WEBVTT - Lowe’s Profit Tops Estimates on Online Growth 0:00:02.759 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.640 --> 0:00:14.600 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:17.880 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.960 --> 0:00:21.080 Business App. Listen on demand wherever you get your podcasts, 0:00:21.400 --> 0:00:23.120 or watch us live on YouTube. 0:00:23.880 --> 0:00:26.560 Let's bring and Drew Redding, Bloomberg Intelligence US home building 0:00:26.520 --> 0:00:28.520 analysts to give us a recap of what we need 0:00:28.560 --> 0:00:31.360 to know about Lowe's results. Drew, Good to speak with 0:00:31.400 --> 0:00:34.800 you is what does lows look like and when it 0:00:34.840 --> 0:00:38.040 comes to its results compared with its big arrival, Home Depot. 0:00:39.960 --> 0:00:43.240 Yes, I think Low's results could be best characterized as 0:00:43.479 --> 0:00:47.040 better than feared, particularly in light of what we heard 0:00:47.080 --> 0:00:50.800 from Home Depot yesterday. They did fall short of consensus 0:00:50.920 --> 0:00:53.960 estimates on same store sales, but I think the buy 0:00:54.040 --> 0:00:57.080 side was probably looking for something flat to lower, so 0:00:57.160 --> 0:01:00.360 a little bit better than they were looking for. Now 0:01:00.480 --> 0:01:03.200 that being said, they did trim their four year outlook. 0:01:03.960 --> 0:01:05.720 Now they're looking for four year comp sales to be 0:01:05.800 --> 0:01:08.080 flat from flat to up one percent, So that would 0:01:08.080 --> 0:01:11.440 imply that four Q is relatively flat. But you know, 0:01:11.480 --> 0:01:13.440 similar to what we heard from Home Depot, they had 0:01:13.480 --> 0:01:17.640 about one hundred basis point impact from hurricane activity that 0:01:17.760 --> 0:01:20.319 was not replicated this year. So again, if you were 0:01:20.319 --> 0:01:22.640 to back that out, it looks like the underlying trends 0:01:22.640 --> 0:01:25.000 in the business are pretty stable. 0:01:25.560 --> 0:01:25.760 You know. 0:01:25.800 --> 0:01:28.800 That being said, they're still grappling with the same consumer 0:01:28.880 --> 0:01:31.840 uncertainty and you know, the same weak housing market that 0:01:31.880 --> 0:01:34.840 their competitors, so you know, still challenges out there in 0:01:34.880 --> 0:01:35.279 the market. 0:01:35.880 --> 0:01:39.240 Drew, I think I understand it correctly that Lows has 0:01:39.560 --> 0:01:42.600 a lower percentage of sales to professional contractors than does 0:01:42.760 --> 0:01:45.720 Home Depot. If so, are they trying to narrow that gap? 0:01:45.800 --> 0:01:47.680 Are they targeting that segment a little more? 0:01:48.680 --> 0:01:52.080 Yeah, great question. So Loew's is about thirty percent professional 0:01:52.080 --> 0:01:56.560 contractors seventy percent DIY. Home Depot is about fifty to fifty, 0:01:56.600 --> 0:01:59.440 maybe even a little bit higher. On the pro front. 0:01:59.480 --> 0:02:03.160 What's interesting to your point on investment is the pro space, 0:02:03.280 --> 0:02:08.240 especially in building products distribution, has really become a battleground 0:02:08.240 --> 0:02:12.000 among home improvement retailers. You had Home Depot recently do 0:02:12.080 --> 0:02:16.880 acquisitions for srs and gms, and then you have Lows 0:02:16.880 --> 0:02:21.960 who recently acquired foundation building materials. So it's certainly an 0:02:22.000 --> 0:02:24.600 area where they're making a concerted effort to grow now. 0:02:24.800 --> 0:02:28.919 LOWS has historically focused on the small and medium sized 0:02:29.000 --> 0:02:32.160 pro and what this acquisition does is it gives them 0:02:32.200 --> 0:02:37.240 exposure to larger pros who do more complex projects, so 0:02:37.240 --> 0:02:40.399 they're able to you know, be the supplier of choice, 0:02:41.280 --> 0:02:44.160 you know, across more building product categories and at a 0:02:44.240 --> 0:02:45.440 larger scale. 