Deke's Investment Blog - May 31, 2020

The beginnings of economic opening. People are still wearing masks yet retail stores, restaurants and small businesses have been given a green light to open. Then there is civil protest over a police killing. The upheaval has caused lots of hard ship. Particularly hard hit are office buildings and shopping centers. Landlords and small businesses alike are generally in a difficult situation. Small businesses are vital to the US economy. They are responsible for nearly half of US employment and about half of gross domestic product. Since the pandemic paying rent is a challenge for many tenants. Landlord rent collections are reduced and everyone still needs to pay their bills. It remains to be seen how things play out. The speed of the recovery is tied to the ability of small businesses to weather the crisis. The outlook for property values is uncertain with perhaps some near-term erosion. Price reduction should be seen as a buying opportunity. Analysts opinion vary about the downturn. Some see slow recovery starting this fall. Others think declines could last until mid-2021 or longer. The massive work-from-home experiment could mean more employees working remotely thus resulting in less need for office space and lower rents. Nevertheless the LA economy is large and diverse. LA’s economy matches that of a national economy. LA is an economic powerhouse even if it needs time to heal.