Oakland Real Estate News
The AT&T building at 2150 Webster Street in Oakland will be converted in creative office space to make room for another new large tenant.
The Unicorn Gets a Reality Check
I highly recommend readinging Bill Gurley's article on the boom private investments in Unicorns and its risks.
Private tech companies achieved new capital injections too easily, and leaned on new funding rounds to sustain growth rather than real profitability. That merry-go-round is coming to an end and companies are being forced to tighten their belts. Compared to just a year ago, venture capitalists have reduced funding by 11% to startups. The sentiment in the Bay Area, certainly in the last few months, has been a higher expectation of profitability instead of hyper-growth, and now many of these companies see their funding resources tapped out and must squeeze out profitability with their current operations.
Interestingly, Mark Cuban predicted this over a year ago in this blog post
Numbers and Facts
The overall US economy is showing steady vital signs, with employment growth and reasonable leverage ratios. Certain areas though are particularly at risk, namely the private investment boom mentioned above, and the boom in education costs and lending.
Total US employment as of February 2016, which is over 5 million greater than the previous peak and 13.8 million greater than the trough in 2009.
Household debt as a percent of GDP as of today, compared to a peak of 92.5% in 2009.
Student debt outstanding as of 4Q 2015, which as risen from $567 billion in 2006.
The Great Recession of 2008 doesn't seem so long ago, but financial bubbles of its kind will inevitably return in various forms. Wary of the next one, knowing that bubbles are difficult to predict, I read A Short History of Financial Euphoria, by John Kenneth Galraith, a nobel-prize winning economist of Harvard University. It's a light overview of financial bubbles throughout modern history, starting with the Tulipomania of 1636, that contains important and relevant points on the common denominators in all bubbles.