How to Know When the Market’s Turning

I met my friend Bill Benton for lunch recently and persuaded him to try Barbacco, a restaurant across the street from his office.  He and I had never been.

It was lunchtime on a Friday and the place was packed.  It is the smaller sister of Perbacco next door and the entrees for lunch never ventured above $12.  This might have been why the joint was jumping.
Bill and I settled in and took a gander at the menu.  Bill’s a steak and potatoes guy and I had to twist his arm a bit to get him to give the burrata cheese starter a try.  Our lunch decisions made, we started to talk shop.
Bill is a principle at Newmark Knight Frank, a commercial real estate firm here in San Francisco.  I asked him how things were going and he let me in on all sorts of good news.  It seems his business has really picked up of late.  This was a bit of a surprise to me because I had just been on a call with a friend in private equity and he talked nothing but doom and gloom. 

“What does this mean?” I asked.  “I thought commercial real estate was supposed to crash.”  He started talking net absorption rates, building loans, etc.  At a certain point I lost him but the upshot was clear: folks are starting to rent commercial space in San Francisco; a sign the market is turning.  Obviously I don’t think anything drastic is going to happen overnight, but Bill liked the burrata cheese and to me that’s a leading indicator.


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