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10 Must Reads for the CRE Industry Today (April 14, 2017)

NAIOP has found commercial real estate development, construction and related services supported 6.25 million U.S. jobs in 2016, REJournals reports. Real estate developers in Chicago have launched an artists-in-residence contest that will grant the winner one year of free rent in exchange for teaching and design services at its apartment buildings, according to Mansion Global. These are among today’s must reads from around the commercial real estate industry.

 

  1. NAIOP report: Commercial real estate supported 6 million U.S. jobs last year “How important is the commercial real estate industry to the U.S. economy? How about 6 million jobs and more than $800 billion worth of importance? The NAIOP Research Foundation recently published its annual study on the economic impact of the commercial real estate business. Researchers found that the development, construction and ongoing operations of new commercial real estate in the United States supported 6.25 million jobs and contributed $861 billion to the U.S. GDP last year. Those numbers are impressive, but they’re not surprising considering the busy year commercial real estate developers had in 2016. According to the NAIOP report, developers built 410 million square feet of office, retail, warehouse and industrial buildings last year. These buildings have the capacity to house 1 million new workers with a total estimated payroll of $57.6 billion. ‘The importance of commercial development to the U.S. economy is well established, and the industry’s growth is critical to creating new jobs, improving infrastructure, and creating places to work, shop and play,’ said Thomas Bisacquino, NAIOP president and chief executive officer, in a written statement.” (REJournals)
  2. Real-Estate Developers Offer Artists Free Rent to Up Cool Quotient “In February, Magellan Development Group in Chicago announced artist-in-residence contests at two new rental buildings, the SoBro in Nashville and Exhibit on Superior in Chicago. The SoBro is close to downtown in a city known for live music, while Exhibit is located in River North, a neighborhood famous for galleries. The contests, advertised on flyers in coffee shops and bars as well as through local music schools, asked musicians to upload one-minute videos by late March in Chicago and by early April in Nashville. About 30 musicians applied to each contest; the developers will select three to six semifinalists. Later this month, each building will host a live contest a la “America’s Got Talent” where residents will vote for whom they want to become their “artist in residence.” The winner will get a year of free rent in either a studio or small one bedroom, valued at roughly $1,850 a month at the SoBro and $2,200 a month at the Exhibit. Future Magellan buildings might include chefs, painters, sculptors or personal trainers, who, like the SoBro and Exhibit winners, will be required to perform and offer classes or services to residents, said Jim Losik, national marketing director for Magellan. New buildings typically have vacancies in the first year, so the amenity is essentially free for the developer, Mr. Losik said.” (Mansion Global)
  3. Jamie Dimon says fixing mortgage industry would boost lending by $300 billion a year “J.P. Morgan Chase on Thursday reported earnings and revenue that beat expectations, with trading and investment banking revenues contributing the most during the quarter. But the company’s CEO used his annual letter to push for a different business line, one which has fizzled in recent years. “It is no surprise the financial crisis, which was caused in part by poor mortgage lending practices and which caused so much pain for American families and businesses, led to new regulations and enhanced supervision,” Jamie Dimon wrote. ‘We needed to create a safer and better functioning mortgage industry. However, our housing sector has been unusually slow to recover, and that may be partly due to restrictions in mortgage credit.’ Dimon then devoted about 1,400 words to a discussion about the regulations put in place since the subprime crisis. An overly onerous regulatory burden, he argued, has reduced mortgage lending by about $300 billion annually — or the equivalent of about 3 million home loans since the crisis.” (MarketWatch)
  4. Lessons on empire-building from real estate developer Rick Caruso “Billionaire real estate developer Rick Caruso learned about entrepreneurship and money at an early age. His father, Henry Caruso, founded Dollar Rent A Car in 1966, building it up into one of the largest U.S. car rental companies while teaching his family some important finance lessons that stuck. ‘Even though we never grew up feeling poor, we always grew up with a great sense of the importance of money and hard work,’ Caruso said. His privately held company, Caruso Affiliated, owns some of the highest-grossing retail centers in the world. Caruso, 58, has also been an active civic leader and philanthropist in Los Angeles, where he grew up and is based. He is a former president of the Los Angeles Board of Police Commissioners and was a commissioner on the Department of Water and Power.” (Reuters)
