Local economic news looking like national headlines

There were a couple of stories in the Seattle Times over the weekend pertaining to the health of the local economy.  The first was an article on the commercial real estate market, highlighting a forecast for falling rents.

Commercial real-estate brokers James Keating and Sean Barnes have one word of advice for their clients looking to lease big chunks of office space in or near downtown Seattle:

Wait.

“By the end of 2009, or the first quarter of 2010, the market’s going to turn,” says Barnes, a vice president in the Seattle office of Jones Lang LaSalle.

Vacancy rates will rise, they predict. Lease rates will drop. Tenants will smile.

The article goes into pretty good depth as to the amount of space coming on line both in terms of new construction and space coming available from existing tenants.

The second story was about Olympic Boat Centers filing for bankruptcy protection.  For those who don’t know it, Olympic Boat Center is a Redmond-based “seller of boats and yachts including Bayliner, Maxum, Meridian and Trophy”.  Boats purchases are highly subject to discretionary income – and are typically hit hard in an economic downturn, so this news isn’t all that surprising.  When I saw the article – I figured that it must be exposure to the California market that was dragging them down.  This could be the case, but when I dug deeper, I noted that they have 8 locations in California as compared to 11 in Washington/BC – so they are not completely weighted to the California economy.  A few months ago, I noted that they had closed their location on Bel-Red Road.   At the time,  I figured they must be moving to newer and fancier digs.  It seems I was mistaken.

68 comments:

  1. 1
    victorchai says:

    First boats, then cars, thrid house…I am not suprised…

  2. 2
    Scotsman says:

    Lots of boats were bought with HELOC money. Once that went away, so did the demand for new boats. That, coupled with the cost of fuel, means that it will be some time before recreational boat sales recover. And the industry as a whole has been in decline for several years.

  3. 3
    brettro says:

    i guess they didn’t “make a boat nut” out of enough people…

  4. 4
    jon says:

    I won’t miss ’em. Not only do those things consume a lot of fuel, they make a lot of noise.

  5. 5
    David McManus says:

    I don’t have a problem with someone having a boat as long as they can afford it, meaning they are aware of all costs that comes with it, and have taken a boating safety course. There are so many idiots out there on the water that don’t know the rules of the water. The same should go for automobiles, IMO.

    Getting back to the original article, I think that this does provide one example of how our local economy is not immune to national problems, no matter how much the “professionals” will try and convince you otherwise.

    Don’t forget WM releasing Q2 numbers after market close in half an hour…..

  6. 6
    vboring says:

    wait –

    i thought Amazon and Microsoft were gonna quadruple their in-town office space

    plus all the biotech start-ups

    how can there be expectations of excess inventory?

    ohhhh…. that’s right — WaMu is going under. that should free up some space.

  7. 7
    Rob says:

    Wamu would free up a LOT of space. I did two contracts there. They are peppered all over downtown. But I think they may get bailed out. If they don’t, they most definitely are going down.

  8. 8
    Rob says:

    I live in a fairly upscale neighborhood and without covenants (which I like). But my neighbor bought a ski boat a few weeks ago and parks it ON THE STREET just off my driveway.

    When my wife and I go for walks we fantasize about taking a philips screwdriver and a hammer with us and punching a few holes in the hull as we walk by.

  9. 9
    Joel says:

    Did Matt at UrbnLivn ever manage to sell his boat?

  10. 10
    Buceri says:

    And there might be more vacancies….

    ______________________________

    “They’re All Toast”: Roubini Says Brokers, Even Goldman, Can’t Stay Independent
    Jul 22, 2008 03:06pm EDT

    The broker/dealer business model is “inherently unstable” and the four remaining major firms will not be independent in a few years, says Nouriel Roubini, economics professor at NYU’s Stern School and chairman of RGE Monitor.

    Embattled Lehman Brothers is likely to seek a buyer “within months,” Roubini says. Lehman Brothers ceasing to be independent is not such a shocking outcome, but Roubini ultimately sees a similar outcome for Goldman, Merrill Lynch, and Morgan Stanley.

