Merry Christmas

You’re likely reading this in your slippers and bathrobe surrounded by excited kiddos. After all, it’s Christmas! From our family to yours, may this season of giving be your best yet! 
 
It’s also Sunday - which caused me to ponder the last time the blessed day fell on this day - so I researched it. According to an answer by Jack Wallace in Quora: “If it were not for Leap Years, it (Christmas) would fall on Sunday once every 7 years. But because of Leap Year, it follows a general pattern of years: 6–5–6–11 (just like every other date but Leap Day). The first Sunday Christmas this century was in 2005 (and the last one before that was 11 years earlier in 1994). Christmas fell/falls on Sunday these years: 2005, 2011, 2016, 2022, 2033, 2039, 2044, 2050, 2061, and so on … until the lack of a leap year in 2100 messes up the cycle, producing Sunday Christmas in 2101, and then the pattern of 6–5–6–11 resumes again until (again) the lack of a leap year in 2200 interrupts the pattern.”
 
Ok. Great. But how does that relate to commercial real estate? Indulge me, dear elves and I’ll be your Santa Claus - except the coming down the chimney part.
 
2005. George W. Bush was inaugurated to a second term as President, the Kyoto Accord was forged and Michael Jackson was convicted. Katrina rocked the Gulf Coast as a Category 4 Hurricane and destroyed parts of New Orleans and beyond. Industrial land in north Orange County traded for around $14 psf, rents were in the $.40 NNN range and sales prices were in the mid $90s. Four years hence from the dot com bubble - industrial demand was active and investor appetites strong. Little did we know a parapice was approaching which would derail our commercial real estate market in 2008. 
 
2011. Arizona congresswoman Gabriel “Gabby” Gifford was gunned down while campaigning at a shopping mall in Tucson. She would survive. Not so for Muammar Gaddafi in Libya or Osama Bin Laden in Pakistan. Nuclear disaster was averted in Japan and the commercial real estate market was awakening from the ether of 2009-2010. Akin to Rip van Winkle, our industrial activity roared back to life and prices started to regain the losses incurred in the tough days. I’ll always remember an acquisition’s rep for Rexford told me - “we’ll look back on these days as the buying opportunity of our lifetimes.” And they and many others did!
 
2016. We elected a real estate developer to the office of President and recreational cannabis was legalized in California. An no, the latter didn’t precede the former. They happened during the same election. Industrial real estate started its historic march up the Everest of pricing - which would summit in June of 2022. Vacancies crashed below 2% as occupants scrambled to grab space and investors clamored to acquire it. Fueled by Eisenhower era interest rates and insatiable demand - values on commercial assets had no where to go but up. 
 
2022. We’ve not closed the year and sung Auld Lang Syne but it’s safe to review - recovering from a pandemic, eye popping values, then a Russian invasion, Carter era inflation, interest rates headed up with more to go and residential values hitting the skids were all experienced this year. 
 
What’s in store for 23? Next week I’ll review my predictions from this year and chart a few for next - so tune in. 
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.