Tag Archives: economy

Stay Serious When Seeking Greater Good

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The Way I See It

BY IAN BLACK * SRQ DAILY * SATURDAY PERSPECTIVES EDITION * SATURDAY DEC 17, 2016

While enjoying a sabbatical last May in the “Ould Sod,” my ire was elevated when I learned that the County Commission folded to the “fierce backlash” not of the business community, as referred to in Zach Murdoch’s recent column in the Sarasota Herald-Tribune, but to the demands of one or two roofing contractors backed by the Gulf Coast Builders Exchange to shut the door to efforts to bring the corporate headquarters of the North American Roofing Company to our community. My ire was further elevated upon reading Mary Dougherty-Slapp’s recent column in SRQ Daily, which stated: “Let’s make Sarasota a place that businesses want to come to grow and hire workers with good paying and quality jobs.” So, are we now to believe that the GCBE, after advocating the very opposite in opposing Project Mulligan, now want us to believe that the board have had an epiphany? Hopefully so. The GCBE has always been a proponent of economic growth and vitality even though on this occasion they appeared to be in cahoots with those who would not be in favor of efforts to attract meaningful jobs to our community.

Diversification of our economy is a serious topic and I am heartened that the County Commission, encouraged by our newly elected Commissioners, have prioritized this subject for the BCC over the next year. As a community, we are asking for trouble if we do not take advantage of the incentives that are available for economic diversity. We need to balance the three-legged stool. It is not sufficient that we rest on our superior “quality of life” reputation to attract qualified targeted industries and corporate headquarters. These targeted industries are well documented by the State and are revised every three years. These industries have been identified as those that can help diversify local economies to make them more robust and resilient during an economic downturn or an economic recession. 

I am all for working together to create a strong future as suggested by Mary’s column. The tools necessary to do this are readily available for use in the right circumstances. However, we as a community need to seriously get behind these efforts and not simply put the interests of a few before the greater good when an opportunity such as Project Mulligan comes before us in the future.

There is a time honored maxim in my industry: “Dear God please give me one more real estate boom and I promise I won’t fritter it away.”

Ian Black is founder of Ian Black Real Estate.

For complete article and others, CLICK HERE <—–

 

Is a correction in commercial retail coming?  If so, when?

  


By Natalie Dolce via Globe St

VEGAS—It is that time of year again and GlobeSt.com ramps up its retail coverage in preparation for RECon, the International Council of Shopping Centers’ sprawling annual get-together. As more than 30,000 attendees prepare to descend on the Las Vegas Convention Center for this year’s edition, GlobeSt.com sat down recently some key attendees and retail experts to discuss some expectations for the upcoming event.
Chris Wilson, EVP and southwest retail brokerage lead of JLL, tells GlobeSt.com that this year, he expects to see a high degree of speculation regarding where we are in the real estate cycle. “I expect to hear and be part of discussions that are not if a correction is coming but when,” he says. “I hope to gain some insight as to how hard the landing might be and what may cause the correction.”
Jeff Hughes, a managing director at Stan Johnson Co., is looking forward to several key meetings with longstanding clients as well as getting a sense of what the overall activity level and sentiment is amongst developers and investors. “These large gatherings are an easy way to receive quick feedback on market health while gaining new activity from new clients,” he says.
According to Hughes, although retail is seeing high transaction volume, “markets are sending mixed signals with disruptors.”
Hughes says that is “possibly because there is an increase of supply or concern about the CMBS markets, and investors are going to give pause with this year’s election.”
Ron Meyers, SVP of Leasing, Phillips Edison and Co., tells GlobeSt.com that through the firm’s 25-year history of building shopping center portfolios, it has deep seeded relationships with many of the retailers who attend the convention. Meyers and his team conduct more than 1,000 meetings each year. “It is always a good time to reconnect with them and provide an update on our growing portfolio and our tenants’ growth plans. In addition, we look forward to developing new partnerships with national tenants that have growth plans that align with Phillips Edison’s strategic business objectives.”
For complete article, click here 

Understanding deflation and why it is so scary

Understanding deflation and why it is so scary

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By Rick Newman via Yahoo Finance

If the price of a car or an iPhone drops, that’s usually good news for consumers. So it might be puzzling that investors and economists suddenly seem freaked out about the possibility of deflation, or a sustained drop in the level of all prices, on average.

