Use access key #2 to skip to page content.

ChrisGraley (30.25)

My Town by ChrisGraley esquire...

Recs

5

May 17, 2009 – Comments (1)

I wanted to talk about my little town. It's the town I grew up in. And, although I moved away and lived in many different places, it's the town that I decided to move back to when I had the choice.

The name of my town is Mentor-on-the-Lake Ohio. It's located in NE Ohio, in the smallest but richest county. (Lake County) It's a very small, small blue collar town who's residents have nicknamed it MOLville. (Pronouced Mole - ville) My best description of the town is that it is a suburb of the suburb. It is right next to a very big suburb called  Mentor Ohio. Both towns are about 20 miles NE of Cleveland. Mentor is probably both the population and economic hub of the county. I assume the name Mentor on the Lake came about because it is sandwiched in between Mentor and Lake Erie. I can literally throw rock from my front yard and hit the lake. We do have some million dollar plus homes along the lake, but I'm guessing that a lot of the homes in the town are much less than the average national home price. At one time, both Mentor and Mentor-on-the lake were areas dominated by mostly nursery land. In fact when my grandfather moved into his home in Mentor about 45 years ago, he lived on a dirt road and there were 3 houses within 10 miles. The 50's really changed Mentor a lot and most of the nursery land was sold to meet the housing demand from returning soldiers, but through most of my child-hood, there was still enough forest area to make deer a major traffic problem in both towns though.

Both towns grew tremendously from the 50's on, but my little town stayed primary residential and up until about the point I graduated from high school, we had 2 traffic lights, a grocery store, a roller skating rink, 2 mom and pop stores, 2 drug stores, 2 bars, 2 churches, a small ice cream stand, a Dairy Queen, 2 gas stations, 3 parks and a whole lot of wooded area. I moved away shortly after I graduated in 1987, and shortly after that, growth in my town accelerated. Every time I came back to visit, something new was being built. First came the apartment buildings, and then another grocery store, a couple of strip malls, a couple of more drug stores, etc...

The growth had stayed accelerated up until about a couple of years ago. There's really not any wooded land left, and I'm guessing that we might have about 7 undeveloped lots left that we could build single family homes on. Strangely there are still a couple of herds of deer left, but they only manage to survive because the residents don't seem to mind that they eat from their flower beds and gardens. We still only have about 4 stop lights, but last year we had to add a 3rd lane to the main road where most of the businesses were located, because of traffic. Strangely missing are raccoons and skunks. When I was a kid, I would run across one or the other almost every night. I haven't seen either in the 10 years I've been back.

Please forgive me for making a very long intro to a very short point, but as you can tell I'm pretty fond of the little town where I grew up in. My point is that yesterday I drove by 1 of about 9 strip malls in my little town and noticed that it had 2 businesses left paying rent. I hadn't really noticed it before, because the signs of the old businesses were left up and while I knew of a couple of businesses in that strip mall that closed, I didn't really frequent the others. I then started looking a little closer. All the strip malls seemed to be in the same situation. All together, I realized that less than 50% of the space in these strip malls was earning rent and a few of these current rent earning spaces were fairly new businesses that were replacing failed businesses from the last year or 2. A couple of the spaces had 3 or 4 businesses that failed in the last couple of years. Then I started looking at the other stand alone businesses. There is a pizza shop that has changed names 5 times in 5 years and 2 bars that have done the same thing. There are a couple of buildings that used to be drug stores that have been empty for a few years as well. Most of these things I wrote off as they were happening as just bad management. After all, there are still more people than ever willing to spend money and it is very convenient to drive or walk 2 blocks to get dinner, groceries, or an ice cream cone.

The more I started thinking about it though, the more I realized that it isn't just bad management. Somebody loaned these people the money to fail. Remember how I said that I didn't frequent a lot of these businesses? Well I personally will pay a premium to make my life less stressfull. I would pay $4 for a burger that I can walk a couple of blocks to get, rather than paying $2 for a burger that I have to fight traffic and excercise a negative vocabulary for. A lot of the businesses that opened up in the area were businesses that I new I would never visit when they opened. We had one that did only Celtic jewelry. While a business like that can find a decent stronghold in a city, especially in an artistic district of the city, I can't imagine how they thought they were gonna make money in a small blue collar town. Another business that hasn't failed yet but will, is called "The olive and the grape" "fine wine and olive oil and the lifestyle that goes with it!" I have yet to see a customer walk into her business. On the other hand, the business nextdoor that sells cigarettes, beer, and lottery tickets is booming. All of these people have to come to banks with business plans and the banks should be smart enough to understand that my little town can't support Celtic jewelry or 8 fast food restaurants.

If my little town is an indicater of the entire country, then God help us all! BTW, the commercial real estate crisis is a lot closer than I first thought!

 

Chris

1 Comments – Post Your Own

#1) On May 18, 2009 at 1:19 AM, checklist34 (99.73) wrote:

chris, a house on a lake is one little slice of heaven in my mind.  I hope it brings you alot of happiness.  When I sit somewhere - hotel even - and open a window and hear waves I can't explain how at peace I feel.

Ironically, in my town house prices aren't down, I haven't seen a closed shop that I can remember, and...  the only economy related miseries are related to huge companies with worldwide roots.  Those companies have laid people off here, including my best friends wife (who makes more $$ than he does).

I am currently serving, well enough I hope, on my first job which is working for the outfit that bought my businesses some time ago. The business sells into the construction market, hit harder than any other segment right now.  What we've seen is this:

business was normal last year until late summer when growth stopped.  In the late part of the year business nearly ground to a halt, it was frighteningly bad.  The sales guys got practically no responses from people over the last 4-5 months of 2008.  In early 2009 things picked up alot, and we posted our best jan, best feb ever and it looks like it might be thte best may.  This is a tiny company in the grand scheme of things, and one with really fast growth rates, but what we saw was people got scared and stopped replenishing inventory.  As if everybody just paused for a moment to see how bad business would get.  When they realized some business was still going on they ordered again and so on.

I do not doubt that a similar phenomenon will happen in alot of industry.  And I think both the markets and the economy itself will get something of a boost later this year when inventories stop dropping. 

And in some part based on the fact that I think fair value for the S&P is between 900 and 1000 right now, and in some part based on this:  the economies biggest, most massive hiccup is probably past, I think the S&P will touch 1000 at some point this year. 

And thats my tentative exit point.  Or my tentative point to take a total hedge. 

Report this comment

Featured Broker Partners


Advertisement