Psst, What Are People Whispering About Your Market?

Good, Bad and (Mostly) Ugly... Have you ever heard of WhisperNumber? Here's the theory: the numbers tossed around in private conversations between securities analysts and investors are more accurate than published brokerage reports. Well, I'm starting to hear whispers about the health of the real estate market. One brokerage CEO on the East Coast told me this week that he believes tech companies may be about to dump one million square feet of "stealth" space onto his market. Another CEO on the West Coast told me that his firm had started to track changes in space available WEEKLY as an early barometer of trends. Pick a headline at random in the San Francisco Bay Area and you're likely to find a gloomy forecast, e.g., "Warning Signs: High-tech Titans Slide ..." (San Francisco Chronicle, Dec 8, 2000) Uh-oh.

And consider these amazing statistics from The Red Eye (Dec 6, 2000), a newsletter published by Red Herring. The author, Tony Perkins, paints a litany of dot-bombs. "The Internet Wasteland, is a chart listing 215 public Internet holdings that have seen their stock prices dive over an incredible 80 percent in the past 52 weeks. ... The other death list, produced by ... Morgan Stanley Dean Witter, ... looked at the market capitalization erosion of 261 selected technology stocks ... including some 'Internet brand names' like eBay (down 72%), Amazon.com (down 77%), and Yahoo (down 84%)." That's ugly.

How about eToys, which went public in May 1999, saw its stock rocket to $68, and closed last Friday at $1.25. According to the Wall Street Journal, it will need additional financing next year to fund another $500 million in losses (Dec 8, 2000). ... So will a decline in the technology economy threaten the health of the real estate industry? What geographical markets are most vulnerable? And which sector -- office, industrial, retail? What whispers are you hearing?

--Peter Pike