Deflation was a concern back in 2010 and it’s a fresh worry now as oil prices plunge, the stock market wavers and consumers put spending plans on hold.

The paradox of deflation is that falling prices on a few items can generally be good for consumers, leaving more money in their pockets for other things. But falling prices on too many things can have ruinous effects on the economy that are hard to reverse. Japan suffered nearly two decades of deflation starting in the early 1990s, and deflation helped prolong the Great Depression in the 1930s.

When all prices fall, consumers have a strong incentive to put off purchases — after all, everything will probably be cheaper tomorrow. Some purchases are hard to delay—food, medical care, gasoline to get to work. But a lot of the things we buy can wait, which is why sales of cars, clothing, and appliances drop sharply when times get tough.

In an economy like ours — in which consumer spending accounts for about 70% of total GDP — a powerful incentive to postpone purchases can be disastrous. When spending drops, so does corporate revenue, raising pressure to cut costs, which leads to layoffs and other personnel cutbacks. Companies are likely to freeze salaries or even cut pay for those workers remaining. Dwindling income makes consumers even more leery about spending money, worsening the whole cycle.

More expensive debt

The other mechanism for deflationary ruin is debt. One big reason lending helps the economy grow is inflation—most loans become easier to pay back over time, because the principal doesn’t grow but income used to pay it down does. We typically think of inflation as a rise in prices, but it’s usually accompanied by an increase in workers’ wages as well, and as long as wage increases exceed price hikes, ordinary people get ahead. Home buyers, for instance, often “grow into” a mortgage that might seem onerous at first, because their income climbs as they progress through their careers. The mortgage payments on a fixed-rate loan, by contrast, remain constant. So in a typical economic environment, you gradually earn more income to make the same payment every month.

Deflation creates the opposite phenomenon: Debt gets more expensive over time, because consumer spending power declines. When prices and corporate revenue fall for a sustained period of time, wages inevitably go down, too. That makes fixed-rate debt more expensive, because you have less money instead of more to make the same regular payments. The mismatch affects companies and even governments the same way it does consumers, causing cash-flow shortages, liquidity problems and bankruptcy. Each of these ugly outcomes reinforces the others, making a deflationary spiral very hard to pull out of.

On top of that, deflation makes people wary of taking out debt in the first place. Too much debt is a problem in itself, but prudent lending is an essential element of capitalism. Without it, investment shrivels and wealth is more likely to disappear than accrue.

For complete article, CLICK HERE <—–====

Demand for home loans plunges

Demand for home loans plunges

By Nick Timiraos via The Wall Street Journal

Mortgage lending declined to the lowest level in 14 years in the first quarter as homeowners pulled back sharply from refinancing and house hunters showed little appetite for new loans, the latest sign of how rising interest rates have dented the housing recovery.

Lenders originated $235 billion in mortgage loans during the January-March quarter, down 58% from the same period a year ago and down 23% from the fourth quarter of 2013, according to industry newsletter Inside Mortgage Finance.

The decline shows how the mortgage market is experiencing its largest shift in more than a decade as an era of generally falling interest rates that began in 2000 appears to have run its course. The average 30-year fixed-rate mortgage stood at 4.5% last week, up from 3.6% last May, when interest rates shot up in reaction to the Federal Reserve’s initial indication that it might reduce a bond-buying campaign that was, in part, designed to keep a lid on long-term rates like mortgages.

For complete article, CLICK HERE <—–=====

It’s Now a Renter’s Market* *(in some areas)

Across the U.S., desperate landlords are coming up with novel ways to attract new tenants and retain old ones

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Amy Gips loves her one-bedroom apartment in a swank Manhattan building that features a gym, golf simulator, yoga studio, and massage rooms. But she no longer feels she can justify paying $4,400 a month in rent, especially now that her ex-boyfriend has moved out.