0:02:45.240 --> 0:02:48.120 So basically directly competing with Home DEEPO in many ways. 0:02:48.960 --> 0:02:50.919 Is this going to become duopoly or are There's still 0:02:50.960 --> 0:02:55.600 a lot of other places that professional contractors can go to. 0:02:57.720 --> 0:03:01.640 Yeah, so the building products distributions space is still very 0:03:01.880 --> 0:03:05.760 highly fragmented. You know, I wouldn't be surprised to see 0:03:05.800 --> 0:03:09.600 further consolidation within the industry, you know, across different categories. 0:03:10.160 --> 0:03:12.920 Home Depot and LOWS are certainly, you know, two of 0:03:12.919 --> 0:03:15.480 the behemoths in the industry who have you know, the 0:03:15.560 --> 0:03:19.760 scale and financial flexibility to further consolidate the industry. But 0:03:19.800 --> 0:03:23.120 there's some other players as well, like QXO. So it 0:03:23.240 --> 0:03:25.920 is a frag mented industry, but I would expect, you know, 0:03:25.960 --> 0:03:29.080 in the coming years, it's something that continues to get consolidated. 0:03:29.600 --> 0:03:32.040 Drew, I'm probably like a lot of investors out there, 0:03:32.040 --> 0:03:33.799 I can't keep track of where all the tariffs are 0:03:33.800 --> 0:03:35.960 these days, all the different products. But I'm just guessing 0:03:36.000 --> 0:03:39.120 if I'm a Low's or home depot, my plywood from 0:03:39.200 --> 0:03:42.840 Canada that's probably being tariff. A power tool from somewhere 0:03:42.840 --> 0:03:45.320 in Asia that's probably subject to tariffs. How are these 0:03:45.320 --> 0:03:48.600 companies dealing with it? What have they been telling you guys? 0:03:49.680 --> 0:03:53.280 Yeah, good question. So Lows gets about sixty sixty percent 0:03:53.320 --> 0:03:57.400 of its products from the US, so their exposure internationally 0:03:57.480 --> 0:04:00.000 is maybe not as high as you would expect. China's 0:04:00.000 --> 0:04:03.920 probably around fifteen to twenty percent. You know, there hasn't 0:04:03.920 --> 0:04:05.960 been a whole lot of talk. I think we have 0:04:06.040 --> 0:04:08.600 seen their average ticket increase this quarter was up about 0:04:08.640 --> 0:04:11.680 three percent, and part of that is in response to 0:04:11.800 --> 0:04:15.640 tariff related price increases. Loose told us that they were 0:04:15.680 --> 0:04:18.520 only modest increases, and you know, they'll take a portfolio 0:04:18.520 --> 0:04:20.920 approach to how they increase prices. They'll look at their 0:04:21.560 --> 0:04:24.200 product lineup and see where they have more elasticity. But 0:04:24.640 --> 0:04:27.160 I think the impact of costs will start to come 0:04:27.160 --> 0:04:29.600 in a little greater as we look into Q four 0:04:29.600 --> 0:04:31.920 in early twenty twenty six. And you know, some of 0:04:31.920 --> 0:04:34.680 the areas that we're looking at you mentioned Plywood so 0:04:34.960 --> 0:04:38.960 lumber tariffs from Canada. We also had the implementation of 0:04:39.279 --> 0:04:42.160 tariffs on cabinetry both the kitchen and bath, which to 0:04:42.240 --> 0:04:45.040 go up to fifty percent in January. So I do 0:04:45.080 --> 0:04:46.800 think that the impact gets a little greater as we 0:04:46.839 --> 0:04:49.520 look at the next year, so I would expect further 0:04:49.600 --> 0:04:51.760 price increases from both retailers. 