|
BOSTON'S
CRUMBLING ECONOMY
by Michael A. Nystrom
BullNotBull.com
July 18, 2007
I live near Boston,
and my bicycle is my primary means of transportation. For those of
you not familiar with Boston, the city proper is actually quite small,
and is surrounded by a number of other small towns that make up the
Greater Boston area. I live in a suburb called Arlington, just up
the road from neighboring Cambridge, home to both MIT and Harvard.
Arlington is a very nice (if sleepy) town, but was once the site of the bloodiest
fighting on the first day of the American Revolution.
At least a
few times every week, I ride my bike from my home in Arlington down the
main arterial called Massachusetts Avenue (Mass Ave), into Cambridge to
run errands. Over the past few months I’ve noticed more and more
“For Lease” signs cropping up among the businesses on the main drag.
Yesterday
afternoon, with the Dow pushing 14,000, I decided to take the afternoon
off and go out and document what I’ve been seeing with my camera.
You’d think that with stock markets pushing all time highs that the
economy would be booming. But as many observers have amply noted,
fundamentals don’t back up the strength in the financial markets.
Citing
fundamentals, Mish issued a market-top call last week. Yesterday
Robert Prechter, in a special note to subscribers, issued a warning as
well. In his report, he notes that breadth during the latest rally
has been weak, and advised, “Aggressive speculators should return to a
fully leveraged short position now…” In other words, the end
of this rally is nigh. (You
can read the report as well as three months of back issues during
EWI’s special free week, until July 25).
Below are
the pictures I took, investigating the “fundamentals” of my local
economy. All of these pictures (aside from the last one) were
taken on a stretch of road that I travel regularly, and would estimate
to be about 2-1/2 to 3 miles long. Consumers may make up 70%
of the economy, but they need jobs from business in order to keep
spending. Businesses need places to do business, and this excess
capacity shows that something is wrong with the real economy in Boston.
Commentary
on the Pictures
- Formerly
an independent video store. The sign says it has “moved”
but I’ve noticed that other branches of this particular store have
closed down as well. 2200 SF for lease, and vacant for the past six
months.
- A
Chinese Restaurant that’s gone out of business. Granted, the
food was terrible - I had the misfortune of eating there once. This
spot has been empty for the past three months.
- The
Movie Café – Books, DVDs & a café. Empty for about two
months.
- A Dry
Cleaner – just went under about a week ago. I had cleaning
there that I’d forgotten about – the owner called me up to say
come get your stuff because we’re going out of business!
- This
was a big, fancy stand-alone Italian restaurant that has been
sitting empty for about six months now.
- Nondescript
office space – I don’t know what was there before.
- The
sign says Office, R&D, Warehouse – 40,000 square feet. I
would imagine that it is an erstwhile American manufacturer losing
out to globalism.
- New
construction – this is the first floor of a brand new condo
project. This retail space has been sitting vacant for over 6
months now. They couldn’t sell the condos, so they’ve been
converted into apartments “for now.”
- A
sleepy insurance office.
- More
nondescript office space…not sure what was there before.
- Previously
(surprise) a real estate office.
- A
vacant KFC/Taco Bell. You’d think that in hard times people
would need cheap food, but maybe this has something to do with the
rats at KFC/Taco Bell in NYC. I don't know if you can tell from
the little picture, but it is a real piece of urban blight - the
kind of which we're likely to see more of.
- Formerly
a New Age bookstore. Okay, so you might think that’s a hokey
business to begin with, but the store had been in business for 15
years prior to its closing! This has been sitting vacant for
at least nine months.
- Office
space above the Post Office. I just noticed it – not sure
how long it has been vacant, or what was there before.
- Another
fancy Italian restaurant. Business always seemed decent (not
great), and the sign says they’ve moved downtown. But they
haven’t been able to sell the existing location, and it has been
sitting empty for 9 months.
- The Gap
– this is right next door to the fancy restaurant described above.
The Gap closed down a few months ago.
- Random
office space between Porter Square and Harvard Square.
- This
was formerly a health food store (Cambridge Naturals) that moved
about half a mile away to a place with better (free) parking.
Business seems to be doing fine at the new location, but this old
location has been sitting empty for about a year.
- Kabloom
was a flower shop next door to the health food store. It looks
like the whole chain has gone out of business – I’ve seen other
stores around town shuttered. I would say fresh flowers are a
luxury item for good times – they’re expensive!.
- Tower
Records. Out of business – a victim of the new economy, and
the rigid recording industry. The building is up for sale.
This has also been empty for about nine months.
- Some
random office space next to Tower records in Harvard Square. Also
has been vacant for several months.
- New
construction in Harvard Square.
- I’m
told this used to be a great big used book store, but this space has
been sitting empty since I moved to Boston two years ago! If a
used bookstore can’t survive in a city with 50+ colleges (that’s
right!), in the middle of Harvard Square…Well, the rent is too
high. There is a lot of space for rent in Harvard Square.
The only one’s who can afford it are the big corporate chains,
which makes it kind of a boring place. You may as well just
visit the mall for all the character you’re going to get there.
- Office
space in new construction in Harvard Square
- A
former restaurant in Harvard Square
- A
former café in Harvard Square
- A huge
piece of office space / first floor retail in Harvard Square
- A
former Japanese Restaurant between Harvard Square and Central Square
that has been empty since I moved to Boston two years ago!
- 5,800
SF of Non-divisible space. I’ve seen this sign here for the
past year and a half.
- Office
space in Central Square. I don’t come to Central Square too
often, so I’m not sure how long this has been vacant, or what was
there.
I know
that it is natural for businesses to go out of business, but the key
point with these properties is how many there are, and how
long they've been vacant. It was really kind of depressing, and I
couldn't help but think that if the Dow weren't hovering at 14,000,
there would be more talk of how bad the economy really is.
© 2007
Michael A. Nystrom
Editorial
Archive
CONTACT
INFORMATION
Michael A. Nystrom
Cambridge, MA
www.bullnotbull.com
l Email
Please
visit my blog and web site for free daily market articles and analysis.
Click Here.
The
opinions of FSU contributors do not necessarily reflect those of
Financial Sense.
|