A week ago, just as the 27-year-old associate at a private equity fund was planning her next move, a letter arrived from the property management company. The rent for the 750-square-foot Chelsea apartment with floor-to-ceiling windows overlooking Madison Square Park was reduced $900, or about 20%. It changed her calculus, though she hasn’t given up on the idea of shopping around for something under $3,000 a month, with one or two months of free rent thrown in.

For years, rising rents in Manhattan were thought to be as inevitable as baseball at Yankee Stadium. But times change, and in New York, landlords are scrambling to hold on to renters who have been hit by the economic downturn.

That means renters who, like Gips, are still in good financial shape now have the whiphand. “I was thinking that the rent was so high that there was no way I’d consider staying,” says Gips. “Now that they’ve offered the reduction on their own, I kind of feel I should do a bit of negotiation.”

Avoiding Empty Apartments

During the six months since the financial crisis began in earnest, control of the Manhattan rental market has switched to the tenants, who no longer have to pay broker fees (traditionally about 15%) and who can get up to three free months of rent and even gym memberships thrown in just for signing on the dotted line. The power shift might not be as dramatic in other parts of the country, but rents are getting more affordable from Charlotte to San Francisco. And landlords everywhere are getting more creative (and desperate) to hold down vacancies and prevent turnover.

• Landlords figure it’s better to take a hit by offering a month or two of free rent and other freebies than to carry empty apartments that aren’t generating income.

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It’s a nationwide phenomenon, according to Victor Calanog, research director at real estate data firm Reis. Half of apartment buildings reduced rents in the fourth quarter of last year and the first quarter of this year — the highest percentage since Reis began tracking apartment data in 1980. (By comparison, only 17% of buildings reduced rents in 2007.) And average asking rents fell 0.6%, to $1,046, in the U.S. in the first quarter, compared with the previous quarter, the largest drop since Reis began collecting quarterly data in 1999. And average effective rents, which include free months and other landlord incentives, fell 1.1%, to $984.

Effective rents fell in 64 of 79 markets that Reis tracks. Effective rents in San Francisco dropped 2.8% in the first quarter of this year, compared with the previous quarter — the nation’s largest quarterly decline. Rents fell 2.6% in New York City (all five boroughs), 1.3% in Charlotte, 2.5% in San Jose, 0.9% in San Antonio, 0.9% in Cleveland, 1.2% in Chicago, and 2.3% on Long Island. Only a few markets, such as Houston and Dallas, showed increases, Calanog says.

For Full Article written by Prashant Gopal via Yahoo Finance & Business Week, click HERE <—–

Change!

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Memo – To all Employees

As the CFO of this business that employs 140 people, I have resigned myself to the fact that Barack Obama is our new President and that our taxes and Gov’t fees will increase in a BIG way.

To compensate for these increases, I figure that our clients will have to see an increase in our fees to them of approx. 8%, but since we cannot increase our fees currently due to the dismal state of the economy, we have no choice but to lay off eight of our employees instead.

This has really been eating at me for a while, as we believe we are family here and I didn’t know how to choose who will have to go. So, this is what I did. I strolled through our parking lot and found 8 Obama bumper stickers on our employees’ cars and have decided these folks will be the first to be laid off. I can’t think of a more fair way to approach this problem. These folks wanted change; I’m giving it to them.

Sincerely,
CFO & The Boss

Obama to Unveil $75 Billion Mortgage Plan

One day after signing a $787 billion stimulus bill into law, President Barack Obama will outline a $75 billion plan to help stem foreclosures, which is at the heart of the nation’s deepening economic woes.

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Johnny Cash – God\'s Gonna Cut you Down

The goal will be to prevent millions of American families from losing their homes because they can’t make mortgage payments.

“All of us are paying a price for this home mortgage crisis,” Mr. Obama will say of the plan, according to prepared text of remarks released to the Associated Press.

The plan, called the

    Homeowner Stability Initiative

, would provide incentives to lenders to cut monthly mortgage payments to sustainable levels. It defines this at no more than 31 percent of homeowners’ income.

