X-Message-Number: 683
Date: 28 Mar 92 05:25:20 EST
From: "Steven B. Harris" <>
Subject: ACS Proposed Building Buy

Art Quaiffe writes:

   >>This modern three-story building, constructed in about 1977,
is located in an attractive industrial park near the NASA Ames
Research Center.  Close neighbors include Atari and Lockheed.<<

   Comment: I hate to pour cold water on a deal which is already
far gone, but hey, folks, isn't this a lousy time to be buying
California industrial real estate?  In three years Atari will
still be around, I'm sure, but you might be able to buy that
Lockheed property for a song.  Along with a whole lot of other
defense-related-industry buildings.  

   I don't have to tell you this morning's news flash: the Cold
War is over; we won and the military industrial complex lost. 
Have you all been listening to the White House, the Defense
Secretary, and the Pentagon?  Their plans are damned scary for
California as it is, and remember this is a *Republican* admini-
stration talking, which may possibly last 4 more years, but which
won't last forever.  In short, if you think the real estate
market is soft in California now with the recession, my guess is
that it's going to look like the roaring 20's compared with the
California industrial real estate market which will result
shortly from the great defense spending contraction.  Need I
point out that the folks looking at those fire-sale properties
when this happens, will be the same ones that ACS hoped would be
renting space from them instead?  Nor will it be easy for ACS to
unload or (for that matter) refinance in three or four years when
all this really hits the fan, since by that time a lot of other
people will be trying to do the same.  

   Won't a whole lot of manufacturing industries be rushing in to
fill the gap left by the high tech defense industries, you ask? 
Fancy computer and biotech companies?  Answer: Dream on.  Not in
this state if they have any sense, since taxes will have sky-
rocketed even more by that time to finance the increased load on
the social services system caused by the loss of jobs.  One in
seven people in LA county is now on welfare, and the bay area is
headed for the same.  Light industry with any mobility and sense
will long since have headed for Oregon, Nevada, Arizona and Utah,
where the cost of living is half what it is here.  If you want to
see the future of California, take a look at New Jersey.  With
this difference: in California it's going to be even worse.

   That's my two cents worth, and now I'm on record.  If ACS can
still get out of this (albeit with some forfeit), it might be
still be wiser to just cut loses and run while you still can.  In
a couple of years you won't be able to.

                                          Steve Harris

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