0:04:52.880 --> 0:04:55.919 Stay with us more from Bloomberg Intelligence coming up after this. 0:05:00.000 --> 0:05:03.840 And to the Bloomberg Intelligence podcast. Catch us live weekdays 0:05:03.839 --> 0:05:06.719 at ten am Eastern on Apple, Cocklay and Android Auto 0:05:06.839 --> 0:05:09.920 with the Bloomberg Business App. Listen on demand wherever you 0:05:09.960 --> 0:05:12.599 get your podcasts, or watch us live on. 0:05:12.480 --> 0:05:17.240 YouTube TJ Max. Before to some earnings here, Mary Ross 0:05:17.240 --> 0:05:21.280 Gilbert covers the stock for Bloomberg Intelligence as a retail analyst. 0:05:21.279 --> 0:05:23.599 She's based out there in La Mary, I know you 0:05:23.600 --> 0:05:27.640 guys like the TJ Max. I mean, Alex is a fan. Alex, 0:05:27.720 --> 0:05:30.120 Alex Steel's a fan. Scarla who's a fan? Lisa Mateo's 0:05:30.120 --> 0:05:32.080 a fan. I have the card, You've got the car. 0:05:32.160 --> 0:05:32.840 I have the credit card? 0:05:32.880 --> 0:05:33.200 All right? 0:05:33.279 --> 0:05:33.640 Very good? 0:05:33.800 --> 0:05:34.520 Mary? Are you a fan? 0:05:34.839 --> 0:05:37.120 Our investors a fan? 0:05:37.760 --> 0:05:38.039 Paul? 0:05:38.320 --> 0:05:41.120 You are absolutely right. I'm a fan too, and they 0:05:41.160 --> 0:05:44.520 it's because they carry such a variety of brands and 0:05:44.560 --> 0:05:47.359 it appeals to all income groups. So if you have 0:05:47.400 --> 0:05:51.920 a luxury consumer, you can get Balanciaga, you can get 0:05:52.000 --> 0:05:55.680 Chloe Low, So they carry all of the brands. And 0:05:55.720 --> 0:05:59.560 then if you're more oppressed and you're really a valued consumer, 0:05:59.600 --> 0:06:04.200 they have Steve Madden, they have Theory, so they really 0:06:04.320 --> 0:06:09.040 they have Puma, they have Nike, Adidas, so they have 0:06:09.320 --> 0:06:13.400 all the brands that consumers want, and that's why they're Marmas, 0:06:13.800 --> 0:06:17.159 which is tj Max and Marshall's division, reported a comp 0:06:17.240 --> 0:06:20.919 sales increase of six percent, and that's why. You know, 0:06:20.920 --> 0:06:22.800 if you look at the overall results, they were up 0:06:22.839 --> 0:06:25.120 five percent, so a lot of strength there within the 0:06:25.120 --> 0:06:30.120 Marmas home goods and of course Canada. Canada was up 0:06:30.160 --> 0:06:34.400 eight percent, So we're seeing consumers flock to get the 0:06:35.240 --> 0:06:39.920 brands that they want and they've had some amazing buying opportunities, 0:06:39.960 --> 0:06:41.200 so their margins were higher. 0:06:41.800 --> 0:06:45.880 So the way that TJX stocks at stores is that 0:06:46.680 --> 0:06:50.040 they get inventory that hasn't sold at full price stores. 0:06:50.080 --> 0:06:53.520 But if all these merchants, all these retailers are managing 0:06:53.520 --> 0:06:56.359 their inventories better and don't have a lot of excess inventory. 0:06:56.640 --> 0:06:59.440 Where does tj X get its inventory? I mean it 0:06:59.480 --> 0:07:01.599 has to have a another option, right. 