Chris Powers joined me to talk about our big predictions and focus points for 2022. There are a lot of topics that we’re excited to follow, from the interest rates that fuel our businesses to the future of Bitcoin and remote work.
Our perspectives may not match what you’re used to hearing on certain topics, and that’s intentional; Chris’ approach is to learn from people by asking questions and backing up his observations with data. Some of Chris’ predictions are data-driven, some are just gut, but he’s constantly digging one step deeper than media headlines to understand what’s going on in today’s world.
Interest Rates and Inflation
Monitoring interest rate trends is key to both my business and Chris’, and it’s easy to predict an increase of at least 50 basis points in 2022. Inflation is running rampant, the Fed has communicated likely rate increases, and frankly, the world right now can handle it. The economic environment the past couple of years has thrown caution to the wind, with people taking on more debt and getting rich off of anything from used cars to meme stocks. We’re starting to see the euphoria end, and that could suggest we’re in need of a controlled cooldown.
While interest rate hikes may be fueled by wild inflation, Chris predicts we could be shifting towards a deflationary environment soon. Consider the bullwhip effect, in which inaccuracy in demand forecasting can yield wild supply chain inefficiencies. Since 2020, consumer demand has been radically changed. People are stockpiling on everyday items like paper towels and diapers, while stores are sprinting to keep their shelves stocked. Eventually, we’re likely to see a period of inventory stocking up combined with lower than typical pandemic-level demand, which could cause a race to the bottom as stores try to offload inventory. Early signs of an economic slowdown could further apply downward price pressure.
Industrial Rent Hikes
Chris has grown into an expert on industrial real estate and sees the increasing focus on e-commerce and last-mile shipping leading to at least 8% higher rents for those spaces. Ecommerce only makes up 17% of all sales in America, and it’s growing exponentially while the supply of space is growing linearly. Companies are investing to reduce the cost of last-mile delivery, and they’ll be willing to pay higher rent to be closer to the customer. All the vehicles and equipment used for online delivery need to be stored somewhere, and the right location can charge top dollar.
Bitcoin to $100K
While fully admitting that he’s not a crypto genius, Chris is excited about the potential both short and long-term for those assets. Most institutions have barely dipped their toe in the water of embracing cryptocurrencies, and the space has a cultlike following among its supporters. There’s a rare overlap of incredibly bright people being all-in on the future of crypto while incredibly wealthy people are still in early stages, meaning this may be a great time to get in.
I disagree slightly, despite having a stake in cryptocurrencies. I think Web3 is massively overblown, and the average wealthy person doesn’t care about it. Even worse, the average smart person can’t simply explain it in a way that gets me excited. But Chris follows what people are doing, and generally, when the smartest people in the world are diving in headfirst it’s not happening by accident.
BREIT and Crowdfunding
BREIT is the Blackstone retail nonlisted REIT, and it’s been raising up to $3 billion a month. Through BREIT, all the retail investors in the world can invest with Blackstone, and it’s raised billions of dollars from individuals and financial planners that manage money for the masses. This is a serious push towards crowdfunded capital raising, which is only growing more legitimate every year. In fact, crowdfunding is past the period of concern and now represents a phenomenon that allows anybody to invest with real parties like Chris and me.
The Sunbelt and the South
Southern metros like Austin and Atlanta are booming, and Chris sees it staying that way. Some may be put off that the region is growing more expensive and more crowded, seeking cheaper housing and better quality of life in the Mor upstate New York, but Chris sees people moving there for freedom more than anything. Children and families in the sunbelt live a different reality than those in California and New York, and this is a bet that people will pay for greater freedom.
Remote Work Reversion
As I contemplate opening an office in Athens, Georgia for a large part of my employee base, Chris is adamant that the office will see a resurgence in the next few years, but don’t assume that it’s like it was before; the office doesn’t need to be a place to force employees to spend mandatory hours at their desk five days a week, but it will be a place to collaborate, get to know the people you’re working with, and make your voice heard by your manager and leaders.
While it may never be explicitly stated, there will almost certainly be an imbalance in rewards and promotional velocity for those who have a physical presence in the workspace and those who don’t. People that were once dead set on working remotely will prioritize going to the office if they think it’s impacting how their work is perceived. People who want to work from home don’t call the shots, and people who call the shots don’t want to work from home.
The Opportunity in Self Storage (or any business)
We were asked, can a regular Joe make it in self-storage? Absolutely.
I’m a regular Joe, and I’m making it. In fact, the best deals, the life-changing deals, are under $1 million and I don’t even touch those. There are lazy real estate operators everywhere ignoring their business, and there is juice to squeeze all over the world. But don’t limit your thinking to self-storage, look up from your computer screen and look at what the world around you needs. There are regular Joes lazier than you making tons of money all over.
Three Key Takeaways
- Dig into the headlines you read every day, and don’t be afraid to take a contrarian approach if what you hear and see doesn’t agree with them.
- Follow what smart people are catching on to, you might get there earlier than the masses.
- Look up from your computer, sombody lazier than you is making a ton of money in your area.
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