    The problem, he says, is that broker/dealers use the same model as banks — borrow short and lend long — only they borrow on even shorter timeframes, use more leverage, and don’t have the kind of government backstop banks enjoy.

    In the wake of Bear Stearns’ demise, which showed how brokers are vulnerable to a “run on the bank” if they can’t get overnight funding, the Fed temporarily opened its discount window to brokerage firms. But making that option permanent means submitting to the same kind of regulation and capital requirements as banks; that, in turn, means a very different business model — and much lower profitability — for Wall Street firms, whose current business model is “not viable,” he says.

    With U.S. financial giants like JPMorgan, Citigroup, and Bank of America dealing with internal issues, the most likely buyers are international financial firms or sovereign wealth funds, Roubini says. But unlike in 2007, foreigners are not going to settle for preferred shares, and non-voting rights next time around.

    That raises the questions: Is America ready for (true) foreign ownership of major financial institutions? And do we have a choice?

  11. 11

    DEEJAYOH, YOU MADE A GOOD POINT

    I see a bunch of new lease buildings going up east of Seattle, Covington has rows of ‘brand new built ones, most currently empty with for lease signs. I’m sure this is going on all over the Seattle area. Must be a cheap time to build and/or construction companies use the over-build as a tax write-off? 2009-2010 it gets worse?

    Dr. Roubini’s university bloggers are suggesting park your money in credit unions, not FDIC banks. See some proof for this advice:

    http://www.marketwatch.com/news/story/time-worry-about-your-bank/story.aspx?guid=%7BAA04141E%2D663B%2D41E3%2DB067%2D734DCCC685B3%7D&dist=msr_1`

    Its not just boats that don’t sell right now, even Harleys [with older boomers retiring or passing away; there’s likely a glut of used ones and growing fast too]:

    http://www.foxnews.com/printer_friendly_wires/2007Oct19/0,4675,EarnsHarleyDavidson,00.html

    You thought your 1968 Charger type car was good investment, well its likely horrifyingly plummetting in value too:

    http://classiccars.about.com/b/2008/06/25/is-todays-economy-good-for-the-car-collector.htm

    Good point Deejayoh. I hear used small airplanes are getting worthless too, although if you own one, the skies are much clearer for pleasure flights :-)

  12. 12
    David McManus says:


    SAN FRANCISCO (MarketWatch) — Washington Mutual (WM:
    Washington Mutual Inc
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    Last: 5.85+0.37+6.75%
    4:00pm 07/22/2008
    Delayed quote data
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    Financials
    Sponsored by:
    WM 5.85, +0.37, +6.8%) reported a net loss of $3.33 billion, or $6.58 a share, late Tuesday. That compares to net income of $830 million, or 92 cents a share, a year earlier. The nation’s largest thrift said it boosted loan loss reserves by $3.74 billion to $8.46 billion during the latest quarter. The company also said that the remaining cumulative losses in its residential mortgage portfolios will be towards the upper end of the range it disclosed in April. Excluding one-time items, the lender said earnings per share would have been $3.34 in the second quarter. WaMu was expected to lose $1.05 a share, according to the average estimate of 12 analysts in a Thomson Reuters survey.

    Stock will probably go up 100% based on the market these days. Wachovia reports huge loss and axing of 7000 employees and their stock surges.

  13. 13
    NotaBull says:

    “I live in a fairly upscale neighborhood and without covenants (which I like). But my neighbor bought a ski boat a few weeks ago and parks it ON THE STREET just off my driveway.”

    That’s why when I decided to buy I made the decision to buy in a neighborhood with fairly strict covenants. Given the lack of mobility that home ownership usually implies, I didn’t want to end up in a neighborhood where a neighbor decided to leave their ugly RV or boat out in front of their house, or mine for that matter.

    In my neighborhood you can’t have an RV/Boat or anything like that on a road or your own driveway. I love it and so does everyone that lives here. It’s not for everyone, but I think it’s a good way to have choice. If you’re OK with the possibility of boat/RV/nasty yard, then you have that choice. If you’re not OK with that possibility, you have that choice too.

