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10 Must Reads for the CRE Industry Today (August 30, 2017)

Market observers believe the Fed could postpone interest rate hikes for more than a year, reports CNBC. The hotel development boom is winding up, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Market Thinks Fed Could Hold Off on Rate Hikes for Another Year—At Least “Unless something dramatic happens, the Federal Reserve won't be hiking interest rates again until well into 2018, according to current market predictions. Fed funds futures — contracts that indicate where the market thinks the central bank's benchmark rate will be — point to no further moves until at least next June, and possibly a good deal later. Futures indicate that the Fed will approve just one increase between now and the end of next year.” (CNBC)
  2. Hotel Building Boom Stalls as Demand Plays Catchup “Hotel developers are slowing down new U.S. construction projects after years of rapid growth, a result of tighter lending conditions and a ballooning supply of rooms in large markets. Though consumer demand remains healthy, hotel construction spending was down 2% to $27.5 billion in June at a seasonally adjusted annual rate from December, according to Census Bureau data, after more than tripling since bottoming in 2011.” (Wall Street Journal, subscription required)
  3. NYC Real Estate Is Addicted to Foreign Cash. The Withdrawal Symptoms Aren’t Going to be Pretty “When Barry Sternlicht talks, the real estate industry listens. Earlier this month, the Starwood Capital chief used his pulpit to address a subject New York players often like to downplay: the city’s increasing dependency on foreign capital even as geopolitics is being upended. ‘If you are having a fight with our administration, you are just not going to invest here,’ Sternlicht said. ‘They are very quick to shut down the capital flows… It has to do with politics.’ Sternlicht was talking about Qatar, whose government has been at odds with the Trump administration for months. But he could have easily been referring to China, or the European Union.” (The Real Deal)
  4. Despite Initial REXMLS Loss, Blockchain Has Arrived for Real Estate “Now, there’s a new player in real estate technology raising funds and distributing tokens backed by ethereum (ETH), a blockchain-based currency. In an effort to create a decentralized real estate data and listings platform, REXMLS just launched their first token sale. You might think this sounds like a real estate data game changer or maybe a creative way to raise money. So is REX just the next penny stock pump and dump scheme or is there a real value and market fit for this new technology?” (Forbes)
  5. Allegiant Air Ventures Into Real Estate “Low-cost airline Allegiant Travel Co. will venture into real estate with a sprawling resort on Florida’s Gulf Coast, even as hotel development slows nationwide amid a glut of rooms. Still, investors are intrigued: Allegiant shares rose 1.5% Tuesday after the company said it will launch an all-inclusive resort company, Sunseekers Resorts.” (Wall Street Journal, subscription required)
  6. Memorial Sloan Kettering Leases Out Entire New Building “Memorial Sloan Kettering Cancer Center has leased the entire new medical building under development by Joy Construction and Maddd Equities at 330 E. 62nd St. Along with a 48-year lease, the cancer hospital, which has tentacles throughout the neighborhood, has options to purchase the more than 100,000-square-foot building as well as the right of first refusal.” (New York Post)
  7. Harvey Puts a Short-Term Squeeze on Regional Banks with Texas Operations: Analyst “Raymond James says regional banks with Texas exposure will face some short-term difficulties from the damage caused by Hurricane Harvey, but lending will pick up into next year because of the rebuilding efforts. There will be several ‘major areas of impact. The first being business interruption, several banks have closed branches and that can continue for the next few days or next few weeks,’ the firm's banking analyst Michael Rose said in a CNBC "Power Lunch" interview Tuesday.” (CNBC)
  8. Most Sectors Near Peak, But Crash Unlikely: RCLCO “Over the next 12 months or so, RCLCO expects a continuing march toward ‘peak’ conditions, as inventory remains at or near equilibrium with demand. ‘At this stage in the cycle, significant increases in rents, occupancy, and prices may be difficult to achieve.’ With little impact from the Trump administration’s policies, capital market conditions remain similar to those at EOY 2016. On the equity side, “moderating operating fundamentals appear to be neutralizing pressure on asset prices.” Foreign capital transactions appear to be on pace to roughly equal those in 2016.” (Commercial Property Executive)
  9. JFK Airport Lot May Transform into New Shopping Center “An 11-acre site near JFK airport now used for parking is being pitched to supermarkets and shopping center tenants. Long owned by Linx Industries, a family company led by principle Arik Kislin, the site straddles both Queens and Nassau County on the east side of Rockaway Boulevard. The parcel is just southeast of the road’s intersection with Brookville Boulevard.” (New York Post)
  10. How Commercial Real Estate Firms Are Contributing to Houston Storm Relief “Commercial real estate firms across the nation are pursuing relief efforts to support those impacted by the storm and rescue workers, law enforcement officials and volunteers on the ground. From financial donations to providing temporary housing and offices for those displaced by floods, here are 28 commercial real estate firms that have joined the fight against this natural disaster.” (Bisnow)
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