Christmas Holidays Anyone?

It certainly feels like an appropriate time to go off on holiday. Just as at Christmas, when you can take time off without fear of missing out on a deal, so would taking time off now have little impact on dealmaking.
There is little enthusiasm being shown by potential tenants or purchasers to conclude deals until after the election result is known.
 
So we thought that an appropriate use of the time that the market is effectively in hibernation would be to undertake our usual summer break thinking about market conditions. Perhaps we will be able to clarify our thinking about what may happen after October 14. Traditionally the industrial property market stopped dead for the 6 weeks of an election campaign. For a number of reasons, last election campaign this did not happen. But this time round has made up for last time. And of course with a Rugby World Cup at the same time, there is yet another excuse to do nothing.

So, for some of our thinking…

MARKET CONDITIONS

For some time the industrial market was shielded from the real impact of rising interest rates by the exceptionally low vacancy rates.
Even now those low vacancy rates, combined with high new build costs, are having an impact on holding up prices for vacant property.

But we appear to be on the cusp of a change in those conditions.
One of the major influences likely to bring about change, is underlying  business sentiment. Just how tough conditions are has not been highlighted in the mainstream media. But those agents close to their clients will know that there are businesses overstocked due to slow sales. And others that have run down their stocks – due to slow sales – and trying to sub-lease excess space, or even downsize their premises. And we are seeing businesses going under. To be fair, some of those businesses who don’t survive, are poorly run, in a sunset sector, or have little resiliency.

Whatever the reasons, the vacancy rate is likely to increase as economic conditions are tougher. And a new government won’t be able to wave a magic wand with the amount of debt they have been bequeathed, and need  to service.

The boom time cycle has lasted longer than expected - extended by profligate money printing on the part of the outgoing administration.

We are now seeing conditions many agents have never seen before. And the survivors will be those who can adjust their strategies. These conditions are  not new. It is just that we haven’t seen them for some years.
The light at the end of the tunnel is that the election will soon be over. Except of course if National/Act need a third party to form a government. And then the light is likely to be even further away.
 
And for some of our other thinking during our early Christmas vacation:

MENTAL HEALTH

Every generation has at some time some difficulty understanding changes in society. There are always concepts which are at odds with our upbringing and our background. I still have difficulty in understanding how driving an electric car is going to save the planet, when to power the electric car we ship brown coal all the way from Indonesia and then burn it to make the electricity to power the car.  And I struggle to understand why it takes most businesses longer to answer an email than it used to take them to write a letter and take it to the Post Office to send.

Coming from a generation where the solution for mental health was “harden up”, it has been something of a mystery as to why there appears to be a mental health epidemic.

But recently we heard a theory which seemed a very reasonable explanation.

And the theory went something along these lines – that over the last couple of generations people have become increasingly used to getting what they want, when they want it. And when they don’t get what they want, when they want it, that translates into mental health problems.

If you want to watch a particular television program then it is easy enough to watch it on delay. Or stream it. In other words you can watch it whenever you want. And even wherever you want. Which is different from the generation who had to be in front of a television set at a particular time on a particular day to watch their program on the one channel available. Or if you are a first home buyer you will have an expectation of buying not just a new home with clothes line, concrete drive, big television and fully furnished. Again different from the generation who would build a bed out of pallets and round up their mates to lay a driveway. And there is a the generation who expect to be able to walk out of university and walk into a management position. As opposed to the age where starting on the shop floor and learning the job by doing it was the start of the journey.
 
This theory doesn’t hark back to the “good old days”. It highlights that we live in an age where there is an expectation that we can have anything we want whenever we want it. And of course when that expectation is not met there is not just disappointment. There are a range of other emotions as well. And those emotions are probably exacerbated by the proliferation of so-called “influencers”, who specialise in highlighting a reality which only exists in their fertile imaginations.
 
Perhaps the answer to the mental health epidemic is neither “harden up”, nor is it increasing the numbers of mental health professionals. Perhaps a part of the answer is simply a shift in mindset from an expectation of having whatever we want, whenever we want it – to a mindset that says that if you want something, then you are going to have to put in the hard work first. And that sacrifices have to be made. As the saying goes: The harder I work, the luckier I get.