0:07:02.520 --> 0:07:05.200 Yeah, Scarlett, you raise a good question. But the fact 0:07:05.279 --> 0:07:08.320 is is that some of the retailers, but also the 0:07:08.360 --> 0:07:12.400 brands themselves. So if you think of for example, PVH, 0:07:12.480 --> 0:07:16.360 which has the Tommy Hill Figure and Calvin Klein brands, 0:07:16.760 --> 0:07:19.720 we see those brands pretty prevalent throughout off price, So 0:07:19.760 --> 0:07:23.200 that's been a good channel for them to sort of 0:07:23.200 --> 0:07:25.760 release some of that excess inventory. And when they work 0:07:25.800 --> 0:07:29.080 with some of their wholesale partners, including the department stores, 0:07:29.600 --> 0:07:33.000 So where you have product that's not selling off price, 0:07:33.200 --> 0:07:37.240 is just a natural fit to be able to release 0:07:37.280 --> 0:07:40.280 that inventory. So you want to keep your inventory fresh 0:07:40.400 --> 0:07:43.120 in the stores, especially when you're a full price operator, 0:07:43.680 --> 0:07:46.880 and there hasn't been any slow down in terms of 0:07:46.920 --> 0:07:50.880 that excess inventory. And that's why even on the luxury side, 0:07:50.920 --> 0:07:55.120 where typically you wouldn't think you'd find markdowns, it's been 0:07:55.160 --> 0:07:59.480 pretty prevalent, especially with overall weakness in luxury. 0:08:00.400 --> 0:08:03.080 So what does the folks at cheek kJ max what 0:08:03.080 --> 0:08:05.000 are they saying about the consumer these days? 0:08:06.480 --> 0:08:09.240 Well, the consumer, I mean they're really seeing strength. So 0:08:09.400 --> 0:08:12.320 It's interesting because when you sort of read the take 0:08:12.400 --> 0:08:15.760 on Target with their results today and they sort of cited, 0:08:16.080 --> 0:08:19.520 you know, the consumer is very cautious. But that caution, 0:08:19.760 --> 0:08:22.520 I think what's really going on is that they've got 0:08:22.560 --> 0:08:25.600 the brands that consumers want. So those that are executing 0:08:26.240 --> 0:08:28.680 are the ones that are getting the sales, because even 0:08:28.840 --> 0:08:33.480 some retailers that are more full price oriented are generating sales, 0:08:33.880 --> 0:08:35.920 or they may be promotional, like we're going to get 0:08:35.920 --> 0:08:38.120 Gap when they go to report tomorrow, and we think 0:08:38.120 --> 0:08:40.720 we're going to see strong results there out of Old 0:08:40.840 --> 0:08:43.360 Navy and out of Gap, and those are their two 0:08:43.440 --> 0:08:46.280 largest brands. So we think that they're just executing really 0:08:46.280 --> 0:08:50.040 well and providing great fresh merchandise. But they're also promotional 0:08:50.080 --> 0:08:53.240 and they provide value to the consumer. So the consumer 0:08:53.320 --> 0:08:55.960 is flocking to value, there's no doubt about it. But 0:08:56.040 --> 0:08:58.800 we do see some you know, operators, You've got Ralph 0:08:58.880 --> 0:09:02.160 Lauren on the luxury side, they continue to outperform and 0:09:02.200 --> 0:09:07.200 their sales are always topping expectations too, and consumers there 0:09:07.320 --> 0:09:09.960 are willing to pay full price, so there are a 0:09:10.000 --> 0:09:13.839 lot less promotional every year, they seem to be less 0:09:13.840 --> 0:09:17.400 promotional for that reason. They're able to sell at full price. 0:09:17.840 --> 0:09:21.360 So clearly TJX has a strategy that works well given 0:09:21.400 --> 0:09:23.800 the current environment, and even when the economy is doing well, 0:09:24.040 --> 0:09:26.000 I would argue it has a strategy that works well. 0:09:26.360 --> 0:09:29.400 At at what point do investors want more from the 0:09:29.440 --> 0:09:33.199 company than just executing on the strategy. Will they want 0:09:33.400 --> 0:09:36.000 I don't know, am an agent? Do they want consolidation? 