Mr. Obama will outline the plan Wednesday at a high school in Mesa, Ariz., one of the states hardest hit by mortgage defaults.

More than 2 million American homeowners faced foreclosure proceedings last year, and that number could reach as high as 10 million in the coming years depending on the severity of the recession, according to a report last month by Credit Suisse.

“In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen,” Mr. Obama plans to say.

The plan will include several elements, reported the Washington Post.

It will encourage lenders to lower borrowers’ payments to affordable levels, perhaps through the government subsidizing lower interest rates. It also will establish industry standards for modifying troubled loans, which could include extending the terms of loans or giving borrowers a short-term break on payments.

Homeowners would also be allowed to refinance their mortgages if they owe more than their homes are valued, reported the AP, and bankruptcy judges would be given more authority to change mortgages.

An official, speaking on the condition of anonymity, also told the AP that the Obama administration will use Fannie Mae and Freddie Mac to help prevent borrowers from defaulting on their mortgages.

The administration, reported the Washington Post, also focused on developing a plan that would not put too much taxpayer money at stake, supplanting previous government foreclosure prevention efforts that have fallen short.

As part of the housing rescue plan the Treasury Department would double its financial support for housing finance giants Fannie Mae and Freddie Mac, allowing them to play a bigger role supporting housing as part of a fresh foreclosure mitigation plan, according to Reuters.

The Treasury said it was increasing its preferred stock purchase agreements with the two government-controlled companies to $200 billion each from $100 billion. It also said it was raising the limit on the size of the mortgage portfolios the two companies can hold by $50 billion to $900 billion each, along with a corresponding increase in their allowable debt outstanding.

This story compiled from numerous sources on the web.
via original content – http://PBS.com

Circuit City says “Game Over”!

FRIDAY, JANUARY 16, 2009

Circuit City waives the white flag!
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By MICHAEL FELBERBAUM and VINNEE TONG, AP Business Writers

Circuit City Stores Inc., the nation’s second-biggest consumer electronics retailer, said Friday it had run out of options and will be forced to liquidate its 567 U.S. stores. The closures could send another 30,000 people into the ranks of the unemployed.

“This is the only possible path for our company,” James A. Marcum, acting chief executive, said in a statement. “We are extremely disappointed by this outcome.”

The company had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable. And bleak holiday sales results further weakened even the stronger retailers.

Circuit City said in court papers it has appointed Great American Group LLC, Hudson Capital Partners LLC, SB Capital Group LLC and Tiger Capital Group LLC as liquidators.

“Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders,” Marcum said.

Shareholders are likely to receive nothing, as is typical in bankruptcy cases. It was unclear what would happen to the company’s 765 retail stores and dealer outlets in Canada.

Circuit City filed for Chapter 11 bankruptcy protection in November as vendors started to restrict the flow of merchandise ahead of the busy holiday shopping season.

It had been exploring strategic alternatives since May, when it opened its books to Blockbuster Inc. The Dallas-based movie-rental chain made a takeover bid of more than $1 billion with plans to create a 9,300-store chain to sell electronic gadgets and rent movies and games. Blockbuster withdrew the bid in July because of market conditions.

Circuit City, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, said in its initial filings that it planned to emerge from court protection in the first half of this year.

Under court protection, Circuit City has broken 150 leases at locations where it no longer operates stores. The company already closed 155 stores in the U.S. in November and December.

U.S. Bankruptcy Judge Kevin Huennekens had given the company permission to liquidate if a buyout was not achieved.

The liquidation is the latest big blow to the nation’s malls, which have suffered from a rise in vacancies as a slew of chains from Mervyns LLC to Linens ‘N Things have liquidated. But analysts say that the demise of Circuit City, whose stores range in size from 20,000 to 25,000 square feet, will hurt the fortunes of mall operators even more.

“It will bring to market a glut of big box spaces across the country,” said John Bemis, head of Jones Lang LaSalle Inc.’s retail leasing team. “It will have one of the largest impacts on big box real estate across the country.”
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AP Retail Writer Anne D’Innocenzio contributed to this report.