Under the heading of "Big Trouble in Little Dubai" the Business Insider listed the following headlines today:
- Dubai Shows What A Property Plunge Really Looks Like
- Massive Selling Before Dubai Debacle Means Inside Information Was Leaked
- Dubai Sheikh Calls International Investors A Bunch Of Suckers
Gotta love that Sheikh, eh? And the Martha Stewart that "insiders" pulled before the story broke was oh so typical. We've been reading similar stories about our own miraculous stock rally the last few months. "Insiders" are reportedly selling 17 shares for every one they buy, with the heaviest action coming from the CEO executive class. The rats are fleeing the ship. What is it they know that the rally cheerleaders on MSNBC don't know?
But Business Insider showed that you don't have to go too far to see what a commercial real estate property collapse looks like. In the South Bay Area, the fabled "Silicon Valley" they report cavernous vacancy rates in office complexes, (20.5%) and R&D centers (18.9%). In neighboring Sunnyvale the vacancy rates exceed 50%! In many places there are entire developments sitting empty and abandoned. What a waste. Yet I wrote extensively about ways such space could be used to foster the growth of a new grass roots economy if landlords would just get off the old "First, Last, Security Deposit and Lease" model. Here's what I suggest:
What if all the vacant commercial space in the business parks could be turned into co-ops open to anyone to come and utilize space and resources for business purposes? Each building could cater to a given area of the economy. There could be a computer co-op where people offering PC skills, graphic artists, web designers, writers, photographers congregate to offer their services in otherwise vacant office buildings. There are thousands with skills but without the money to open and finance a business along traditional lines. And there are thousands more who will be losing traditional jobs—people who have a wide range of skills. A commercial co-op creates a business community center focused on its defined skill set. People can come to the center to take advantage of the space for meetings, to use computers and other peripherals, to find other talented artists, image specialists or designers, locate a network guru. They could sell, trade or barter services, and the property owner just charges a set fee for daily or weekly access to the entire co-op.
Imagine a center like this focused exclusively on clothing, where women could come and make their own clothing, buy the necessary cloth, access sewing machines, or just sell or trade items from their own wardrobe. The way women love to dress, shop, and network with one another would see a place like this explode with activity in no time at all. Now expand the idea to include maintenance services in the blue collar sector where all the laid off construction guys can come and join mechanics, plumbers, electricians in a co-op. Imagine an electronics bazaar where people can bring their TVs, audio equipment, cameras, iPods, cell phones, computers, Playstations and then buy, sell or trade. Our households are overflowing with this stuff anyway, and because they won’t have money to buy new, people will adapt and “make do” with existing products. The idea of planned obsolescence, constant upgrading, and throwing the old away will give way to frugality, reusing the old, making do with what you have. Imagine a food co-op selling home made everything: pastries, pies, jams, home grown and home canned foods. Imagine a place like the existing antique stores one usually finds in the more distressed parts of most towns, co-ops where people can come to sell or barter anything. Imagine a permanent Farmer's Market, not the one day events we see in many towns now.
How does the property owner make money? Instead of collecting rent from a single tenant, he uses the Realtor and his agents and brokers as property managers for the co-ops. They collect revenues by just issuing access passes to anyone using the facilities, either day passes, or weekly or monthly passes--in amounts people can easily afford. The idea is to get the space thriving with activity, for it is this activity that will generate the revenue return for the agent and owner over time. Americans are already familiar with the shopping club concept. They have membership cards to large warehouse stores where they look to buy new goods cheap. The same idea can be applied to buying, selling or trading existing goods when people don’t have money to even to visit “Price Club” any longer. Think of it as a local eBay, right in your otherwise abandoned business park. The Property manager deducts their fee, and the rest goes to the property owner. The more active the co-op is, the greater the revenues, which could easily exceed amounts collected under a more traditional lease/rent agreement.
The economy will eventually evolve into these arrangements anyway, with bartering, flea markets, garage sales, farmers markets, co-ops taking the place of big box stores, shopping centers and malls. People will adopt these behaviors on their own because they will be forced to. Now is the time for enterprising men and women to see the opportunity in a distressed economy and build the new pathway to real recovery.