0:09:36.160 --> 0:09:38.280 Do they want innovation from TJX? 0:09:39.559 --> 0:09:42.760 Yeah, Well, so that's the reason why TGX is focused, 0:09:43.000 --> 0:09:46.280 you know, internationally. So they're going to be entering Spain 0:09:46.440 --> 0:09:49.520 in twenty twenty six, so coming next year, and of 0:09:49.559 --> 0:09:54.040 course they've had some they have two joint venture investments, 0:09:54.160 --> 0:09:56.880 one in Mexico and then one in the Middle East, 0:09:56.920 --> 0:09:59.760 and they're both off price retailers that they've invested in. 0:10:00.120 --> 0:10:04.000 So they're basically taking their talent and providing them a 0:10:04.120 --> 0:10:07.640 platform to leverage their talent in these joint ventures and 0:10:07.640 --> 0:10:10.720 to grow that way. So they're always looking for ways. 0:10:10.760 --> 0:10:14.400 Because Scarlett, you bring up a good point. TJX trades 0:10:14.440 --> 0:10:17.400 at a pretty high premium in the off price space, 0:10:17.480 --> 0:10:20.760 and generally it's a pretty big premium that is due 0:10:20.760 --> 0:10:25.720 to their very consistent execution. But You're right, consumers keep wondering, well, 0:10:25.760 --> 0:10:28.880 how can they keep growing on top of all this growth? 0:10:29.240 --> 0:10:32.560 And yet they keep doing it. But as they talk about, look, 0:10:33.040 --> 0:10:35.920 they have drops several times a week. There's not a 0:10:35.920 --> 0:10:39.240 lot of retailers that offer fresh merchandise several times a week, 0:10:39.720 --> 0:10:43.320 and they curate the merchandise by location, so they're very 0:10:43.360 --> 0:10:46.240 cognizant of the demographics for each location. 0:10:47.080 --> 0:10:49.520 Stay with us. More from Bloomberg Intelligence coming. 0:10:49.360 --> 0:10:50.240 Up after this. 0:10:54.120 --> 0:10:57.839 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:10:57.920 --> 0:11:00.600 weekdays at ten am. He's den on Apple, Cocklay and 0:11:00.600 --> 0:11:03.880 Android Auto with the Bloomberg Business App. Listen on demand 0:11:03.920 --> 0:11:07.480 wherever you get your podcasts, or watch us live on YouTube. 0:11:07.840 --> 0:11:09.960 Let's talk a little bit of commercial real estate here. 0:11:10.520 --> 0:11:13.200 We can talk about big market small markets. We do 0:11:13.240 --> 0:11:16.280 that with Liz Hard, president of Leasing for North America. 0:11:16.600 --> 0:11:18.440 The name of the firm is new Mark, joining us 0:11:18.480 --> 0:11:21.760 live here in our Bloomberg Interactive Broker Studio. We appreciate that. Liz, 0:11:21.920 --> 0:11:26.280 you step back. Let's start with retail. Talk us about 0:11:26.280 --> 0:11:29.360 the retail marketplace. Where are we in terms of filling 0:11:29.400 --> 0:11:29.840 that up? 0:11:30.200 --> 0:11:33.960 Absolutely so, overall, retail's performing really well. This year. Lowest 0:11:34.000 --> 0:11:36.040 availability we've seen is five percent, and we're at five 0:11:36.080 --> 0:11:38.320 point three right now. So across the market is doing 0:11:38.320 --> 0:11:40.880 pretty well, but like most of the market, it's a 0:11:40.960 --> 0:11:45.680 quite bifurcated story. So in normal's performing very well, power 0:11:45.679 --> 0:11:48.000 centers performing very well. But if you look at what 0:11:48.000 --> 0:11:51.719 the availability is, the availability that we're tracking half of 0:11:51.760 --> 0:11:53.760 it's been on the market for over twenty four months, 0:11:53.800 --> 0:11:56.320 So it's that bifurcated story that steth's not moving, it's 0:11:56.480 --> 0:11:57.440 really not moving. 0:11:58.240 --> 0:12:01.320 What does it look like in city center versus the suburbs. 