Ghost Town

What makes a city? To me, it's the people. The people develop certain patterns and those become the culture. The reason I chose to move to Portland was the people and the culture, which is the same reason I love to travel the world, meet people and experience different patterns and cultures. The many years of travel have taught me that we are all very different and also the same in so many ways. The difference plays heavily on culture and geography. For example in warmer European countries like Spain, businesses would close midday in the heat of the day for a few hours and reopen in the late evening, sometimes as late as midnight, to serve their customers. Families tend to use break time as family time. However, in the USA we have a different practice, whereby we tend to stay open all day and close our businesses just in time for dinner or family time. What I see are the patterns. The patterns of people. Everyone has a slightly different pattern like some jog first thing every morning others do it in the evening. Patterns of people are important to analyze as you seek to make investment decisions, for it will have will cause and an effect on values and cash flow of the investment or commercial property you have interest in. It has been my experience, and when it comes to real estate I firmly believe, that it takes 9 months to 18 months to change a pattern or let's call it a “habit”. When I see the massive disruption that is happening to our economy, I see a change in patterns and habits. We are definitely being pulled to create new habits, for example, I have changed my daily practice/habit by integrating this blog and writing content. The longer we continue to keep our businesses on pause, the more likely we are to develop new patterns that will become habits. Let's say businesses re-engage towards the end of May or early June, there will definitely be a change in people's habits, but I don't believe it will be that drastic because it's still a relatively short amount of time and not necessarily long enough for most us to create new patterns or habits. There will be larger changes, for example, more focus on how to protect the economy in the future without the massive shutdown of businesses. I foresee better systems in place for mass testing of pathogens that could help prevent an epidemic on a global level as a preventative measure. I expect an uptick in behaviors like buying a grocery online because consumers have become used to the convenience and have learned how to create a practice around the comfort and convenience of online ordering. How will this alter the day-to-day operations for grocery stores? How will they adapt to this new pattern? When investing in commercial real estate it is so important to be informed and to study the patterns of people and industry. Perhaps office space is less necessary as now people are working from home. Perhaps some of these people will not want to come back to a traditional office setting and they may want to work from home. I am watching this shift closely to see what transpires in the weeks to come. If more people work from home, there is less of a need for office buildings, which means the need and value of office buildings will decline. I believe I am seeing another pattern that could help change the use of the office is to replace those offices with servers to support the 5G and all the data transfer which is not going down but up in volume. These are just thoughts that still need solid data to drive your investment decisions. So if you are considering an investment in an office building watch this pattern. there are many others to discuss but I will save for another blog.

Tell us what patterns or habits you are changing?

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