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Tuesday, June 16, 2009

Cape Cods and Cappuccino: Parallels in Real Estate and Coffee

Ok, so Seattle is known as the coffee Mecca.

I get that.

Seattle having spawned Starbucks and the espresso shot heard 'round the world, it's understandable. Cold climate, hot drinks, social scene pulling in computer nerds, aerospace workers, college students, grunge rockers and the like.

This was not unique. 145 years ago the Julius Meinl coffee chain started in Vienna beginning a trend across Europe and at one time boasted 1,000 stores.

In the U.S. over the past 20 or so years, it has all been about competition: Burger wars, Cola wars, etc. And coffee has been no exception to that rule.

Of course Starbucks has raised some ire and eyebrows in competing with small local coffee houses, and other chains as a Goliath to their innumerable Davids.

Smaller companies are now fighting back with so called "sexpresso" shops spiraling outward from the Seattle coffee vortex.

Scantily clad women in little huts, whipping out lattes and mochas. And the trend is catching on! Given the cold climate in and around Seattle, one would wonder that the chilly environs would not be conducive to such uniforms, but the popularity and novelty apparently outweighs the discomfort. There have been multiple stories and discussions in the Seattle PI on this new development.

From Seattle, to Tukwila, to Ballard and Lakewood, Port Orchard, Renton: these little shops are sprouting up like Pacific Northwest mushrooms: Moka Girls, Bikini Espresso, Cowgirls Espresso, that plays on the word "naughty" with: Natte Latte, Knotty Bodies. All dubbed as a blend of "Starbucks meets Hooters" describing the service and... um... product presentation you experience in these shops.

Now what does all this have to do with Real Estate?

It's all about cycles and competition.

The Real Estate Market spun outwards from the 90's to 2008. Prior to that we had shorter cycles of increases in pricing and declines. Markets fluctuated more frequently on cycles of a few years.

The expansion of the Starbucks chain is like the real estate boom, it kept going with no end in sight....until the point of saturation.

It did not take a business genius to see that as soon as you started having stores competing with each other on the same block or in the same neighborhood, they would begin to cannibalize each other's business and cause a retraction. Or that limited incomes could no longer pay escalating home prices.

This has now led to a period of retraction. Stores are closing, real estate prices dropping, increases in availability of foreclosure properties. The market becomes much more competitive due to decreased spending and competing for a smaller total market.

What comes next? Innovation and creative marketing.

We now have bikinis thrown into the mix. Anything to get the buyer's attention.

Short sales and foreclosures are sexy too! A wide variety of selection at bargain basement prices for investors and first time buyers to compete for. Never into real estate? Maybe the $8,000 tax credit can entice you. On top of that., you can put it towards the down payment?

Never tried a Cappuccino? Try one and you get to see our sexy outfits.

Creative thinking and innovation will continue to get the attention of buyers. Until the general attitude of the market turns. There are definitely changes, innovation and creative solutions in the wind.

Just please keep the fringe out of my foam.

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