  14. 14
    DavidB says:

    http://www.cnbc.com/id/25802673

    Here’s a good article on the CNBC website that summarizes the issues affecting the real estate market and the reason why prices will continue to decline for the next year and a half!

  15. 15
    NotaBull says:

    “When I saw the article – I figured that it must be exposure to the California market that was dragging them down. ”

    I was talking to the owner of a San Diego RV sales business back in late 2006. Actually, they sold popups in the 5K to 15K range. Even though the local economy was still going very strong and the national story about housing was in its infancy, the business owner was very glum.

    He said sales were really bad because of the “economy”. What he meant was that the locals could no longer HELOC their way into buying new toys. People selling big ticket discretionary items like RVs, boats, feel the pinch even when prices are flat and employment is good. That’s where we’re at locally right now. Prices are flat for a number of people that bought in the 2005/2006 time-frame so they can’t get a new HELOC and buy a toy, even if they wanted to. As prices decline, it’ll be people back in 2004 that can’t get a HELOC. Then 2003. How far it goes is anyone’s guess… I have no idea myself…

  16. 16
    Please Buy My House, Idiot Renters! says:

    “Did Matt at UrbnLivn ever manage to sell his boat?”

    I don’t know, but if you read his blog, he still owns two condos, is furnishing the one that he lives in, and in his words last week: “I don’t make any money off this blog and blew half of my savings in Vegas a few weekends ago and will blow the rest in Montreal this weekend.” And he has a job in the RE industry.

    I just marvel – some people have a much higher tolerance for risk than I do.

  17. 17
    jon says:

    “US proposes rules to get 800 bln barrels oil shale”

    “would provide enough long-term supplies to meet current U.S. oil needs for 110 years”

    http://uk.reuters.com/article/oilRpt/idUKN2231522420080722?pageNumber=1&virtualBrandChannel=0

    These deposits dwarf those of the rest of the world. Will the US be the Saudi Arabia of the 21st century?

  18. 18
    uptown says:

    Oil Shale – the bad news…

    “Oil shale production consumes large amounts of water and power, both of which are scarce in the West. Shale rock is heated with steam to extract the oil.
    …Commercial development of oil shale will not begin until it is technologically viable, which is not expected for several years.”

    Good news (kind of) is that the USA has 27% of the worldwide proved recoverable coal reserves (wikipedia).

  19. 19
    uptown says:

    On topic:

    The price of gas is probably the biggest factor in killing sales of small and medium motor boats like Olympic Boat Center sells. Friends in the luxury yacht business have seen no slow down. Lower dollar has made us more competitive in building and servicing the big yachts.

  20. 20
    vboring says:

    @16

    some people have a much higher tolerance for stupid than i do.

  21. 21
    Tsuru says:

    Sailors like to say that there are two great days in boating: the day you buy your boat and the day you sell your boat.

  22. 22
    Wisen Heimer says:

    An acquaintance was by my home this weekend, and mentioned that he had gone down to Eugene to trade in his RV for a new pick-up truck and some cash. He had delayed getting down there about 30 days, so, in the meantime, what he was offered by the dealer when he DID finally get to Eugene with his RV was $8,000 less. Those RVs seem to be plummeting in value too, if this is any indicator.

  23. 23
    Birdie Num Nums says:

    If you want to park your cash with relatively safety, why not just invest in Treasury bills directly from Treasury Direct?

  24. 24
    Sniglet says:

    Sailors like to say that there are two great days in boating: the day you buy your boat and the day you sell your boat.

    Hmmm… I thought that saying was in regards to home-owners. :)

  25. 25
    John says:

    Having a boat is a great idea, just like having a house with a big lush yard for all the bbq parties, until you realize you have to maintain it.

  26. 26
    Garth says:

    Rob,

    If you are in the city, there is a 72 hour rule and all you have to do is report them a couple times and they will have to figure out a different solution as moving a boat every three days is a pain. I learned about this rule a few years ago after leaving my car in a great street spot for a few weeks while I was riding my bike to work. Once they are after you it is not worth leaving you vehicle there.

    http://www.ci.seattle.wa.us/Transportation/parking/parking72hour.htm

  27. 27
    disbelief says:

    Now for some really bad local economic news……

    WaMu reports $3.3 billion quarterly loss (just in)

    http://seattletimes.nwsource.com/html/businesstechnology/2008066316_webwamu22.html

    The saga continues…

  28. 28
    Rentersarelosers says:

    Dow up 850 points from the low last week.