0:12:01.360 --> 0:12:02.920 I think about a couple of places I've been to, 0:12:03.000 --> 0:12:06.319 like Seattle, which there are parts of downtown Seattle which 0:12:06.360 --> 0:12:09.440 look vacant, but then you go to the suburbs like Bellevue, 0:12:09.480 --> 0:12:11.680 and I mean, traffic is out of control and it 0:12:11.720 --> 0:12:15.200 looks like everyone has gravitated over there for certain cities 0:12:15.720 --> 0:12:18.320 that have really been hit hard by the work from 0:12:18.320 --> 0:12:20.080 home phenomenon, what does that look like? 0:12:20.280 --> 0:12:22.640 So we're seeing that trend start to stabilize. It definitely 0:12:22.760 --> 0:12:25.440 was a COVID trend that was very, very pronounced, and 0:12:25.480 --> 0:12:27.520 in the last twelve months it started to smooth out. 0:12:27.800 --> 0:12:30.280 So it is starting to show that it's starting to blend. 0:12:30.520 --> 0:12:33.160 But in the market that you just showed, Seattle is 0:12:33.240 --> 0:12:36.040 a very occupier friendly market. So that's one in which 0:12:36.040 --> 0:12:38.800 the retailers are really calling the shots. And that's true 0:12:38.800 --> 0:12:40.880 in a lot of those West Coast markets right now. 0:12:41.080 --> 0:12:43.480 You're not seeing that as much in other markets, particularly 0:12:43.520 --> 0:12:45.640 in the Sun Belt, where it's really the landlords who 0:12:45.640 --> 0:12:48.800 are calling the shots. So it is a suburban urban trend, 0:12:48.800 --> 0:12:51.360 but it's also a geographic trend across the United States. 0:12:52.000 --> 0:12:54.160 Here in New York City, we just had one of 0:12:54.200 --> 0:12:57.240 the maybe the coolest office building open up, the JP 0:12:57.320 --> 0:12:59.719 Morgan oh My Park Avenue one. 0:13:00.080 --> 0:13:03.040 Watch right, we can't go in there yet though we can't, Well, 0:13:03.120 --> 0:13:03.400 we can. 0:13:03.320 --> 0:13:04.920 Ask Jamie Diamond. You think he'll let us in if 0:13:04.920 --> 0:13:05.840 we ask him on the radio. 0:13:06.000 --> 0:13:09.640 He allows us to remote broadcast there. But again across 0:13:09.679 --> 0:13:12.520 and then across the street from penn Station on. I 0:13:12.520 --> 0:13:14.800 guess it's Sixth Avenue, you know the empty lot there 0:13:14.800 --> 0:13:17.440 where that old Pennsylvania Hotel used to be. So it 0:13:17.679 --> 0:13:19.800 seems like the city's definitely getting better. 0:13:19.840 --> 0:13:20.440 It's back. 0:13:21.280 --> 0:13:23.280 How does New York City look just from an office perspective? 0:13:23.320 --> 0:13:27.439 Absolutely so. In the Trophy category, you're below five percent availability, 0:13:27.520 --> 0:13:31.160 so low single digits, very very high performing. Again, you 0:13:31.200 --> 0:13:33.200 do have that kind of tail of two cities going 0:13:33.200 --> 0:13:35.199 on where the lower end of the market isn't performing 0:13:35.240 --> 0:13:39.360 as strongly, but we're seeing very high absorption in the 0:13:39.400 --> 0:13:42.880 top category, very strong demand being led again, you know, 0:13:42.960 --> 0:13:45.840 financial services sector, tech sector which is coming back, and 0:13:45.880 --> 0:13:47.800 you're having a little bit of an AI boom here 0:13:47.840 --> 0:13:50.400 in New York City. A lot of companies coming out 0:13:50.400 --> 0:13:52.120 for the West Coast that want to get into New 0:13:52.200 --> 0:13:55.040 York City's tech talent, which is bigger than it's ever been. 0:13:55.080 --> 0:13:56.959 It's great to see that happening here in New York City. 0:13:57.120 --> 0:13:59.680 That is super interesting. Talk a little bit more about that. 0:13:59.760 --> 0:14:02.040 What kind of space are they looking for? How quickly 0:14:02.120 --> 0:14:04.440 are they growing? And you know, where do they want 0:14:04.440 --> 0:14:06.800 to be situated. Do they want to be in midtown 0:14:06.840 --> 0:14:09.400 your banks? Do they want to be downtown where it's 0:14:09.480 --> 0:14:13.280 always been more of yes? That And what's the New 0:14:13.320 --> 0:14:17.560 York name for our tech spirits Silicon Alley? No, yeah, 0:14:17.600 --> 0:14:18.760 maybe Silicon Alley. 