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To: A.L. Reagan who wrote (70363)	2/24/2001 4:16:24 PM
From: lurqer	Respond to of 99985

that if folks are looking in this area for the next macroeconomic bubble to burst Not sure you understood the motivation for my post. In response to lg's request for info, all I was doing was providing links to a couple of "straws in the wind". Your statement wrt No. Cal. was merely a convenient peg upon which to drape the "straws". Betting against Zell Given my level of real estate knowledge, the idea is preposterous. Thanks for the laugh. lurqer

To: A.L. Reagan who wrote (70363)	2/24/2001 4:25:02 PM
From: JRI	Read Replies (1) \| Respond to of 99985

AL- Thanks for your perspective. What's your take on the wealth effect, and its tie to home equity and home prices? Have heard in a couple places that increases in home equity often drive consumer spending more than stock portfolio gains (I suppose the logic being that, I believe, the absolute number of people who have a majority of net worth in their homes vs. stock market.....I'm not talking the absolute $ amount, just the absolute amount of people).. Anyway, what's your take on how this could effect economy going forward, and its what time frame, and....even if it is a minimal effect by your forecasts....piled on top of lower equity portfolio, greater unemployment, and rising consumer debt, could it be the straw that broke the consumer's back? (I don't know what the combined impact from all these factors are, but I wouldn't expect a strict linear relationship between those and consumer spending habits....I would think there is a "enough's enough" point, and rapid graph change)

To: A.L. Reagan who wrote (70363)	2/25/2001 12:16:42 PM
From: portage	Read Replies (2) \| Respond to of 99985

AL Reagan - I think the point of the SF Chronicle's article about the Equity Office purchase offer was that analysts were surprised that they got away with underpaying for Spieker, not hinting at an overpaying. The implication being that Spieker would accept what looked at first like a low price because either 1) they expected the overheated California market to cool down, or 2) by diversifying their risk geographically in becoming part of the widely spread, high quality Equity Office portfolio, they were making a wise move that would pay off in the long run, even if the current offer was somewhat lowballed. One of the interesting things happening here in commercial real estate is that many companies in Silicon Valley and San Francisco (not all of them high tech) are being enticed to relocate to Oakland, the Tri-Valley area near Pleasanton, and further east into Walnut Creek/Pleasant Hill (where Spieker has 2 or 3 new office buildings). It is only somewhat successful so far, but it relieves the extreme prices in SF and the Peninsula a bit. The difficulty in moving high tech firms is partly that the close geographic proximity to other similar companies is important for engineers who often swap ideas or talk shop, and can generate synergies for the industry overall this way. Still, companies like Cisco and Oracle are committing to large new office space in the Tri-Valley, partly because it is in the commute route for many of its long distance commuters who can't afford to live in SV these days. While the highest end rates may come down in SF and SV, there is in a sense this safety valve to enable companies to spread to cheaper space in other parts of the Bay Area that have good transportation access, are close to large residential areas where existing and potential employees live - and these cities want a bigger piece of the action. So your thesis that No. Cal is OK makes sense to me as long as the economy stays strong. But if a big turnaround comes, as it has before and will again, it has a long way to fall. Nobody would touch Catellus, which has development rights to the huge Mission Bay development in SF, in the early 90s, and their stock price was in the toilet then. By the mid to late 90s, the development plans for Mission Bay were up and running, complete with a new transit connection and the nearby Pac Bell ballpark, and Catellus was booming.