- Dubai Shows What A Property Plunge Really Looks Like
- Massive Selling Before Dubai Debacle Means Inside Information Was Leaked
- Dubai Sheikh Calls International Investors A Bunch Of Suckers
Gotta love that Sheikh, eh? And the Martha Stewart that "insiders" pulled before the story broke was oh so typical. We've been reading similar stories about our own miraculous stock rally the last few months. "Insiders" are reportedly selling 17 shares for every one they buy, with the heaviest action coming from the CEO executive class. The rats are fleeing the ship. What is it they know that the rally cheerleaders on MSNBC don't know?
But Business Insider showed that you don't have to go too far to see what a commercial real estate property collapse looks like. In the South Bay Area, the fabled "Silicon Valley" they report cavernous vacancy rates in office complexes, (20.5%) and R&D centers (18.9%). In neighboring Sunnyvale the vacancy rates exceed 50%! In many places there are entire developments sitting empty and abandoned. What a waste. Yet I wrote extensively about ways such space could be used to foster the growth of a new grass roots economy if landlords would just get off the old "First, Last, Security Deposit and Lease" model. Here's what I suggest:
What if all the vacant commercial space in the business parks could be turned into co-ops open to anyone to come and utilize space and resources for business purposes? Each building could cater to a given area of the economy. There could be a computer co-op where people offering PC skills, graphic artists, web designers, writers, photographers congregate to offer their services in otherwise vacant office buildings. There are thousands with skills but without the money to open and finance a business along traditional lines. And there are thousands more who will be losing traditional jobs—people who have a wide range of skills. A commercial co-op creates a business community center focused on its defined skill set. People can come to the center to take advantage of the space for meetings, to use computers and other peripherals, to find other talented artists, image specialists or designers, locate a network guru. They could sell, trade or barter services, and the property owner just charges a set fee for daily or weekly access to the entire co-op.
Imagine a center like this focused exclusively on clothing, where women could come and make their own clothing, buy the necessary cloth, access sewing machines, or just sell or trade items from their own wardrobe. The way women love to dress, shop, and network with one another would see a place like this explode with activity in no time at all. Now expand the idea to include maintenance services in the blue collar sector where all the laid off construction guys can come and join mechanics, plumbers, electricians in a co-op. Imagine an electronics bazaar where people can bring their TVs, audio equipment, cameras, iPods, cell phones, computers, Playstations and then buy, sell or trade. Our households are overflowing with this stuff anyway, and because they won’t have money to buy new, people will adapt and “make do” with existing products. The idea of planned obsolescence, constant upgrading, and throwing the old away will give way to frugality, reusing the old, making do with what you have. Imagine a food co-op selling home made everything: pastries, pies, jams, home grown and home canned foods. Imagine a place like the existing antique stores one usually finds in the more distressed parts of most towns, co-ops where people can come to sell or barter anything. Imagine a permanent Farmer's Market, not the one day events we see in many towns now.
How does the property owner make money? Instead of collecting rent from a single tenant, he uses the Realtor and his agents and brokers as property managers for the co-ops. They collect revenues by just issuing access passes to anyone using the facilities, either day passes, or weekly or monthly passes--in amounts people can easily afford. The idea is to get the space thriving with activity, for it is this activity that will generate the revenue return for the agent and owner over time. Americans are already familiar with the shopping club concept. They have membership cards to large warehouse stores where they look to buy new goods cheap. The same idea can be applied to buying, selling or trading existing goods when people don’t have money to even to visit “Price Club” any longer. Think of it as a local eBay, right in your otherwise abandoned business park. The Property manager deducts their fee, and the rest goes to the property owner. The more active the co-op is, the greater the revenues, which could easily exceed amounts collected under a more traditional lease/rent agreement.
The economy will eventually evolve into these arrangements anyway, with bartering, flea markets, garage sales, farmers markets, co-ops taking the place of big box stores, shopping centers and malls. People will adopt these behaviors on their own because they will be forced to. Now is the time for enterprising men and women to see the opportunity in a distressed economy and build the new pathway to real recovery.
