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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: DOUG H who wrote (70367)	2/24/2001 5:03:39 PM
From: A.L. Reagan	Read Replies (3) \| Respond to of 99985

I've shelved plans I had and will wait. Up until a few weeks ago I'd intended (and am going through the permitting process) to build four smaller flex/office buildings (total around 56,000 s.f.), of which one was under contract presold to an end-user and three were spec lease. This is the final phase of an 18-acre business park I've been building out since '97. My end user purchaser is a contract product designer with major clients like Dell, CPQ, Brocade, and a host of minor ones. He and I just today had a long chat. His input is that while he is plenty worried, he has not seen any indication of a slowdown in product development activity from his clients. However, his DSO's have lately increased significantly. He still wants to go ahead on his building project, but is scaling back on the interior finish-out and on furnishings. He guessed correctly that I've now scaled back to building his building, one spec building, and leave the other two until later. (I'll probably finish the sitework, pour the slabs and put up the steel, but wrap the building envelope only when spec building #1 gets substantially leased.) So I'm personally a good example of an economic actor who highly benefits from interest rate cuts, but due to NAZ swoon and other lack of confidence am cutting back near term business spending on construction by more than half. W/r/t the housing market I have no expertise in this area, other than living in one, and since I'm not planning to sell in the forseeable future, I'm not particularly interested in theoretical swings in its value. However, in the general area in which I live in the semi-boonies north and northwest of Austin there are a number of new upscale residential subdivisions (one is a Jack Nicklaus golf course community) in the site development stage that were basically targeted to execs with Dell and MOT's semiconductor division and other big employers we have around here like Cypress Semi, DuPont Photomasks, Sulzer Orthopedics (the folks with the hip replacement recall), State Farm, Schwab's new call center, as well as execs with a bunch of smaller techie companies. These new houses, for comparable square footage and amenities, and arguably lesser construction quality, and much smaller lot sizes, are priced around 50% more than our house, built circa 1996. I told my wife not to think we had any increase in wealth, but that the developers of these new communities would likely have a decrease in theirs. One amenity they have we don't is fiber to the home, and "smart house" cabling. We're stuck with satellite for TV and any broadband we might want. (But my house has a river running through the back yard, and our own, no lie, dinosaur track, so take that Jack Nicklaus.) NEW TOPIC FOR MDD'ers: What kind of sell-of, if any, would be anticipated if, at 2:15 EST on Monday, there is not a Fed rate cut? (It appears to me that the last hour of Friday was heavily hyped in this regard, and are we set up for a swoon Monday afternoon?)