The Real Estate Espresso Podcast

Latest Episodes:

How Is The US Economy Really Doing? Sep 10, 2025

Show notes

When you listen to J Powell speak from the podium at the FOMC meeting he typically talks about managing the Fed’s dual mandate to maintain price stability and to maximize employment. The past several years have been focused on taming inflation. Core PCE inflation measured 0.3% for the past two months June and July. We will get the August report on Sept 26. On an annualized basis Core PCE inflation remains pretty sticky at 2.9%. This is higher than the Fed’s 2% target. It’s not zero, and it’s not runaway inflation either. I don’t even get into the debate about whether the measurement is appropriate or not. We will take it for now that Core PCE is what the Fed needs to set interest rates.

The other side of the coin is the labor market. If you’ve been listening to this show for a while, you will know that I’ve been flagging the inconsistencies between the two surveys that make up the employment report. There is the payroll survey and the household survey. The numbers reported in the two surveys are not consistent and have not been consistent for a long time. The employment report is the one that is most likely being overstated.

Yesterday, The Bureau of Labor Statistics (BLS) has announced a significant downward revision to its employment data for the U.S. down 911,000 jobs compared with the previous estimate. That's a big deal.

So with this latest employment data, it’s almost a foregone conclusion that the Fed will cut their benchmark lending rate at next week’s meeting. The real question is how much, and whether this will affect the medium term bond yield and the 10 year bond yield in particular.

The bond yield is a reflection of risk for those bonds that have a risk premium attached to them. I don’t believe the US Treasury market is carrying a risk premium. So in the absence of a risk premium, the yield is a reflection of the economy. A weaker economic cycle will pull bond yields down as growth is going to take a hit. A stronger economy will bring inflationary pressure on prices which will tend to drive yields up. We have a 30 day t-bill trading at 4.17%, the 10 year treasury trading at 4.08%, and the 2 year trading at 3.55% and the 5 years trading at 3.61%. This is the market clearly signalling that over the medium term, interest rates are heading lower.

That’s good news for real estate investors.

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Building Real Estate In Remote Locations Sep 09, 2025

Show notes

My wife and I just came back from a 7 day cruise from Seward Alaska to Vancouver in Canada. One of the stops was a port of call created specifically for the cruising industry called Icy Strait Point. This port is built into the side of an island off the coast of Alaska. Most people on the ship would have enjoyed the fresh cooked salmon, and marvelled at the numerous souvenir shops sprinkled throughout this manufactured village. I on the other hand looked at it through the lens of a real estate investment.

Cruise lines are often looking for ports that charge low landing fees. These fees amount to huge sums over time. That’s why each major cruise line has built their own beach club at a private island in the Bahamas. They get a day at the beach with no port fees or landing fees.

The investment structure for Icy Strait Point is a unique partnership where the Huna Totem Corporation, an Alaska Native village corporation, maintains full ownership and operational control, while major cruise lines act as key investors. This model allows the native corporation to retain sovereignty while securing the capital needed for port development.

The investment came primarily from NCL and Royal Caribbean which gives these cruise lines preferential access to the port.

Icy Strait Point is fully owned and operated by the Huna Totem Corporation, which represents more than 1,550 Alaska Native shareholders. All profits from the port are reinvested back into the community of Hoonah.

When you travel, don't just eat the fish and buy a t-shirt, look behind the curtain at the investment structure.

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Shrinking Populations Have Shrinking GDP Sep 08, 2025

Show notes

On today’s show we are taking a deep look at my forecast for the US economy over the next few years. What I’m about to share is not getting covered by the mainstream media as far as I can see.

If we look through history, we know that economic growth and population growth are linked. It’s not that population growth alone is the cause of economic growth. It’s not enough by itself. But we know that you cannot have one without the other.

The US population is now shrinking for the first time in a century. The last time the US population shrank was in the late 1920’s when jobs evaporated during the Great Depression and people who had come to the United States for work left the country.

In the first several months of the new administration, immigration numbers are way down. We have fertility rates at historic lows. We have workforce participation falling as baby boomers retire.

The only way that the US population and hence the economy can grow requires immigration. The US unemployment rate remains low because the workforce is shrinking.

On Thursday we got a jobs report that surprised Wall Street and many economists. The real question in my mind is how many jobs does the economy need to generate if the population is shrinking.

We might need to get used to low employment reports and this could represent the new normal.

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From Architect To Investor with Mark Shuler Sep 07, 2025

Show notes

Mark Shuler is a practicing architect in Seattle Washington, now for more than 40 years. He started investing post 2008 and today is has more the 4,000 units under management. Today Mark is concentrated in Houston. We're talking investment thesis and how it's evolving in the Houston market in particular.

To connect with Mark, visit sgreinvestments.com or email him at investor@sgreinvements.com.

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Marcin Drozdz Sep 06, 2025

Show notes

Our guest today is Marcin Drozdz who hails from Banff Alberta. He's been active in raising capital since 2007. On today's show we are talking about current market conditions for investment and how there continues to be a large gap between buyer and seller expectations.

To connect with Marcin, visit https://www.marcindrozdz.com/

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What The Heck Do I Do All Day Long? Sep 06, 2025

Show notes

Some people ask me, Victor what does a typical day look like for you?

On today’s show we are talking about one of the daily flows of being a developer in today’s environment. I’m naturally involved in talking with investors, with leading parts of our organization, with negotiating contracts, and with reviewing project plans, performing due diligence. But today’s I’m going to focus on just one aspect of my weekly workflow. There is a certain strength that comes from repetition of an exercise. In the gym, you can lift heavier weights and do more repetitions. This is what breeds excellence.

