What I'm Reading Tipping Point? Industrial developers are delivering nearly 700m sf of warehouses across the US following two years of record absorption. Tenant demand remains incredibly strong. However, with a recession likely coming, there is an increasing risk of overbuilding in some markets. Bisnow Hitting Pause: Amazon has been...
July 11th – Staying Power
What I'm Reading Staying Power: As the pandemic fades, there was a sense that the effort to shorten supply lines and bring production back home would fade. However, that isn't happening. The construction of new manufacturing facilities in the US has soared 116% over the past year, dwarfing the 10%...
June 23rd – Perfect Storm
What I'm Reading Perfect Storm: Supply chains are experiencing a massive bullwhip from the COVID economy and have resulted in a build up in inventory levels. At the same time, a slowdown in consumer spending caused by inflation could result in a recession. Freight Waves IMO, consumer discounts are coming....
June 22nd – Make it Rain
What I'm Reading Make it Rain: An LA Times review of state data found that it routinely costs more than $1m per unit to build a subsidized affordable housing unit in California. Between prevailing wage requirements, high material and regulatory costs, the process has become so bloated with corruption and...
June 20th – Domino Effect
What I'm Reading Domino Effect: Higher mortgage rates and a slowing housing market will help slow inflation today. However, it will also lead to less home building and layoffs across the housing industry ranging from builders to lenders and everything in between. As a result, a slowdown today likely makes...
June 16th – The Hangover
What I'm Reading The Hangover: California has a near-$100 billion budget surplus thanks to booming asset prices leading to a capital gains windfall. As usual, politicians in Sacramento are fighting over how to spend the money quickly by establishing new social programs or funding large one-time expenditures. However, with asset...
June 9th – How Low Can You Go?
What I'm Reading How Low Can You Go? The MBA's Market Composite Index, which includes purchase and refinance applications, fell 6.5% on a seasonally adjusted basis to 288.4, compared to 645.4 one year ago. That's the lowest level in 22 years. Reuters What a brutal time to be in the...
June 6th – Pick Your Poison
What I'm Reading Leveling Off: Rent is still increasing sharply YoY but the pace is slowing somewhat. Calculated Risk Trade Off: Just-in-time inventory management substantially reduced the risk of inventory cycle recessions where over-ordering leads to a glut. In the post-pandemic world, companies are increasingly opting for a just-in-case model...
May 24th – Shock and Awe
What I'm Reading Shock and Awe: Amazon has put 10m square feet of warehouse space on the market (it could reportedly go up to 30m sf) as the ecommerce giant deals with excess supply brought online during the pandemic. However, a deeper look tells a different story. The 10m sf...
May 6th – Mean Reversion
What I'm Reading Mean Reversion: Americans have returned to their pre-pandemic consumption habits with spending on gyms, concerts and recreational travel up substantially. At the same time, pandemic darlings like Peloton, Netflix and Instacart have underperformed. Wall Street Journal My take: a lot of this is mean reversion. Americans were...