Francis Rentz, CCIM, attended the West Florida ICSC conference and saw Kiernan “KC” Conway, the Executive Managing Director of Real Estate Analytics Valuation and Advisory Services speak.  KC had some intriguing insights about the current state of the economy and some predictions for the next 36 months.

• The best indicator of where the US GDPwill be is to look at its trading partners.   Germany’s GDP will tell you how all of Europe is doing and Hong Kong GDP will tell the story in Asia.

• The National Restaurant Performance Index has been a great indicator of recessions.  If people start eating out less the economy is heading for a retraction.  The NRPI has just turned positive in 2012 so the economy is recovering.

• CMBS Debt – There is $300b worth of CMBS debt maturing in 2012 and 2013.  Life Insurance Companies have a total of $300b worth of debt on their books currently.  Hence, there is no way the life companies can come close to filling in the gap.  Therefore values are going down.   17% of all CMBS loans in GA and FL are in default.  50% of all CMBS loans in Phoneix are in default.

• Manufacturers are moving back to the US for Patent protection!   There is not an efficient way to enforce your patents in some of these countries.  Additionally, there is better infrastructure to move goods efficiently in the US.

• Manufacturers are moving to tertiary (i.e. – less expensive) and better educated markets (i.e. universities and good labor).

• Ports – Florida has more ports than any other state.   Savannah just passed Oakland and is now the 4th busiest port behind, NY, SF, and LA.  If the Houston, TX port shut down then the country would go into recession.  Tampa can be a strategic redundancy to Houston.  Having the newer cranes in the port is important and Florida leads in upgrading to the modern cranes.  Tampa is the number #1 exporter of fertilizer.

• Banking – Dodd Frank is a disaster and needs to be repealed.  It is applying the same rules to the largest banks as the small community banks.  The smaller community banks ($500b and less) need an immediate exemption.  Community banks do not pose any “systemic risk”.

• Section 165 of Dodd Frank – is particularly troublesome.  It attempt to determine who is “systemically important”.  Fed can determine that anybody is systemically important at any time and therefore all banks are playing defense.

• European Austerity – Problem with Europe is GROWTH!  People do not have a strong work ethic and countries lack infrastructure.

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