In the world of development, that translates into examining the economic model for a project and truly testing the main variables on a continual basis.

So we don’t have the luxury of creating a financial model only once. The model will often go through dozens of revisions over the life of the project. On a major project it’s not uncommon for a financial model to have 20 or 30 versions. The biggest focus is on controlling the elements that you can control.

What you can control are the choices you make on how the project gets built so that you bring the unreasonable construction estimates that invariably are presented down to hopefully workable numbers. That means digging into hundreds of details on the construction and engaging in value engineering analysis.

This is where we are looking at the portions of the construction that have the biggest impact on the overall cost and looking for ways to save.

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AI In Construction Is Almost Here Sep 04, 2025

Show notes

On today’s show we are taking another look at artificial intelligence. So far when we think of AI, most people think of something like ChatGPT or Google Gemini. But this is the tip of the iceberg.

The real revolution is going to be the combination of AI and robotics. We are talking about a complete remake of virtually all physical products in existence. Think of autonomous vehicles, autonomous lawnmowers, autonomous aircraft, autonomous cooking tools, autonomous construction equipment.

The US administration seems focused on bringing manufacturing back to the US. But instead, the US should be focused on winning the factories of the future. These facilities will first need to manufacture the robots that will be used to manufacture the products. If we don’t take that first step then we will be doing some manufacturing in the US with Chinese robots. That virtually guarantees that our western economies will be relegated to a second tier economy.

Europe is a lost cause. They’ve erected so many regulatory barriers that Europe is has no chance to achieve leadership in AI.

So on today’s show I’m going to showcase one startup company, Bedrock Robotics.

Their focus is on excavators for heavy construction.

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When Jobs Move Sep 03, 2025

Show notes

On today’s show we are talking about what happens when there is an announcement about jobs moving.

It seems like a zero sum game in which there are winners and losers. Yesterday’s announcement from the White House had those characteristics.

If you’ve been following this show for a while, you know that my development firm Y Street Capital, together with a few partners owns a large parcel of land consisting of 1783 acres in Colorado Springs. The project is a large master planned community located on the eastern edge of Colorado Springs. The development of the city is constrained by the mountains on the west side. It has developed North and South. Denver is about an hour to the North. The city has also developed East which is where our property is located. Our immediate neighbour is Schreiver Space Force Base. There are numerous assets in Colorado Springs.

Colorado Springs is a major hub for U.S. military space and defense operations, and as a result, many of the assets located there are part of the newly formed U.S. Space Force, which was created from elements of the U.S. Air Force.

The move was widely anticipated. Our sources said that the announcement would happen before the end of August. (We were off by two days.) Our sources tell us the move is anticipated to affect about 750-1000 jobs. Schriever Space Force Base is not being moved, nor are the ground bases in Alaska or elsewhere around the world. While the move is negative for Colorado Springs, we anticipate that the Golden Dome announcement from earlier this year will require growth in both Colorado Springs and Huntsville in order to be realized. Much of the growth that was announced for Huntsville is linked to the Golden Dome program, and not the wholesale relocation of Space Force from Colorado to Huntsville. Therefore, we do not foresee a long term negative impact.

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Is AI Affecting Employment? Sep 02, 2025

Show notes

On today’s show we are taking a look at a paper published in the past week by Stanford University.

But first, I’d like to let you know about an opportunity for one lucky individual to participate in the creation of the real estate espresso podcast. This is an unpaid internship position which will give you the opportunity to learn and to contribute to how guests for the podcast are selected. The work represents a couple of hours a week. If you, or someone you know might be a good fit for this position, we will be accepting applications to join our podcast team. Send an email to podcast@victorjm.com and let me know a little bit about yourself and how you think you might be a good fit. Again send an email to podcast@victorjm.com

On today’s show we are taking a look at a paper published in the past week by Stanford University.

There is a lot of news coverage about how AI is changing the world of software development. This is seen as a bellwether for what is to come elsewhere in the economy. Software is ideal for tools like AI in that it is a much more restricted language than natural language with a much smaller vocabulary. It’s at the intersection of math and language, so it’s much easier for a large language model to work on.

The Stanford paper was widely quoted in the media and it tells us a few things about the state of AI and how it is affecting hiring.

The first, and perhaps most striking fact is the substantial and measurable decline in employment for workers aged 22-25 in occupations deemed most exposed to generative AI. This group has experienced a 13% relative decline in employment since late 2022, a period that coincides with the widespread adoption of tools like ChatGPT.

For the most AI-exposed occupations, young workers experienced a 6% decline, while older workers saw an increase of 6-9%. This tells us that junior positions are being displaced, but the most experienced workers are using AI to augment their work and multiply their productivity.

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BOM - The Four Obsessions by Patrick Lencioni Sep 01, 2025

Show notes

Our book this month is "The Four Obsessions of an Extraordinary Executive: A No-Nonsense Breakdown" by Patrick Lencioni.

It's not a new book. It was first published in 2000. The author is founder and president of The Table Group, a firm dedicated to helping leaders improve their organizations’ health since 1997.

Prior to founding The Table Group, Lencioni served on the executive team at Sybase, Inc. He started his career at Bain & Company and later worked at Oracle Corporation.

The core of the book are four obsessions that the author believe are core to a healthy organization.

Obsession #1: Build a Real Leadership Team, Not a Social Club

Obsession #2: Stop the Confusion and Get Clear

Obsession #3: Communicate Until You're Sick of Your Own Voice

Obsession #4: Put Clarity into the Company's DNA

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