What War is Showing Us Now

Many of you know me as the host of the Real Estate Espresso Podcast. By day, I’m the senior partner at Y Street Capital. We have several projects underway that are open to accredited investors residing in the United States. If you’d like to learn more, you can visit ystreetcapital.com/investors.

The information is not publicly available. But you can register to join our portal and learn more about the projects we currently have underway. This is not a solicitation. Any investment would be by prospectus only in compliance with US securities regulations

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On today’s show we are talking about seeing into the future. Having a successful business relies upon seeing into the future and solving the needs of that future before the rest of the world does. Many of the things we can see are hidden in plain sight if you choose to look. But you have to be willing to look.

If you look at history, you will see that wars are very hard to contain. Even the current conflict in the Ukraine is not limited to two countries. We have the entire European Union involved, the US is involved, Iran is involved. It looks like China might become involved.

We are seeing more defence startup companies and defence incubators than ever before. You would have thought traditionally of startup incubators as being focused on technology, or blockchain or biotech. We don’t typically think of defence incubators. But I’m here to tell you that this is a growing industrial complex. If you knew that defence spending was going to increase in a specific geographic area, what would you do to help serve that need. If your philosophically opposed to the notion of defence spending, you might choose to do nothing. And that’s a perfectly acceptable answer. But at least it’s a considered response. Most people by default do nothing because they don’t even think that there might be something to do.

We don’t know if the current war is going to erupt into a hot war on a large scale involving superpowers. Maybe it will remain confined to a proxy war. We can only hope that the conflict doesn’t escalate and that is comes to a speedy end. In war there are no real winners. But again, wars often last a lot longer than people expect them to. Thats what history tells us.

Even if we put a hot war aside,

What is clear is that globalization as we knew it has changed and will probably not revert to the open borders we have experienced over the past two decades.

The huge beneficiary of this shift is Mexico. There are now 28 Chinese companies who have opened large scale manufacturing plants in Mexico to serve North American customers. The cost of labor in Mexico is higher than the cost of labor in China. But the lower cost and time for transportation offsets the higher labor costs making Mexico every bit as competitive as China.

This means that global trade routes are about to change. They won’t change entirely. But some traffic destined for the port of Long Beach, might be coming over land through Texas. Texas may become the next transportation gateway to the rest of North America.

If you could see into the future and imagine a few dozen more major manufacturing facilities in Mexico, how would that change the demand for transportation and for warehousing in Texas? If you could see into the future and fulfill the needs of those supply chains, what would you do as a real estate investor?

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Host: Victor Menasce

email: podcast@victorjm.com