Rapid Growth in e-book Sales

Great chart above showing the steep rise in e-book sales since the end of 2008. E-book sales were $37.6 million in Q2 2009, rising 45.7% from Q1 2009. In June alone, e-book sales were $14mm or 1.5% of the month’s overall book sales of $942.6 million. While still a tiny sliver of the overall book publishing market, sales are set to rapidly rise over the coming year with several new products in the pipeline including a new wireless reader by Sony (launched on August 25th), Apple’s highly anticipated tablet (hopefully released by Q4 2009, but more likely in early 2010), and Plastic Logic’s 8.5 x 11 inch touchscreen device (sometime in 2010). Further many of the new product launches, including Sony’s new Reader Daily Edition, are using a more open approach, allowing for easier use of content across multiple platforms. The leading open format appears to be EPub, created by the International Digital Publishing Forum, and utilized by Sony’s new device.

China's Underconsumption

Great chart from the Economist showing how little Chinese consumption comprises of the nation's GDP -approximately 35% vs. nearly 70% in the US. In fact, despite signficant growth in the nation's economy over the last decade, consumption as a percent of GDP is actually down from 49% in 1990. With over 1.3 billion people, a robust and growing economy, maturation of the country’s financial system, and the government’s increasing focus on expanding its social safety net for its aging populace (which discourages saving and permits a higher level of consumption during one’s most productive years), the Chinese consumer remains the most compelling investment story of our generation.

NY Law Firm Sees Big Reduction in Rent

The following WSJ article provides a pretty scary datapoint about the state of NYC commercial real estate market. According to the piece, the law firm Orrick, Herrington, & Sutcliffe, recently signed a lease in the CBS Headquarters building located at 51 W. 52nd Street in the low-mid 70s per square foot vs. $120-$140 per square feet for equally comparable real estate at the top of the market in 2007. Further, the landlord agreed to contribute $150 per square foot of improvements, allowing Orrick to move into the location with essentially no out of pocket expenses.

The article also quotes a Reis study that suggests that the vacancy rate in Midtown Manhattan has spiked to 10.6% vs. only 5.9% pre-Lehman (enough to fill 6 1/2 Empire State Buildings) and rents have fallen by 7.2% over a similar time period.

While evidence continues to mount that the worst of the recession is behind us, particularly in the lower end of the residential real estate market, Orrick's experience suggests that the commercial real estate downturn has only just begun.

http://online.wsj.com/article/SB124882179252188243.html