One Big Thing
A few weeks ago, when pandemic-related shutdowns were in full swing and work from home was becoming a way of life, a suburban renaissance was a good bet. With the events of the past week, its becoming a virtual certainty. Civil unrest, protests, riots and looting have swept through nearly every urban (and some suburban) ares in the US in the wake of the murder of George Floyd. If cities seemed marginally less desirable due to large crowds and shared spaces recently, they seem a lot less attractive when broken windows, looted storefronts and civil unrest are taken into account.
The relative winners in this sort of environment are suburbs in areas with a reasonable cost of living and good weather. The losers? Tightly downtown multifamily properties and office buildings in tightly packed cities. Especially those in cold places and/or with a high cost of living and a large number of companies that have embraced work from home. The early market activity for lease rates in San Francisco and Silicon Valley are downright ugly.
Gateway cities were among the biggest winners of the longest economic expansion on record. Now that expansion is over and a combination of the pandemic, recession and social unrest have them looking extremely vulnerable.
What I’m Reading
Temperature Check: Calculated Risk’s high frequency indicators are beginning to show an uptick in economic activity.
In the Cross-Hairs: IF companies manage to shift their supply chains away from China (color me skeptical on this), the ports of Los Angeles and Long Beach could be post-pandemic losers.
Opening Up: San Francisco is going to offer sidewalks, streets and public spaces for business activity. This is a step in the right direction and should have been done years ago. Its one of the things that makes European cities so appealing. Good to see it and I hope that more cities allow it.
Season of Uncertainty: Businesses in resort towns that rely on seasonal income to survive are facing a summer season where they don’t know what business will look like thanks to social distancing and COVID.
Chart of the Day
Giveaway: In a sign that 2020 has not yet hit rock bottom, a federal judge granted Carole Baskin’s Big Cat Rescue control Monday of imprisoned reality TV star Joe Exotic’s former zoo properties in Oklahoma, finding they were fraudulently transferred to avoid paying her under a $1 million trademark judgment.
The Irony: A man robbing a hot dog stand in Chicago had his gun misfire and shoot him in the penis while he was adjusting the waistband of his pants.
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