Its my birthday in a couple of days – but I digress! I’ve had a chance, since moving in the last few weeks, to drive, walk and cycle around some areas I haven’t been to in a while.
During these little journeys I talk to new locals, old locals, agents, shopkeepers and business owners. I don’t care what the Government and the spin artists are putting out – there ain’t much good news out there. Large and small local shopping centres have increasing numbers of vacant shops, with many of the spaces being vacant for quite a while now. When I asked adjacent business owners what the story was, I inevitably got the news that they too, were considering shutting up shop as soon as they could get out of their leases.
Speaking to a new neighbour yesterday I was told how much they lost on a luxury golf course frontage home over a 3 year period. To rent this home, and claim 2 x Office spaces within the home as a tax deduction (back of a napkin calculation), would have cost, out of pocket, $100,000.00 over three years. Their capital loss, not including interest paid on the loan, interest lost on the sizeable deposit stuck in the mortgage, some fairly hefty repairs, stamp duty and selling agents commission, was $400,000.00.
On a bike ride today I saw 6 leases where I’ve always seen a shop, office, restaurant or merchant there, doing well for the last 20-25 years. Vacant, boarded up, gone, left town, possibly bankrupt and certainly not happy tales in most cases.
Turnover down, some blame online sellers – well, to that I always ask, why aren’t you in that space too? If you can’t beat ’em – join ’em.
I’ve bought a number of items recently where I’ve enjoyed half price or less, even when compared to a major department store’s “Sales” pricing. Who in their right mind isn’t going to take advantage?
And still we get “Sales Volumes UP” “Clearance rates at Auctions UP” and still I ask, what was the sample size for that statement and I get “What do you mean?”. In one case an Agent told me the sample size illustrating a 5% rise in median price for a suburb that had 10,000 properties within its boundaries was —— wait for it —— 17!
Whats happening on the ground in real time is not funny. Everything is slowing – the attitude out there is very pessimistic in most quarters and I can’t see it getting much better any time soon.
I have spoken to some business owners who are so busy they can’t sleep but when I drill down to the reason I normally find a market temporarily skewed in their favour by some one off event, like a huge government project, or the recent failure of a major competitor.
More next bike ride!