Archive for November 2018
Meet my new neighbors!
The Puget Sound Business Journal just revealed that Facebook is about to lease 1.3 million square feet in Seattle’s exploding South Lake Union neighborhood. I might add that Expedia is moving from nearby Bellevue into a new campus in the Interbay Neighborhood (to the northwest of the map below). They will occupy the 750,000 SF waterfront site formerly used by Amgen, but will add about 200,000 SF of new space to house up to 9,500 staff. These announcement would be huge for any other top-20 market, but Seattle has it’s 1000 pound gorilla in the form of Amazon, which occupies a stunning 8,100,000 square feet, almost 20% of the downtown office space. By the beginning of the next decade (that’s in about a year, folks), Amazon will employ about 55,000 people in my immediate neighborhood.
The attached map is courtesy the folks at the Seattle Times. It’s about a year old (I’m too lazy to spend anymore time on this — journalists do great work.) but still more-or-less valid. It is simply astonishing how much space Amazon occupies in one city. For reference, in NYC, the biggest single private sector tenant is Citi, with only 3.7 million SF. As for dominating a percentage of the skyline, Amazon’s 19.2% is also in first place, with the next highest being Nationwide Insurance which occupies 16% of downtown Columbus, OH.
This is even more stunning when you think of how many brand names are in Seattle or the Seattle suburbs — Microsoft, Boeing, Costco, Paccar (they make Peterbilt and Kenworth trucks), the Russell Group, Starbucks, Weyerhaeuser, Holland America, and T-Mobile, to name a few. Add to that the Port of Seattle, which provides thru-put for Washington’s huge agriculture industry, and the associated expeditors, and hopefully you get the point.
I try to keep this blog from being too parochial, but it’s hard not to admit that Seattle is a pretty cool place to do business. However, this comes with some drawbacks. Morning commutes can be brutal — we have some of the worst traffic in America, and it’s getting worse by the day. Rents are going thru the roof. We are geographically constrained and the soil conditions make construction astronomically expensive. Eight or nine months of the year, the weather is retched (but truth be told, it’s the most beautiful place in the world in the summer time). The cost of living here is awful. That said, the Creative Class, as the urban economist Richard Florida would call them, flock here by the bus load. There is a lot to be learned from how we do things here.
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Happy Thanksgiving, everyone!
All of us at the Kilpatrick family, and from our extended family at Greenfield, wish you and yours the best of holidays and a great holiday season.
With that, I want to take one minute for business — here is a post from yesterday on my sister-site, ACCRE.COM. I hope some of you find this useful. Best wishes —
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Homebuilder Confidence Slides
The NAHB / Wells Fargo Homebuilder Confidence Index slid from 68 to 60 in a report just released this morning. This index is a composite of current builder expectations, buyer traffic, and 6-month sales expectations. While a reading about 50 is considered positive, this drop — to its lowest level since 2016 — is widely considered a bearish indicator. The monthly drop is the greatest since 2014.
This announcement contributed to a down stock market open this morning, and with good reason. Most investors do not appreciate the degree to which homebuilding permeates the broader economy, in terms of both direct expenditures (building supplies, equipment) and secondary and tertiary effects (payrolls, land investments, permitting and fees, insurance — the list goes on). Economists estimate that homebuilding contributes about 15% to 18% to overall GDP.
New home construction tends to be skewed toward first time buyers, and the shortages of such buyers has plagued the market for some time now. This signal suggests demand is seriously worsening.
On the positive front, commercial real estate looks pretty good this morning. My sister blog, ACCRE.COM, will have some commentary on that later this week.
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Political picture of America
I tend to avoid political commentary on this blog, save for issues concerning the economy. However, this morning I stumbled on some data — or more specifically, data presentation — which will be of interest whether you are a republican, democrat, or something else entirely.
Robert Allison, writing on the SAS Learning Post this morning, has a great piece titled, “Building a Better Election Map“. Allison notes that we are all confronted with a congressional election map that looks something like this:
This is misleading on a lot of levels. From a republican perspective, it implies that they still have control of the vast expanse of America. For democrats, this map makes them question whether or not they really took control of the House of Representatives. It’s simply not a good way to combine the population distribution of the U.S. with the data on House representation, which is supposed to be apportioned according to that population distribution. Allison experimented with a number of formats, and ended up with a great interactive map that divides the U.S. up into 435 equal sized representational images and then color codes them according to the current representation. Note that this map also shows where “flipped” seats happened this year.
Well, ain’t THAT neat! This immediately lets the reader see where geographic trends are happening. Several interesting pieces of data come out instantly. For one, Texas is “bluer” than one might think. Second, the largest number of republican-to-democrat flips happened in pivotal Pennsylvania (not in California, where one might have thought listening to the newscasts). Third, the old Confederacy is a lot “bluer” than one might have thought, with democrat-to-republican flips happening in Virginia (2), South Carolina, Florida (2), Georgia, and Texas (2 thusfar).
As noted, Mr. Allison’s work is interactive, and I highly recommend you read his entire piece. It’s a great article on both politics as well as data representation.
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Back again!
I’ve been gone for over a month, but hopefully not forgotten! One of the big stories around Greenfield has been the continues soft-launch of our REIT Fund-of-Funds, ACCRE. We’re rolling this out as a subscription-based newsletter, rather than an actual managed fund. However, non-subscribers wishing to follow our progress can simply tune into the blog itself, ACCRE.Com, and follow our periodic posts, but without access to the actual fund itself:
www.accre.com/2018/11/fund-status-for-october-2018/
From a small northwestern observatory... 