that make up this great land
 
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