0:14:19.520 --> 0:14:21.640 I'd say Midtown South and then south of that. They 0:14:21.640 --> 0:14:23.640 do like to be more downtown for the most part, 0:14:24.000 --> 0:14:26.760 not Midtown. Then really although AI is a little bit 0:14:26.760 --> 0:14:29.120 of everywhere because it's also you know, very much where 0:14:29.160 --> 0:14:31.160 we are right now, right because it's even in this building. 0:14:31.200 --> 0:14:33.480 You guys have an AI division, and the talent here 0:14:33.720 --> 0:14:35.160 is going to be in your building as well, So 0:14:35.200 --> 0:14:37.880 it really is everywhere. But in terms of how quickly 0:14:37.920 --> 0:14:40.120 it's growing, I'll talk about San Francisco first, then we'll 0:14:40.160 --> 0:14:44.080 mimic how it's here as well. It's pretty incredible. It's 0:14:44.080 --> 0:14:45.800 growing as quickly as I've ever seen it in my 0:14:45.880 --> 0:14:49.600 twenty year career. There's several companies in San Francisco that 0:14:49.960 --> 0:14:52.360 started less than five years ago that are already looking 0:14:52.400 --> 0:14:54.440 for over one hundred thousand square feet. I think there's 0:14:54.480 --> 0:14:57.000 seven as of the last count, but the numbers changing 0:14:57.000 --> 0:14:59.360 so quickly it's hard to keep track of. And what 0:14:59.400 --> 0:15:01.560 you're really seeing is a commitment to the office space. 0:15:01.680 --> 0:15:04.400 So how interesting is this? Right, they're able to build 0:15:04.440 --> 0:15:08.120 new companies. They certainly have access to technology, you know that, 0:15:08.360 --> 0:15:10.280 and they're a tech first company. But why are they 0:15:10.360 --> 0:15:12.920 choosing to be in the office. Well, they're solving big 0:15:12.960 --> 0:15:14.520 problems and when they're doing it, they want to be 0:15:14.520 --> 0:15:16.640 doing it face to face, and they're choosing to do 0:15:16.680 --> 0:15:20.560 it mostly in higher end buildings, creative buildings. They love 0:15:20.640 --> 0:15:23.880 high ceilings, they love to have natural light. And one 0:15:23.920 --> 0:15:25.800 thing that's really interesting is a lot of them are 0:15:25.840 --> 0:15:28.840 thinking about productivity hacks. So how do they get snacks 0:15:28.840 --> 0:15:31.800 that are elevating their productivity? How do they make sure 0:15:31.840 --> 0:15:34.400 that they even have the level of oxygen? Isn't that 0:15:34.440 --> 0:15:37.640 interesting to make sure that they're maximizing their productivity. So 0:15:38.000 --> 0:15:40.440 a lot of an analytical approach to real estate. That's 0:15:40.520 --> 0:15:43.440 probably much more than we've seen in that past generation. 0:15:44.080 --> 0:15:47.200 How about industrial space, It seems like for a while 0:15:47.240 --> 0:15:52.120 there we're building these Amazon distribution centers everywhere you could, 0:15:52.160 --> 0:15:54.360 I mean half of the state New Jerseys at Amazon 0:15:54.400 --> 0:15:57.000 distribution center. I think talk to just about industrial. 