12th Annual Inland Empire Market Trends - Appraisal Institute

Yesterday was a red letter day. I delivered a brief speech on the East Inland Empire that I have been working on for the past week. Prior to this, my only real speaking experience has been in 10th grade drama, so I was pretty nervous.

But the appraisers at the event were very friendly, and I think only a couple of them dozed off during my presentation.

I was not sure what to expect. Erik Hernandez at Lee & Associates went before I did with the topic being the West Inland Empire industrial market. These two markets are similar, and the big picture trends effecting them both are nearly the same.

So I decided to take a step back and give my view of the "really big picture", talking about supply chain dynamics, import volume and consumption trends. My report is available here.

I think I may have overdid it. I think most of the audience was there for information on financing, landlord and tenant issues and residential information.

I think if I was to do it again next year, I could improve and make it more relevant. One of the biggest mistakes you can make is to not understand your audience and I think I was a little off the mark.

A few people came up to me afterwords, interested in my port regression. This part I really enjoyed; other proxies for port volume, the Baltic Dry Index, shipping rates etc.

Appraisers are smart numbers oriented people, so the fit with research is natural.

Here are links to some of the other presentations:

Apartment Market: Very good info in there on loan standards and why nobody is building anything right now.

Hotel Market: I actually work with Brandon, he works upstairs at the downtown office. Research is downstairs, so we don't interact a whole lot. Which is a shame, because we do a lot of the same things. Such as create market reports. Basically, economy is in right now, and anything with luxury or resort in the name is getting hammered, especially as companies cut back on "excessive" spending. PKF is predicting a hotel recovery in 2010.

West Inland Empire: I am not sure if Erik's presentation was actually long, or I just perceived it as long since I was nervously waiting to go next. He covered quite a bit, but what was new to me were the "opportunity funds", the mountains of money that are waiting for the bottom to occur. The retail investment presentation also talked about this issue, so when prices start to go back up, they might go up much, much quicker than rational people would expect. This is because everyone jumps into the pool at the same time, another feast, setting up for another famine.
We have also been seeing the "blend and extend" where landlords cut existing rent on tenants for the commitment of extending their lease term. I thought his "blend and pretend" strategy was humorous as well, where the landlord tries to keep the tenant in the building by employing all sorts of rental engineering.

Retail investment More info on financing and insight into the distressed asset portion of the retail equation.

Retail leasing: This has a lot of tie in with the industrial space in Southern California. Fewer retailers means fewer industrial warehouses. Discounters are dominating as consumers cut back consumption.

I again want to thank my gracious hosts in giving me the opportunity to work on my public speaking skills. I met many great appraisers who I will be adding, hopefully, to the comparable network I am trying to strengthen here in Southern California.