Landmark Links April 28th – How to Fix a Pothole

Quote of the Day….. “If Hannibal Lecter ran a 4.3, we’d probably diagnose it as an eating disorder” – Arizona Cardinals GM Steve Keim on how much off-field issues matter to NFL GMs when a player is talented.


West Coast = Best Coast: Cities in the West and Southwest are exceeding the growth that they experienced before the financial crisis, drawing young talent away from the rest of the country.  However, this comes with a price, especially in areas with housing constraints where the cost of living is booming as well.

Strikin’ It Rich in Seattle: The economy in Seattle is booming with a strong mix of tech aerospace and other growth industries.  It also costs far less to live in than tech hubs like San Francisco and parts of the South Bay in Los Angeles which is helping to fuel the boom.


California is not running out of water.  It’s running out of fresh water.  That’s a critical distinction because fresh water can be manufactured.  It just costs more to do so and California is literally addicted to cheap water.  Desalination has been around for centuries and is becoming a key area of focus as the drought is well into its 4th year.  It’s used around the world to provide water to places were fresh water isn’t plentiful like Australia and much of the Middle East.  That being said, it isn’t cheap and, despite some recent advances in technology it’s an extremely energy-intensive process.  The drought and mandatory 25% cut that it has resulted in is pitting cities against agricultural concerns as both are forced to cope with an increasingly scarce resource.


Thus far, scarcity has been the near-constant theme for housing in 2015.  Bloomberg provides a great summary of the housing market in charts.  In many desirable areas where employment growth is strong, there simply aren’t’ enough units being built or enough existing units on the market to keep up with household formation.  As housing costs have been soaring for both owners and renters.  There has to be a breaking point somewhere.  One result of this trend is that Ellis Act evictions are on the rise in LA where owners of rent-controlled buildings are converting to condos.  One place that Los Angeles could find space to develop is near the soon-to-be reinvigorated LA River.  The area has been largely ignored by developers but could be attractive if/when the river becomes a park amenity rather than a drainage ditch.  The city will need to do something dramatic to meet Mayor Garcetti’s goal of building 100,000 new housing units by 2021.  As low as supply is in prime markets, inventory might actually be overstated since a substantial portions of the available listings are “stale” and unlikely to transact at anything close to their asking price.  There is one space where the market is undoubtedly strong: Ultra-Luxury where prices of $40MM or more are no longer a novelty.

Commercial Real Estate

Cashing in on the Venture Capital Frenzy: Real estate owners in tech-heavy locations are benefiting massively from the boom in Venture Capital funding to start-up companies just as they did 15 years ago.  There is little if any office space left in parts of Silicon Valley where office rents have doubled since 2011.  Developers are clamoring to add more development against the wishes of a lot of locals as rents continue to rise and vacancy has fallen below 2%. This works great for everyone….until it doesn’t:

“In this process, lots of startups are forming and hiring. The main and obvious beneficiaries right now are real estate owners. They are turning crappy Class C and Class B space into sought after incubators and co-working startup spaces. Vacancies are down. Rents (or memberships) are up. WeWork is valued at $5B. If and when VC and angel money dries up, the operating leverage the landlords and owners get on the way up will hurt on the way down as startups without funding lay off people, downsize and can’t pay rent. Shockingly, this scenario took place 15 years ago and landlords went from taking equity in their startup tenants to demanding 6 months cash up front in case they weren’t good for it. Things got messy quickly. Today we are in the dispersion phase. Every experiment is being tried. Many will do amazing things. Most will fail. But the byproduct of their detritus will be the fodder for the next wave to recombine into more useful things.” Lux Capital (via Medium)


Green Apple: Apple’s US operations are now 100% powered by renewable energy sources including its data centers.  The company is also building solar farms in China in an effort to do the same with its manufacturing facilities.

Chart of the Day

Office vacancy in Mountain View, CA is nearly non-existent as landlords have benefited from a boom in VC funding.

Source: The Wall Street Journal


How to fix potholes quickly: 1) go around town with a can of white spray paint and draw giant penises on them.  2) Wait for city to fill them and get rid of the offensive drawings.

The Most Frugal Man on Earth – The $8 Million Dollar Janitor: Ronald Read was a life-long gas station attendant and janitor who died last year at the age of 92.  He didn’t come from a wealthy family. By the time of his death, he had accumulated stock holdings and property worth $8MM, most of which he donated to charity, shocking his family and friends.

Drugs are bad, ‘mkay: Florida Couple Arrested or Selling “Golden Tickets” to Heaven; Jesus Blamed (h/t Winn Galloway of Land Advisors): “I’m willing to wear a wire and set Jesus up…”

Monkeying Around (video): Tourist flicks off monkey.  Epic fail ensues as monkey drop kicks his ass.

The United Church of Bacon is a real thing.  It is also suing Wells Fargo for Discrimination h/t Michel Faris of Land Advisors)

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

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Landmark Links April 28th – How to Fix a Pothole

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