Jim The Realtor: Sell it for a Buck

The dollar drives our new economy, says one informal “economist” scouting properties in Southern California’s suburbs.  Single dollars.

Jim the Realtor, who narrates his own tour of foreclosed commercial residential and retail properties in Encinitas, Carlsbad, and a few other suburbs in San Diego County, California, says there is opportunity, as long as prices drop like a rock. It is an expression of creative destruction, expressed in the uniquely Southern California elocution of a drive-by.

It is an interesting tour.  These are not broken down, falling apart buildings reticent of images in places like Cleveland’s  Slavic Village.  Just the opposite, in fact: these are beach side condos, strip malls off the interstate, and 100 percent rented out shopping centers.

Jim’s message comes at the end of this video.

What’s odd is that his tour feels somewhat optimistic.  It sounds like the market has corrected and now there are some great chances to buy decent properties that are buckling under too much debt service.  The underlying properties are sound, but the $6 million first and the $1.5 million second are just too ravenous.

That’s not exactly his take, though.

Get it down to a dollar, he says.  Landlords can get tenants if they slash rents to $1 per square foot. There are just not enough businesses out there.  So, while existing leases may generate much higher rents, the demand at the margins is gone.  One dollar is pretty low.  Right now, most property in the San Diego suburbs is renting for between $1.80 and $3.30 per square foot.

That lower rate, though, reflects the kinds of businesses that are still making money.  Landlords need to get it down to a dollar, because tenants are getting their prices down to a dollar.

“There are just not enough businesses to occupy all of the vacant space that there is.  If you get it down to a buck a foot, at least at that point, your tenants can be running THE BIGGEST CLEARANCE SALE EVER week after week, and selling stuff for a buck.  That is the economy.  That is what is working.”

So, that’s our future.  Huge commercial projects, struggling with too much debt from the now gone halycon days of 2003-2007, are going to fold.  No more whirlpool outlets and independent mortgage brokers hawking i/o’s.  Its going to be $1 packages of tootsie rolls and bathroom curios.