  5. The Long View: Can logistics deliver? “Commercial real estate investment may be heading for a downturn in 2017, but there is one exception: logistic warehouse properties. “It’s hard not to be enthusiastic about logistics,” the Blackstone Group’s real estate head Jonathan Gray said at a conference last week. Blackstone is one of the suitors vying for the $13 billion warehouse real estate investment trust Global Logistic Properties, competing with private equity firm Warburg Pincus and several Chinese institutions. On Monday, Chinese conglomerate HNA Holdings offered $1 billion for the Singapore logistics firm CWT Group. Meanwhile, by the end of 2016, the average sales price per square foot for New Jersey industrial properties (which are heavily made up of logistics facilities) rose to $71.67, the highest level since 2009, according to CBRE. In other words: we are dealing with a logistics investment boom.” (The Real Deal)
  6. Real-Estate Developers Offer Artists Free Rent to Up Cool Quotient “In February, Magellan Development Group in Chicago announced artist-in-residence contests at two new rental buildings, the SoBro in Nashville and Exhibit on Superior in Chicago. The SoBro is close to downtown in a city known for live music, while Exhibit is located in River North, a neighborhood famous for galleries. The contests, advertised on flyers in coffee shops and bars as well as through local music schools, asked musicians to upload one-minute videos by late March in Chicago and by early April in Nashville. About 30 musicians applied to each contest; the developers will select three to six semifinalists. Later this month, each building will host a live contest a la “America’s Got Talent” where residents will vote for whom they want to become their “artist in residence.” The winner will get a year of free rent in either a studio or small one bedroom, valued at roughly $1,850 a month at the SoBro and $2,200 a month at the Exhibit. Future Magellan buildings might include chefs, painters, sculptors or personal trainers, who, like the SoBro and Exhibit winners, will be required to perform and offer classes or services to residents, said Jim Losik, national marketing director for Magellan. New buildings typically have vacancies in the first year, so the amenity is essentially free for the developer, Mr. Losik said.” (Mansion Global)
  7. New housing developments are urbanizing Long Island “When Brooklynites David and Natalie Resto move into their new two-bedroom townhouse this month, they’ll have spiffy extras — like a swimming pool with a sun deck — minutes away by foot. They’ll also be able to walk to public transportation and a CrossFit gym. Believe it: The Restos are moving to the ’burbs. Their just-purchased two-story home is part of Country Pointe Huntington, a multi-family development on Long Island’s North Shore located about an hour’s drive from their Brooklyn rental. The couple was primarily lured by better pricing, quieter surroundings and the fact that — like when you’re renting in the city — pretty much everything is taken care of.” (New York Post)
  8. Newly designed co-living apartments in D.C. bring sophistication to group housing “You might expect 25-year-olds in Washington to live with multiple roommates to afford to live in this high-cost city. But the visual of millennials hanging out in a crumbling group house on a stained couch leaking its stuffing is about to be shattered. Newly designed co-living apartments bring sophistication and privacy to the group living experience. For example, instead of a moldy bathroom used by decades of transient residents, each roommate at the Oslo in Shaw in Northwest has a private bathroom with a sleek glass-enclosed shower and a private bedroom with a walk-in closet. “When we saw that this place is brand-new and we could each have our own bedroom and bathroom, we grabbed it, especially since it was the last available apartment here,” says Garrett Lance, who has lived at the Oslo with his roommates James Arnold, Justin Griffis and Andrew Krentz for two years. All are 25.” (Washington Post)
  9. Wanhua Picks Louisiana for $1.1B Manufacturing Facility “Wanhua Chemical Group will develop a $1.12 billion chemical-manufacturing complex in Louisiana, with the selection of a specific site to occur later this year, the company announced Monday. The plant is intended to produce methylene diphenyl diisocyanate (MDI). Immediate access to supplies of natural gas and other feedstocks, and deepwater transportation via the Mississippi River, were among the factors that drew Wanhua to Louisiana. “Wanhua Chemical carefully executed its long-term MDI strategy and selected Louisiana as the best place in the world for its investment in this fast-growing category of chemicals,” Louisiana Economic Development Secretary Don Pierson said in a prepared statement. The Wanhua project reportedly will be the second-largest direct investment in Louisiana by a Chinese company, after a $1.85 billion methanol complex under development by Yuhuang Chemical in St. James Parish.” (Commercial Property Executive)
  10. Denver industrial real estate market “very competitive” for tenants displaced by upcoming development “Businesses occupying about 2 million square feet of industrial real estate in Denver are going to be displaced as a result of the widening of Interstate 70, the $1.1 billion National Western Center project and ongoing gentrification in and around the River North Art District, a CBRE broker said Wednesday. And those businesses are finding themselves at the mercy of an increasingly competitive market in their search to find a new home: Asking lease rates for industrial space, already near record highs, continued to climb across the metro area in the first quarter of 2017, the 28th consecutive quarter of positive leasing activity in the market, according to a report from the commercial real estate firm CBRE.” (Denver Post)

 

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