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10 Must Reads for the CRE Industry Today (August 28, 2017)

The Trump Organization was looking into building a tower in Moscow while Donald Trump was running for president in early 2016, reports the Washington Post. The Boston Globe asks what will happen in the city after the real estate boom is over. These are among today’s must reads from around the commercial real estate industry.

  1. Trump’s Business Sought Deal on a Trump Tower in Moscow While He Ran for President “While Donald Trump was running for president in late 2015 and early 2016, his company was pursuing a plan to develop a massive Trump Tower in Moscow, according to several people familiar with the proposal and new records reviewed by Trump Organization lawyers. As part of the discussions, a Russian-born real estate developer urged Trump to come to Moscow to tout the proposal and suggested that he could get President Vladimir Putin to say ‘great things’ about Trump, according to several people who have been briefed on his correspondence.” (Washington Post)
  2. Office Spaces Focusing More on Communal Areas “Businesses are beginning to design offices spaces that are increasing the amount of square footage per employee when shared work settings are taken into account. That is one of the conclusions of a new report by architecture and design firm Ted Moudis Associates, which analyzed 2.4 million square feet of Ted Moudis’ office projects. Many companies are expanding the selection of alternative places to get work done.” (Wall Street Journal, subscription required)
  3. What Happens After the Real Estate Wave Crests? “Boston was flying high. New towers were transforming the downtown skyline, while growing companies couldn’t hire fast enough to fill open jobs. Home prices had been surging for half a decade, and condo builders were racing to keep up with the demand. The year was 1988. And what happened next was a real estate bust just as epic as the boom that preceded it. Jobs vanished. Banks failed. Unsold condos littered the market. It took most of a decade for Boston to dig out.” (Boston Globe)
  4. Thousands of Homes in Houston Inundated by Tropical Storm Harvey “Heavy rains are continuing to fall on Houston as tens of thousands of homes in the city are being inundated by Harvey, a former category 4 hurricane that has been downgraded to a major tropical storm. Harris County sheriff's spokesman Jason Spencer says flooding throughout the county that includes Houston and the region is so widespread that it's ‘difficult to pinpoint the worst area.’ In all, more than 230,000 homes on the Texas coast are at risk of damage from storm surge, according to analytics company CoreLogic. The combined reconstruction value of is about $39.6 billion, Corelogic estimates. But many of the homes at risk are not in a designated flood zones.” (Forbes)
  5. Here’s What Will Make Real Estate Investing Great Again “Profitable enterprises can be poor investments if you pay too much for them. That’s exactly what is happening now with publicly traded REITs. This development was forecasted in an article I wrote last February. With assistance from investment firm Research Affiliates, the article concluded that REITs would produce returns between 0% and 2% annualized on an inflation-adjusted basis over the next decade.” (MarketWatch)
  6. How Stephen M. Ross’ Gift to the University of Michigan Ended Up in Tax Court “On his way to becoming the University of Michigan's largest donor, Stephen M. Ross and a group of business partners donated a collective gift to his alma mater. In return, the partnership claimed a giant charitable tax deduction: $33 million. The Internal Revenue Service didn't buy it. IRS lawyers flagged Ross and his partners as engaging in a ‘tax avoidance scheme lacking in economic substance … to the benefit of Mr. Ross and his associates at Related Companies.’” (Detroit Free Press)
  7. Google Effect Unleashes Downtown San Jose Property Boom “Google’s effort to acquire a broad swath of downtown San Jose properties for a massive new tech campus is triggering a sharp jump in selling prices for commercial real estate in the area. The internet search giant’s plan to expand into San Jose with a new campus employing up to 20,000 Googlers near the Diridon train station and SAP Center could take years to become a reality, if the company moves ahead with plans to build.” (Mercury News)
  8. Flooding After Harvey Too Much for Retailers, Grocers: Many Close Sunday Afternoon “Major grocers and retailers in the Houston area were forced to close most or all stores Sunday after Harvey slammed the city overnight. H-E-B operated some Houston-area stores until 3 p.m. Its store at Braeswood and Chimney Rock, however, remained closed as Brays Bayou overflowed, forcing residents to escape in boats and helicopters. It also closed its Central Market store on Westheimer.” (Chron)
  9. The Closing: Joanne Podell “Joanne Podell, a veteran retail broker and executive vice chairman at Cushman & Wakefield, was named the company’s top producer nationwide in 2016. She is the second woman in the history of the company to receive that designation. Podell, who has brokered more than 100,000 square feet in the past year, spearheaded the largest retail transaction in New York City in 2016 when she represented sports giant Nike in a 70,000-square-foot lease for its flagship store at 650 Fifth Avenue.” (The Real Deal)
  10. Northwestern Mutual’s New HQ Opens in Milwaukee “The 1.1 million-square-foot Northwestern Mutual Tower and Commons project along the Lake Michigan lakefront in downtown Milwaukee has celebrated its grand opening. Gilbane Building Co., of Providence, R.I., was the project’s construction manager, along with joint venture partner CG Schmidt, a Milwaukee-based construction management and general contracting firm. The 32-story tower adjoins a three-story, two-block-long space known as the Commons.” (Commercial Property Executive)
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