10 Must Reads for the CRE Industry Today (August 15, 2016) Photo by Joe Raedle/Getty Images

10 Must Reads for the CRE Industry Today (August 15, 2016)

 

  1. Donald Trump's Possible $0 Tax Bill - That's Why People Do Commercial Real Estate Development “The New York Times is speculating that perhaps the reason that Donald Trump hasn’t released his tax returns is because he’s not actually been paying any Federal taxation. David Cay Johnston has been making similar points before now. Others here will tell you more about the tax laws and whether this is possible or even true. But there’s an economic point which is being glossed over in the analysis. An assumption being made which is an incorrect one. That point being that if the NYT’s contention were true then no one would ever do commercial real estate development. Yet we can obviously see that people do commercial real estate development. Thus the contention cannot be true. Specifically this concerns the allowances for depreciation on commercial property.” (Forbes)
  2. If Elected, Hillary Clinton to Expand Low Income Housing Tax Credit “Gene Sperling, a top economic advisor to Democratic presidential candidate Hillary Clinton recently said that U.S. housing will play an important role in a Clinton administration. ‘For Hillary Clinton, growing middle class jobs and middle income security is the single lens in which she will judge economic policy,’ Sperling said in an address to the National Association of Home Builders (NAHB) Board of Directors at their Midyear Meeting in Miami. ‘What better helps the middle class than housing? Housing creates jobs in the United States. There is probably no other sector that creates jobs throughout income levels - from construction jobs to professional and servicing jobs.’ Noting that the credit pendulum has swung too tight in the aftermath of the Great Recession, Sperling cited a study from the Urban Institute that compared credit availability during the pre-crisis levels to the standards of today. The study found that 5 million fewer home loans have been issued as a result of current tight lending standards. ‘Our challenge now is to never swing back to where we were, but to get to an equilibrium where people who are creditworthy can get the housing they need,’ said Sperling. ‘This will lead to increased housing starts, construction and affordable housing, which we need in this country.’” (World Property Journal)
  3. The volatile bonds that tie Over the course of June and July, Britain roiled international markets by voting to leave the European Union, Italy’s struggling banks pushed the Eurozone closer to a new crisis and the U.S. Federal Reserve voiced fears that global economic growth is on unstable footing. And yet the reaction to all of this by many in New York’s real estate industry was relief. Eight years after one of the worst financial crises in history, we have become stuck in a perverse dynamic where bad news for the world economy is often good news for the city’s property market. A lot of that has to do with the outsized impact of bond markets on real estate. As a rule of thumb, economic uncertainty causes bond yields to drop (with a few exceptions). And lower bond yields are often great news for property investors, especially in the Big Apple, because they make real estate look more attractive and push down the cost of financing.” (The Real Deal)
  4. BC playing catch-up on student housing “In 2009, Boston College made a bold promise — it would be the first university in the city to house every student who wanted to live on campus. That pledge delighted neighbors, who were fed up with rowdy students crammed into single-family homes on their otherwise quiet streets. It also impressed city officials, who wanted colleges to house more students. But now, seven years into a 10-year campus building plan, BC has added only 240 new beds, while the plan promised 1,280 by the end of the 10 years. That goal has been reduced again, to 940.” (Boston Globe)
  5. Grocery retailer to expand in new markets “Sprouts Farmers Market is on the move. The Phoenix-based grocery store chain is targeting several new markets for further expansion into the Southeastern United States, the Tampa Bay Business Journal reported.  According to the report, Sprouts said in an Aug. 9 regulatory filing that Florida, the Carolinas, Louisiana, Mississippi and Arkansas would each be a ‘midterm expansion market.’ Sprouts currently has 243 stores in 13 states.” (Chain Store Age)
