“The riskiest thing we can do is just maintain the status quo.“
Robert Iger
“An ounce of prevention is worth a pound of cure.”
Benjamin Franklin
Let’s talk about real estate, CA, and some Predicated Antecedents, while doing so I will like to mention Aline Barnsdall, a woman ahead of her time whom was able to envision what is now Barnsdall Art Park before the Griffith Observatory or the Hollywood sign were there like the world wide web, phones and apps which have reshaped our world. Think about the English language 50 years ago because woke did not have the same definition so our horizons will keep changing bringing CA and Different to a whole new level. Real estate in CA is saturated, and prices are like a high-end cars where you don’t question their quality but most people can’t afford. Markets seemed as good investments: CA, MA, & NY, among others present low cap rates yet the idea that the equity built over time justifies prices. Perhaps a better measure of equity is IRR and not a CAP rate which fails to notice TIs and fees.
Industrial buildings have been in high demand and that will continue to be the case for a while. Bezos had a grand vision from the beginning while recognizing Walmart as his biggest competitor, something he accounted and planned for. What does this mean? Everything is becoming more automatic like the fast-food industry. This prompts questions, such as, is it the healthiest? Can it be done better? The way in which our country is moving with automation being a front runner one must think of all the implications it brings. Industrial will continue to be on demand yet automation may take many hourly-income jobs: grocery stores, drivers (think of Tesla, and the automatic cars Elon is creating). Also, many hospital procedures can now be done from home and the amount of time in hospitals is constricted by the demand and lack of supply resulting on what I see in our horizons as the path for retailers and housing, mixed-use.
Mixed-use will help smaller retailers against the economies of scale players like Amazon possess. How? Mixed-use will help foot traffic which is optimal for the sustainability of business, e.g. you live upstairs, walk downstairs to buy what you need, and perhaps meet someone for coffee, after all we are social creatures. In the midst of our need for housing through mixed-use landscaping and aesthetics are essential this is something our cultural fathers: Emerson, Twain, and Sullivan all knew, meaning well planned development accounts for community and some form of forestation. A good example of this is Old Pasadena in Pasadena, CA and The Pearl in San Antonio, TX both created for more than real estate prioritizing history and community same as the many projects led by Bjarke.
Everything brings good and bad, sweet and sour, perhaps it should be viewed as Yin and Yang needing to coexist together in order to bring complex ideas to fruition in a way that honors our history while birthing solutions for the new needs our country has. The generation of baby boomers, millennials and now Generation Z have presented new needs and opportunities, office space in itself is different, and many people can now work from home. Again, mixed-use with recreational areas (parks & recreation) are a priority. We are in a new decade and I hope we make it better for us and those to come. What will happen with housing for the elder? The amount of debt we have? The opportunity to explore and develop other parts of our country investors have overlooked… Many things to think about and look at and my hope is that we can do what Robert Iger did for Disney.
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Today's Thoughts 