Thursday, November 26, 2015

Trend Czar

About This Blog

Unvarnished truth. Consultant Jonathan Miller (Miller-Ryan) has compelling views on the market, and he shares them with subscribers.
  • High Tech Job Killing

    Where will our next generation of jobs come from? The banking sector clearly is not a major growth industry—company staffing counts go sideways, average Wall Street bonuses slide, and retail operations shrink thanks to cash machines and smart phones. And who needs trading floors and as many day traders when transactions are programmed by computer algorithms. Consolidation has been occurring for years as most major cities have lost their money center banks to the global finance centers—New York, London, Tokyo, and Hong Kong, and a few others. Last week’s Wall Street Journal article about Bank of America highlighted how its Charlotte headquarters is just a fiction—most senior executives operate out of the New York area. When oil prices skidded last year energy towns cooled quickly after a hot growth spurt—Houston doesn’t look so appealing anymore and North Dakota (as if it were ever a major place to invest) is back in the doldrums… Oh Canada—it’s once highly touted economy has tracked backwards on oil price shocks. With U.S. unemployment at a lowly 5%, everybody is waiting for housing construction to really kick into gear, but that’s been like waiting for interest rates to increase. The “full employment” numbers continue to belie a compromised workforce, which suffers from ongoing wage stagnation and many college grads saddled with high student debt. As a result unsurprisingly, first time homebuyers continue to lag and home construction is well below past peaks… And if the Fed finally ticks up interest rates at year end, mortgage rates will follow—not exactly a plus for housing. So everybody is on the tech bandwagon, a notoriously volatile category, which is actually the biggest factor battering our workforce numbers and compensation levels. You can joke about how many more apps we need to find restaurants or the right pair of silver candlesticks. But how many more do we really need? Google and Facebook drive profits through advertising, but if people lose jobs or find their budgets stretched because their compensation flags they will have a tougher time eating out and just plain consuming, and that will eventually hit advertising rates. Meanwhile, the traditional advertising outlets like newspapers and magazines disappear with all the jobs they once mustered. TV network programming and cable TV platforms are about to fall apart as internet options disaggregate channel packages. Movie theaters struggle to keep up with home entertainment options. Lots of jobs continue to disappear. At some point we will figure out we don’t need all these tablets, smart phones, laptops, desktops, and flat screen TVs, and can consolidate functions without spending so much on so many expensive devices. Am I wrong, but did we reach the limit when Apple introduced smart watches? And so much of the tech sector is focused on facilitating productivity, which continues to lay waste to other traditional jobs and helps dampen average wage gains. Driverless vehicles promise to eliminate many taxi drivers and truckers; the proliferation of robots eats further into the manufacturing jobs that would build the driverless cars; drones and robots even reduce the need for as much flesh and blood in the military, a traditional employment option for the non-college bound. Internet shopping relentlessly cuts into bricks and mortar retail and all those sales jobs. Mom and pop store owners don’t have a chance when shoppers can buy the same item for less on Amazon. It’s the Walmart effect squared. And don’t you know Walmart and Target are relying more on internet sales, which will be packed by robots, delivered by unmanned drones and driverless trucks, and paid for through wireless transfers. Store clerks may get raises, but there will be fewer of them, many fewer. Will apps creators, social media bloggers, and robot repairmen replace all the bank tellers, newspaper reporters, and cabbies? Don’t think so...

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  • What About Public Space?

    Apartment buildings continue to propagate in and around urban cores to satisfy move back in trends and meet expected continuing demand from career-focused young adults. High rises with floor-to-ceiling glass and surrounding views, granite kitchen counter tops, well-appointed gyms, roof decks, pools, and business centers are all the rage.  Developers and advisors sell institutional partners and investors on almost can’t-miss “build-to-core” projects. Build them, lease them up, sell them to core investors hungry for any…

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  • No Better Than Bric-a-Brac

    On NPR yesterday morning the resident expert said all he knows is that “stocks go up and down,” which of course is all any of us really knows. But as I have been saying for quite a while now the U.S. economy and our property markets have been living off low interest rates with this government pump priming making us look better than we deserve and much better than just about anywhere else in the…

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  • Experiencing Millennials

    Amid strengthening consumer buying, most department stores continue to struggle—their sales range from sluggish to flat to down.  The big demographic bubble of Millennials dresses down—scruffy beards, jeans, and even tee-shirts become acceptable office attire in more companies. Suits and blazers are only necessary occasionally, if at all. And for years now it has been obvious that most people (not only GenerationY) no longer have as much time or interest to stroll through aisles of…

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  • Wary About Office--Tenants Edge

    We are six years into recovery and the national office vacancy rate is hovering somewhere around 15%. Is this the new equilibrium? Ten percent or under vacancy used to be the rationalized comfortable zone for relative supply-demand balance, but not many office markets can boast those numbers, especially out in the suburbs where much of the vacancy concentrates. Now, spec projects ramp up in many downtown markets beyond the relatively safe 24-hour cores like in…

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  • Our Exceptional US Infrastructure

    Just before I left for a trip to England last month, an Amtrak train left the tracks north of Philadelphia, killing eight and injuring more than 200. It was not a high speed train—we don’t have those in the U.S. In fact we don’t have many passenger train lines in this country, and the accident ironically precipitated another round of let’s cut funding to Amtrak from a Congress which has chronically underfunded passenger train service.…

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  • The Five Cap Rate Rule

    I was talking to a portfolio manager last week just as he was reviewing the latest benchmark quarterly return for open-end diversified funds from the NCREIF-ODCE. The total return for the first quarter on the highly followed index was 3.39%, including a hefty appreciation component of 2.20%....

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  • Private Equity Firms: The Curse of Success

    Blackstone’s $14 billion acquisition of GE’s real estate holdings highlights again the concentration of institutional property assets among a relative handful of global private equity players, who mostly trade among themselves, driving up prices. 

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  • Water Crisis

    About 15 years ago, I was out in Phoenix and a local was telling me about the unlimited supply of water available from regional aquifers. I had been questioning how the city could maintain all its vernal golf courses in the middle of cactus filled deserts, let alone the rampant suburban development stretching to the horizons. …

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  • Potholed Thinking: What's More or Less

    More and Less The monthly jobs report tells a familiar story—the unemployment rate heads down, lots of new low wage jobs are created, the overall labor force has not grown appreciably as more baby boomers retire, and the small minority of people at the high end of the education scale (with graduate degrees) have the greatest opportunity to secure most of the wage gains, while everyone else treads water or loses ground… Employees of Wal-Mart,…

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