Ahh,
springtime. Longer days, warmer temps, flowers abloom, the crack of the bat on
opening day of MLB, NCAA final four, and the Masters golf tournament. You may
be wondering how I have time to make any deals with all the sports happening
this time of year. It’s tough. But in light of the screen time I’m spending, my
thoughts these days are random.
Please
stay tuned as I run through a few thoughts I have clouding my consciousness.
Someone famous once said - they’re only opinions, but they’re all mine”.
Seller/buyer disconnect. I wrote an entire column on this
topic last week. If you missed it, you can catch it online.
Not
terribly long ago, we were immersed in a seller’s market. Occupant demand
outstripped supply and sellers were bullish. Multiple offers were the norm.
Asking prices were abandoned for the dreaded TBD in case pricing was pegged too
low and money was left on the table. The amount of buyer activity determined
the ultimate strike price. In order to compete in this frenzy, occupants were
forced to shorten due diligence periods, jettison financing contingencies, and
seemingly overpay. A listing translated into a guaranteed paycheck.
My
how the world has changed in two short years. The only thing keeping sales
prices relatively stable is a lack of availabilities.
Impact of our Presidential
election. I
get asked quite often what to expect if Mr. Trump is elected vs Mr. Biden.
Generally, a republican administration can portend tax cuts, an increase in
defense spending, loosening of government regulations, and the appurtenant boom
in the economy. To the extent this boom causes prices to rise - interest rates
must be hiked in order to cool the fever.
Counter
to this would be a democratic administration with higher taxes, cuts in
defense, more regulation, and a weakening economy.
Yes.
I’m oversimplifying. I can hear the detractors screaming - we have a democrat
in office and the economy is just fine. In our most recent republican tenure,
government debt increased dramatically. So the above are only
generalities.
Bottom
line. Who knows?
What’s happening with our
economy? Speaking
of said economy, what’s up? Consumer confidence is high, over 300,000 jobs were
added in March, labor participation rate is now close to two thirds. If the
economy is in the doldrums - why are employers adding so many jobs? Granted a
big portion of the new employment is in the service industry where folks are
spending money to dine out, take trips and buy experiences. Meanwhile, we
expected a declining interest rate market this year as we anticipated the
Federal Reserve would start the march down with inflation coming to heel. As of
this writing, our benchmark ten year treasuries are topping 4.4% - bad for
borrowers, good for savers. Retailers in the beauty trade are taking their
lumps as well.
Bottom
line. Who knows.
Springtime
spells new beginnings. Another year and another batch of things to ponder.
Should be an eventful balance of 2024.
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.
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