The beat goes on!!
It was an interesting week this past week. Post Labor Day always brings a flurry of meetings. Decision makers getting back from extended vacations, people becoming a bit more focused, boards meeting after the summer break. So, you can imagine the number of opinions discussed in this short period. Ranging from the Pats and Giants to the Sox and the Yankees to where the economy is going from here. So I won’t bore you with the Sox and the Yankees (Go Yanks!) or the Pats and the Giants (go Giants!). Let’s keep it to business.
First, I am HEARING more and more (not necessarily the majority but more and more) clients and prospects talking about the stabilizing of the ship. 2, 3 and 4 months of decent to even good business. A few talking about hiring a worker here and there and, believe it or not, even a couple talking about expanding (I know it’s been a while…yes, expansion means that you take MORE space…not less). Yes, consecutive good months bring consecutive good quarters. Consecutive good quarters bring expansion!
Second, I am SEEING better economic numbers. OK, you can argue the “W” recovery theory but there is plenty of evidence that the strength in the manufacturing numbers aren’t solely based on “cash for clunker” type programs. You can only drive inventories so low…you need to make something at some point. And yes, things are starting to be made once again. And yes, houses are starting to sell once again. That means the Lowes and Home Depot’s of the world will inevitably get busier…which means those companies that supply those companies will pick up as well. And that is a LOT of companies!
Third, I am SEEING more activity out there. And yes, while I still believe companies are making a lot of little decisions and no big decisions, we are at least seeing companies out there with expansion ideas. Will most of these companies ultimately renew and stay where they are? Yes. But there are fewer and fewer companies out there saying that we need LESS space. Thus the possibility that they might need more AND actually relocate! Still small to medium sized companies…but expansion nonetheless.
Unfortunately I am also HEARING the same ole’ negative talk amongst my colleagues and peers. How’s business? It stinks! Where do you think we are headed? No where good!
I can tell you this. The economic numbers are starting to turn people. And while we still have issues to deal with (CMBS markets, unemployment etc.), if history repeats itself, the economic recovery will be as strong as ever. The depressions in 1893-94, 07-08, 20-21 and 29-33 were all followed with economic surges. And I am sure that back in those times everyone also thought the sky was falling. I see no reason to believe that history won’t repeat itself.
Do I believe this recovery will be different. Yes. I am not convinced that the real growth is going to come from the typical sources. I believe that small and medium size companies, including new companies, will drive this recovery. IF it comes from large companies it will mostly come from large companies in new ventures.
Do I believe that we still have structural issues with inventory (too much large space on the market with no real large prospects to fill them). Yes. Do we have issues with credit? Well, kind of. Remember those small to medium size companies that are growing and expanding? They ARE! And there’s money (real estate loans) out there to get (banks are lending). One problem. Appraisals! The appraisers think the sky is falling too. And reduced appraisals on user driven loans are making it difficult for our healthy companies to expand. Reduced appraisals mean more equity needed for deals. More equity that growing companies (who need their equity to grow) can’t use for real estate. Thus killing the deal…thus killing the expansion.
So while there are admittedly hurdles to jump, there is opportunity coming around the corner. Not sure if that “corner” is Q1/Q2 2010 or sometime a little later, but I believe that it is not that far off. So let’s stop reading the numbers and worrying about the train coming around the corner. Because I believe that the train coming the other way that so many of us are worried about is NOT a train at all. It is actually the sun…ready to shine on those that decide to move ahead.
Remember…There are people who MAKE things happen. There are people who WATCH things happen. And there are people who wonder WHAT happened. Let’s make things happen!
Keep smiling!
Mark