0:15:57.240 --> 0:15:59.720 Yeah, absolutely so. Well, Amazon doesn't seem to be slowing down. 0:16:00.160 --> 0:16:03.240 Trend does continue, But what I would say in general 0:16:03.320 --> 0:16:06.480 is that we are still seeing, you know, some absorption 0:16:06.560 --> 0:16:09.320 that's happening. We built quite a bit of industrial so 0:16:09.800 --> 0:16:11.560 it does feel like from the data there's a little 0:16:11.600 --> 0:16:13.800 bit of a pullback in the data of an increase 0:16:13.840 --> 0:16:16.040 in availability, but it's just because the market's catching up 0:16:16.040 --> 0:16:18.480 to what was built, and we'll see that for the 0:16:18.480 --> 0:16:20.560 next couple of quarters. But we are very long on 0:16:20.640 --> 0:16:23.360 industrial being a very solid market in the US, especially 0:16:23.400 --> 0:16:26.720 with the reindustrialization that's happening and kind of the reformation 0:16:26.760 --> 0:16:30.240 of supply chains based on what's happening with tariffs. But 0:16:30.280 --> 0:16:33.760 what's also interesting is Small Bay Industrial. Wow, what a 0:16:33.840 --> 0:16:36.960 hot part of the market. I mean, very very low vacancy. 0:16:37.440 --> 0:16:40.160 A lot going on there too, so the market's feeling 0:16:40.320 --> 0:16:42.720 pretty hot. And then from a user perspective, you know, 0:16:42.760 --> 0:16:46.920 three pls are really shit. They're the three pls. Oh gosh, 0:16:47.120 --> 0:16:50.320 make you explain these I'm like, it's it's what you do, 0:16:50.360 --> 0:16:52.320 and you're redoing the supply chain logistic. So it's kind 0:16:52.320 --> 0:16:53.680 of like a I don't want to call it the 0:16:53.680 --> 0:16:55.400 we work of supply chain, that might be too simple, 0:16:55.640 --> 0:16:58.440 simple simplifying it, that kind of thing. They basically have 0:16:58.560 --> 0:17:00.920 them take it on and then they reposition it for you. 0:17:01.280 --> 0:17:04.200 But three pls that's really the dominant player in the market. 0:17:04.920 --> 0:17:07.160 Which city is kind of hitting on all cylinders here 0:17:07.200 --> 0:17:09.399 when it comes to industrial, when it comes to office, 0:17:09.440 --> 0:17:10.320 when it comes to retail. 0:17:10.560 --> 0:17:17.480 Ooh, all three would I think probably if you're going 0:17:17.520 --> 0:17:20.040 to say all three, it would have to be somewhere 0:17:20.040 --> 0:17:23.320 in the south southeast quadrants, so I'm sun Belt sun 0:17:23.400 --> 0:17:25.720 Belt sun Belt in southeast quadrant is where I would 0:17:25.720 --> 0:17:26.960 say it is probably heading on all three at the 0:17:26.960 --> 0:17:27.440 same time. 0:17:27.680 --> 0:17:29.240 Thirty seconds left. I finally want to go out and 0:17:29.280 --> 0:17:31.480 build something up, build a building, office tower or something. 0:17:31.600 --> 0:17:32.879 Can I get the capital to do it? Can I 0:17:32.880 --> 0:17:34.480 get the banks to lend me money to do it? 0:17:34.560 --> 0:17:36.399 Well, it certainly depends on what you're building, but if 0:17:36.440 --> 0:17:38.800 you're building for trophy in a place with good demand, 0:17:38.800 --> 0:17:39.400 you can now. 0:17:40.320 --> 0:17:45.040 This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 0:17:45.200 --> 0:17:48.680 and anywhere else you get your podcasts. Listen live each 0:17:48.720 --> 0:17:52.480 weekday ten am to noon Eastern on Bloomberg dot Com, 0:17:52.600 --> 0:17:56.159 the iHeartRadio app, tune In, and the Bloomberg Business app. 0:17:56.560 --> 0:17:59.440 You can also watch us live every weekday on YouTube 0:18:00.200 --> 0:18:02.120 always on the Bloomberg terminal.