    One hell of a “dead cat bounce” so far!

    RAL

  29. 29
    didn't just fall off the turnip truck says:

    all the better load up on shorts RAL

  30. 30
    RAL=Choad says:

    Thanks for proving my handle is correct.

  31. 31
    Rentersarelosers says:

    RAL=Choad

    Did ya make any dough off those 850 points? I did.
    Who’s the choad?

  32. 32
    Please Buy My House, Idiot Renters! says:

    “Dow up 850 points from the low last week.

    One hell of a “dead cat bounce” so far!

    RAL”

    Great! I don’t own a house, but I do have hundreds of thousands of dollars invested in the stock market. Nice to own an asset which appreciated this week (unlike some assets I could name…).

  33. 33
    mukoh says:

    Luxury yachts just like post above 19 scares the crap out of me a local RE portfolio owner who I know bought a $2m+ yacht last month. Its a monster.

  34. 34
    shawn says:

    thanks to everyone who steered me in the right direction a while back about using Craigslist to find rentals. I found a great condo to rent in Bellevue, 10 minutes from work. I asked my landlord about my neighbors, since I have a couple of kids, loud kids. He said the upstairs unit had been vacant for nearly a year, no one would buy it.

    Condos by far are a better rental deal than apartments. Cheaper and larger. I got a ten month lease as I am considering buying next summer. I just can’t buy now while the prices are dropping, that would be silly. I expect either things to sort of gently settle by then, or to really get bad and the end to extend, either way, I can wait.

  35. 35
    Scotsman says:

    Looks like the Senate/House have reached an agreement to bail out Fannie/Freddie, first vote is tomorrow. The bill is accompanied by a request to raise the national debt limit $800 Billion dollars so Treasury will have access to the needed funds.

    Welcome to the United Socialist States Of America, where the profits are private, the losses are socialized, and the taxpayer gets the shaft for the next 50 years. I can hardly wait to see what interest rates and the dollar do when this passes. Get ready for 10-12% mortgages and a decimated housing market, not to mention $10/gallon gas.

  36. 36
  37. 37
    economist says:

    I can hardly wait to see what interest rates and the dollar do when this passes.

    http://www.nytimes.com/2008/07/23/business/23rates.html

    “The average interest rate for 30-year fixed-rate mortgages rose to 6.71 percent on Tuesday, from 6.44 percent on Friday, according to HSH Associates, a publisher of consumer rates. The average rate for so-called jumbo loans, which cannot be sold to Fannie Mae and Freddie Mac, was 7.8 percent, the highest since December 2000.”

    A bailout attempt will not bring mortgage rates down. it will bring Treasury rates up. The USG does not have the resources to bail out Fannie/Freddie and the world knows it.

  38. 38
    RAL=Choad says:


    Rentersarelosers // Jul 22, 2008 at 9:52 pm

    RAL=Choad

    Did ya make any dough off those 850 points? I did.
    Who’s the choad?

    Then why aren’t you out enjoying your new found wealth? What did you make…..50 bucks?

    Funny how people like RAL always brag about the money they made in the market, but you never hear about them losing. RAL is the type of guy that ALWAYS wins when he heads to Vegas. Just like houses ALWAYS go up in value.

  39. 39

    GOOD TAKE RAL= CHOAD

    Its like the gambling addict that only talks about his casino play when he’s winning.

