History repeats - the trick is to notice

Back in the early years of this century many senior IT folks were aghast as their earnings disappeared or were significantly reduced.

In some not un-typical situations incomes reduced by two thirds between 2001 and 2005.

Few other Australian industries have ever experienced that. Most Australians would be upset if they didn't get an annual pay rise. There would be a revolution if incomes ever went down!

Against the background of this - and fast forwarding to 2009 - we can see a difficult situation unfolding with commercial real estate.

I outlined yesterday my experiences in looking for small warehouse accommodation. It looks like many landlords are not yet prepared or ready to accept the new realities that exist in 2009.

Just like many IT folk weren't prepared back in 2001.

But reality has a nasty habit of catching up with us - as painful as it might be - we all need to adapt.

The lessons of the IT industry are that the earlier we change our expectations then the easier the transition will become.

But while history may repeat with the outcomes - I don't expect anyone who deals with commercial real estate to understand that - just yet.

Because the scale of the problem is so much larger and the people involved are not well equipped to deal with it.

Later this year is when the crisis will become apparent. That is when we will be able to identify the leaders as opposed to the followers.

Commercial real estate

I have spent the past 2 weeks chasing down warehouse space to rent - for my unfinished boat. Don't ask why - it's a long story.

There is plenty available - one street that I looked at today had 5 properties available nearby - all entering the market over the past 3 months.

Some properties have been vacant for over 3 years. More are entering the market each week.

But is there any price realignment happening?

No way - the price is the price - according to the vendors that I have spoken with.

All that this means is that these landlords aren't yet feeling any pain - and many don't believe that they will.

So if they aren't feeling pain - then I'm not ready to rent.

All very sad really - a little negotiation would help solve our collective problems.

Because my price offer is only going to decrease over the next six to twelve months.

One good thing about the GFC is that many landlords will get to taste some "humble pie" which might even help to re-educate them about "supply" and "demand" market realities.

What I have seen and heard this week is just *silly* - along the lines of - "the world can change all it likes - but I won't be dropping my price".

We shall see how successful that strategy is over time.

Part of the problem is that significant news travels slowly in this neck of the woods - due to the paucity of quality media outlets. But surely the locals are slightly curious about what is happening elsewhere - and what is likely to impact them soon?

Or maybe not - planet Rann might well be a different place from the rest of the nation.

Many locals are hoping so.

A Pissant Little Town

Here is the main content of a presentation that I gave to a group of colleagues at lunch today – it generated raucous laughter - but I didn’t think it was all that funny ;-)

* About two years ago I moved to a country town which is masquerading as a capital city – I moved there for family reasons.

* After I arrived, I registered with all the local recruitment agencies and met regularly with their staff – looking for work and building relationships.

* I applied for many jobs – but was mostly ignored – over 100 serious applications – with only 2 interviews and few returned calls.

* That’s when I realized that I wasn’t succeeding because I wasn’t a part of the local *club*.

* Which is made up of a small group of recruiters and candidates – all looking out for each other – while keeping outsiders away and participating in a slow game of musical chairs.

* Call me dumb – but it all became obvious when I accidentally discovered the short list for a job that I was well qualified for – and didn’t get an interview.

* They were grooming a couple of insiders who are members of the *club*.

* I hate to call it a conspiracy – this club is more like a group of scared rabbits caught in the headlights of a large trainwreck on it’s way into town.

* A “pissant little town” – according to local football coach Aurelio Vidmar.