  6. $1.4B Westfield World Trade Center Ready for Shoppers “Westfield World Trade Center, with 365,000 square feet of new shopping and dining options in Lower Manhattan, will hold its grand opening Aug. 16, when Australian-based retail giant Westfield Corp. will debut its $1.4 billion mall. The opening of the retail center with more than 100 brands comes several months after the $3.7 billion World Trade Center Transportation Hub opened and one month shy of the 15th anniversary of the attack on 9/11. It has street-level space in WTC Towers 3 and 4, as well as galleries that run underground across the WTC campus, including 1 WTC.” (Commercial Property Executive)
  7. Lidl to Invest $100M in Maryland Facility “European discount retailer Lidl will invest $100 million in a Cecil County facility that will create 100 full-time jobs over the next three years, the office of Maryland Governor Larry Hogan recently announced. According to Supermarket News, this is Lidl’s third announced U.S. center. The new regional headquarters/distribution facility will be located in the Principio Business Park and will act as a base for the German company’s planned expansion. With its national headquarters in Virginia’s Arlington County, Lidl hopes to open the first U.S. stores no later than 2018. The Perryville, Md., property will have approximately 754,000 square feet, Cecil Daily reported.” (Commercial Property Executive)
  8. $111M JV to Develop Major Mixed-Use Project in Chicago “Real estate brokerage firm KIG did some matchmaking recently, arranging an $111 million joint venture partnership to invest in and renovate Medical District Apartments, a 410-unit community in Illinois’ Medical District on Chicago’s Near West Side. The partnership includes property owner Guggenheim Real Estate LLC (GRE), Atlantic Realty Partners and Focus Development Inc. ‘Guggenheim has owned this asset for 10 years and we were tasked with finding them a JV partner who specialized in new construction and development,’ Susan Tjarksen, principal and managing broker at KIG, told MHN. The trio will not only renovate the two-tower community—which was originally built in 1972—but will also ultimately develop a larger, mixed-use project on the site. The nearly 5.7-acre site located on Ashland Avenue includes the two 12-story residential towers with two two-story garage decks that could potentially be redeveloped. The partnership is proposing a multi-phase development on the site that would include a mix of residential communities.” (MultiHousing News)
  9. Boston's Warehouse Sector Enjoying Record Low Vacancies in Mid-2016 "According to a new Transwestern-RBJ commercial property report, the greater Boston industrial real estate market had a strong second quarter 2016. ‘Greater Boston's warehouse market is on a historic run right now, with three consecutive quarters of record-setting low vacancy rates,’ said Northeast Research Director Chase Bourdelaise. ‘With the manufacturing market also back into positive territory, we now have all three industrial-related property types firing on all cylinders. While we don't expect record-setting results each quarter, the market is well-positioned for the remainder of the year.’…Vacancy dropped 0.5 percentage points to 9.6 percent, its lowest point on record and first time below 10 percent, on 529,000 square feet of positive absorption. The market is on a 16-quarter streak of positive absorption, with 6.5 million square feet absorbed during that four-year stretch. Asking lease rates dropped from $6.04 per square foot to $5.94 per square foot.” (World Property Journal)
  10. Gov. Brown might accelerate 4 LA megaprojects “Four Los Angeles megaprojects could be built faster if a bill approved by the state Legislature this week is signed by Gov. Jerry Brown, the Los Angeles Times reports. The bill, SB 734, would force lawsuits brought against the projects under the California Environmental Quality Act to move more quickly through the courts. Better known as CEQA, the act requires cities and counties to analyze and find ways to reduce the impacts of new development on traffic, air quality, views, etc. SB 734 would only apply to projects that cost more than $100 million, pay high wages to construction workers, and meet certain green building standards, according to the Times. The newspaper says the legislation aims to make sure lawsuits brought against development projects accused of violating CEQA wrap up within nine months. The tri-towered Crossroads of the World redevelopment, the Yucca-Argyle development (which includes a 32-story tower), the freeway-capping Hollywood Central Park, and a reboot of Elysian Park’s Barlow Hospital are all expected to apply for the benefits of this bill if it passes. Supporters of the bill say it could shave as many as three years off the projects’ timelines.” (Curbed Los Angeles)
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