    Actually, until the DOW gets back up to 14000 [its about 11500 right now], we haven’t broke even from about 6 months ago. So stocks are just as bad as boats. Here’s the latest 12 month cumulative stock trends:

    Returns & Share Prices Current Returns

    G Fund F Fund C Fund S Fund I Fund
    June 2008 0.32% (0.08%) (8.41%) (7.63%) (8.15%)
    Year-to-date 1.79% 1.26% (11.90%) (7.68%) (10.78%)
    12 Month 4.25% 7.28% (13.05%) (11.14%) (10.42%)

    G= bonds, F= Money Markets, C= Domestic Stocks I/S= International Stocks

  40. 40
    deejayoh says:

    Wow. WaMu “earnings” report is really pathetic. They lost money in almost every line of business they are in. I highly recommend reading Mish’s take on this from this morning. They are really screwed.

    And yet both the stock and the market are up this morning. The short squeeze continues

  41. 41
    matthew says:

    Looks like Bush is going to sign the Democratic backed housing bailout plan and give Paulson a blank check. I would encourage everyone on this forum to call their Representatives and tell them to vote no, otherwise we are truly screwed for generations to come.

    The U.S. taxpayer is truly getting screwed. Lets transfer all the debt to the taxpayer, great idea guys!!!

  42. 42
    Everett_Tom says:

    Here’s an interesting one from the Everett Herald

    http://www.heraldnet.com/article/20080723/BIZ/488537800/1005/biz

    Summary: Housing has been so slow in Snohomish, that the Realitors have gotten together to have a massive open house event.. the idea is to entice people into looking again.

  43. 43
    vboring says:

    rising interest rates mean affordability is falling – rapidly. even as prices fall.

    compare the monthly payment for the same loan from the January low of 5.25% to today’s 6.5%. getting the same loan today would cost 14.5% more.

    and loans are getting harder to get as congress is forcing the GSEs to actually underwrite loans and force people to put some of their own real cash down as a downpayment. no loans. no gifts from sellers..

  44. 44
    jon says:

    “The average rent for a downtown Seattle apartment rose to $1,350 in the first quarter of 2008 from $1,253 a year earlier and the vacancy rate fell to 3.5 percent from 5.2 percent in 2007.”

    http://www.bizjournals.com/seattle/stories/2008/06/02/daily32.html

    With people avoiding buying houses, that vacancy rate could head even lower.

  45. 45
    Buceri says:

    ‘The U.S. taxpayer is truly getting screwed. Lets transfer all the debt to the taxpayer, great idea guys!!!”

    Matthew – As bad as it is, I have not heard a single economist that opposes it. By now, both parties support the bail outs.

    Sure, the disease could have been prevented with “a healthier lifestyle”; but now it’s too late for that, the surgery is needed. Let’s hope the lifestyle changes from now on.

  46. 46
    David McManus says:

    ‘The U.S. taxpayer is truly getting screwed. Lets transfer all the debt to the taxpayer, great idea guys!!!”

    Whew, for a second there I thought we were going to have to be responsible.

  47. 47
    economist says:

    I have not heard a single economist that opposes it.

    Well listen to Nourel Roubini (who has been right about the housing bubble all along:

    http://www.nakedcapitalism.com/2008/07/roubini-restructure-fannie-freddie-debt.html

    “The simple answer is that we need to limit as much as possible the moral hazard of a bailout of Fannie and Freddie….And such a bailout is neither necessary, appropriate nor desirable.

    Of course most of Wall Street, domestic and foreign investors and Congress are already screaming and begging “Bail us out, bail us out!” …. But these screams of “the sky will fall” if we don’t rescue Fannie and Freddie are vastly exaggerated and incorrect for a number of reasons…”

  48. 48
    David McManus says:

    I would encourage everyone on this forum to call their Representatives and tell them to vote no, otherwise we are truly screwed for generations to come.

    You mean the Congress that has a 9% APPROVAL RATING. You really want me to take time out of my day to call them and expect them to do something? Yeah, right.

  49. 49
    matthew says:

    Buceri,

    The same economists that said “subprime was contained:”? If you believe them, so be it. I’d rather believe people like Roubini, Derringer, CR, and Tanta, who have nailed the current crisis from the get go. None of the above believe shifting the burden to the tax payer is a good idea. Doesn’t look like the bond market likes the concept of giving Paulson a blank check either.

    Privatize the gains, socialize the losses, the new mantra of the United States of America.

