CBRE recently published this report looking at the impact of the “high-tech software/services industry” on the North American office market. 

Here are a few highlights:

- Since 2010, tech has created ~1.1 million jobs in the US at an annual growth rate that is 3x the national average.

- Seattle currently has the fastest tech job growth in North America. This is the first time in 7 years that San Francisco hasn’t been at the top of their list.

- Silicon Valley, Toronto, New York, and Los Angeles all added more than 10,000 tech jobs from 2016 to 2017.

- The biggest “momentum markets”, relying on 2016 and 2017 data, are Montreal, St. Louis, and Seattle.

- Over the past two years (Q2-2016 to Q2-2018), Atlanta, Los Angeles, Orange County, Seattle, and Portland have all seen double-digit rent growth.

One figure that also stood out for me was this one here showing the relationship between US venture capital investment and the average asking rent for office space in San Francisco.

If you’d like to download the full report, click here. You’ll need to sign up for an account with CBRE, but it’s free to do that.

Warren Buffet recently said in a Yahoo Finance interview that when you buy cryptocurrencies you’re not actually investing. Instead, you’re speculating – speculating that “somebody else will come along and pay more money tomorrow.” Investments need to generate a return. And nobody is at all clear on how to value these crypto-assets. This is noteworthy, of course, because it’s Buffet.

But I thought Fred Wilson wrote a good rebuttal on his blog where he points out that, while, yes, a discounted cash flow model isn’t going to be very useful in helping you determine value in this instance, what we are actually seeing is, “the creation of a new internet, built upon protocols that allow for decentralized networks to form…” We’ve talked about this many times before on the blog.

So where I stand on this debate is that I agree with both Warren and Fred. I don’t see crypto-assets as something I want to start putting a lot of money into right now because I don’t know how to calculate what the IRR may be. But at the same time, if crypto-assets are creating decentralized infrastructure that will one day power the “new internet”, I am positive this new internet will eventually create businesses that will fit into Warren’s definition of an investment. 

“Investing is an activity in which consumption today is foregone in an attempt to allow greater consumption at a later date. “Risk” is the possibility that this objective won’t be attained.” -Warren Buffet

Warren Buffet published his annual letter to Berkshire Hathaway shareholders this past Saturday. I always enjoy reading his letters and I have been doing it for years. If only he wrote a daily blog.

One of the things he talks about in this year’s letter is why Berkshire wasn’t very acquisitive in 2017:

In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price.

That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high. Indeed, price seemed almost irrelevant to an army of optimistic purchasers.

Some of you in the real estate game might be feeling similarly. But he ends the section with these words of advice: 

In the meantime, we will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own.

Buffet has a way of simplifying things. He also, clearly, has a way of remaining disciplined.