  50. 50
    matthew says:

    McManus,

    Congress may have a 9 percent approval rating as a whole, but individual Reps usually have a very high approval rating in their districts.

    Call and do nothing and watch Rome burn, or at least attempt to take some action. Unfortunately too many people share your attitude, another reason America is most likely doomed. More people care about Paris Hilton doing jail time than they care about the destruction of our country.

    What a shame.

  51. 51
    Scotsman says:

    One out of sixteen FHA borrowers is in default. We’ll be paying to bail them out next.

    http://whistleblower.ml-implode.com/?p=22

  52. 52
    Scotsman says:

    Opps, the above should be one out of SIX…. or 16%.

  53. 53
    matthew says:

    Responsibility is rewarded by being raped to pay for those that were not responsible.

  54. 54
    Cheapseats says:

    Scotsman @ 51

    Thanks that link is a good read. It is sad to see where the no money down folks have gone, or I should say that it is sad to see that they are still getting loans…

  55. 55
  56. 56

    I AGREE ECONOMIST

    Dr. Roubini [they used to call him Dr. Doom] has recently shifted gears on full fledged bailout. We can’t afford it.

    On the recent housing bailout bill King Bush wants to reluctantly sign now; there’s $3B going to Freedie/Fannie to “fix up the repossed homes” in distressed areas (Seattle? LOL) to resell and even King Bush thought that was ludicrous. I rarely agree with Bush, this time I do.

    I think what small percentage of the approximate $3 trillion its gonna take to bailout this horrifying mess out over trhe next 2-3 years we can afford to back up with fedral debt should go to simply bull-dozing the excess vacant housing and planting food and more parks.

    If we fix them up to resell, they’ll likely end up empty, rotted and rat infested next to our apartments and homes sooner or later anyway.

  57. 57
    Uncle John says:

    Scotsman 35

    Welcome to the United Socialist States Of America, where the profits are private, the losses are socialized, and the taxpayer gets the shaft for the next 50 years

    and matthew 49
    Privatize the gains, socialize the losses, the new mantra of the United States of America.

    I disagree your definition is off and it is not a new mantra.

    Socialism is when both the Profits and the Costs/Losses are the States and thus the Taxpayers.
    Fascism is when the Profits are Privatized and the Costs/Losses are Socialized.
    Fascism is when The Corporations tell the State what the laws are and the Politicians obey their paymasters by passing them into existence. The Citizens are expected to be loyal to the State and ask get nothing from it.

    The Citizens are kept in disarray by the concepts of Divide and Conquer and Constant Fear.

    the 9% APPROVAL RATING of Congress must mean the Divided Citizens are starting to Wake Up.
    They realize that they are not getting anything in return for their vote.

  58. 58
    Gary says:

    Uncle John is correct.
    This country has been moving towards a facist agenda rapidly over the last oh…..8 years or so.
    Like them or not, if they are the incumbent they need to be voted out.
    I know there are likely some good ones but, too bad.
    You know the saying, one bad apple can spoil the box.
    I hope we can get a new box of apples this time because it certainly couldn’t be worse than this mostly rotten box we have now.

  59. 59
    Scotsman says:

    I stand corrected, Uncle John, with the exception that our citizens do seem to think the government owes them a most generous safety net in all matters.

    Strict term limits would put an end to almost all of these problems.

  60. 60
    Markor says:

    That’s why when I decided to buy I made the decision to buy in a neighborhood with fairly strict covenants. Given the lack of mobility that home ownership usually implies, I didn’t want to end up in a neighborhood where a neighbor decided to leave their ugly RV or boat out in front of their house, or mine for that matter.

    I decided the opposite, after living in a neighborhood that had covenants. Having to get architectural committee approval, to re-paint my house the same color, wasn’t for me. With covenants, if someone is blatantly unneighborly, the homeowner’s association sues and everyone pays the lawyers. Without covenants, someone keys the car on the lawn and problem solved.

  61. 61
    Steve says:

    From the Herald article:

    “If you’re thinking of buying a house, you couldn’t have picked a better time.”

    Hasn’t this always been the case? Prices going up, better buy now! Prices have been lowered, buy now while it is cheap!

  62. 62
    David McManus says:

    I’ll have to agree with Markor on this one. I currently live in a neighborhood (HOA) that has covenants, but I also come from the South where hardly anyone has HOAs.

    Most of the time, the busy bodies that run the HOA just waste our time whining about things that do not affect property values in the least bit and just take the money for stupid crap like a landscaping a small patch of grass for 4K a year. It got to the point where my wife and I don’t even bother going to the meetings anymore because nothing ever got accomplished and the cliques would get what they wanted anyways. Rule enforcement is lax too because no one wants to piss anyone off. Now when I lived in the South, if you had a problem with something your neighbor was doing with their property that could have affected your home, you went and TALKED to them about it. Novel idea, that whole speaking thing. Then you could take the whole key to the car thing if that wouldn’t work. ;-)

  63. 63
    Lake Hills Renter says:

    I will never buy in a HOA neighborhood. I’m not paying to give up my property rights.

  64. 64
    patient says:

    It’s my experience that HOA management is the type of guys who loves to tell others what to do, spends the days spying on neighbours and were rejected from Police academy. No HOA for me thank you very much.

  65. 65
    Craig says:

    I work for OBC or should I say did work for OBC. Basically, recreational boat sales are down…it doesn’t take a genius to figure that out. Small boats from 10K-50K are the biggest hit. For most dealerships those are the meat and potatoes of the company. Now that the HELOC frenzy is over so is the golden age in boat sales. OBC’s biggest problem is the current CEO Rik Tokuno who was former CEO of Car Toys. He ran OBC right into the ground. Have you ever been to a OBC dealership? If you have you probably noticed that they are stuffed with inventory…inventory that is years old! The current CEO thought that having a ton of inventory would be cost effective….WRONG. Instead the boats rotted in the sun and in-order to sell them money had to be spent to fix all the damage. On top of that OBC would still try and hit home runs on every sale, but instead that just lost sales. OBC has internal management problems and should have seen this coming. Let’s not forget that before OBC’s time in So-Cal there was Marine Center. They went BK too and OBC scooped them up. You would think they’d learn from their mistakes.

  66. 66
    David McManus says:

    One more……

    http://seattletimes.nwsource.com/html/businesstechnology/2008070201_webalaskaearn24.html

    The economy is STRONG….SPEND, SPEND, SPEND! Is anybody buying that crap besides real estate “professionals”?

  67. 67
    OBC Executive says:

    RE: Craig @ 65

    Just saw this and felt compelled to refute this ignorant comment, clearly made by a disgruntled salesman. I am a former Olympic Boat Centers executive and held a senior position with the company for five years. For the record, having Rik Tokuno as CEO was the best decision the owners made. Under his watch, for four consecutive years, we increased our gross margins and EBITDA margins. We professionalized what had been a dysfunctional organization, vastly improved our customer service, and grew to become the most highly regarded dealership in the western U.S. Against incredible odds of dealing with short-sighted landlords and vendor partners of questionable integrity, we grew our market share to 43+% in Washington. And, through our market-collapse driven demise, Rik Tokuno admirably led us to act responsibly and honorably.

  68. 68
    Former Long Time OBC employee says:

    RE: OBC Executive @ 67

    Hah, What a joke. I can see that this posting was clearly left by none other than Riki T. himself. It may be true that OBC increased its GM and EBITDA, but at what cost? It was only at the cost of the employees and customer satisfaction that any gains were made; wages were reduced, service was eliminated, high pressure sales became the norm – our customers were being screwed in every way that you could possibly imagine. It was really sad to see a company that had been a Northwest icon for over 50 years get brought down by his lack of talent. By the way,OBC had a huge market share in WA prior to Rik coming on board. On a side note, prior to the completion of the bankruptcy Rik was able to land a job running a company called Ecohaus. Naysayers figured he wouldn’t last 4 years at that company, but were they wrong he couldn’t even make 2 years before that company closed it’s doors. I just noticed that 5 years after OBC’s failure Rik’s LinkedIn account still shows him as CEO of OBC.

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