10 Must Reads for the CRE Industry Today (December 21, 2016)

10 Must Reads for the CRE Industry Today (December 21, 2016)

 

  1. REITs, Real Estate and Donald Trump in 2017 “The outlook for REITs is positive heading into 2017, as a growing economy will spur earnings and dividend growth. And having a real estate mogul in the White House is not a bad thing either, said Wilson Magee, portfolio manager for the Franklin Real Estate Fund (FGRRX). Rexford (REXR) , which is up 41% year to date, is one of Magee's top picks for the coming year. Rexford focuses on industrial properties in the greater Los Angeles market.  Back on the East Coast, Magee is bullish on SL Green (SLG) . Shares of the New York-focused office landlord are flat in 2016, but they have an exciting new project on Vanderbilt Place.  Finally, Magee is a fan of specialty lab space owner Alexandria Real Estate Equities (ARE) , which is up 21% thus far in 2016, even though biotech shares have been drubbed.” (The Street)
  2. More signs the apartment boom may be fizzling “Fresh data may confirm that the recent heyday for apartment construction is over. Fewer newly-constructed apartments are being rented out, according to figures released early in December by the Commerce Department. The 'absorption rate' — whether an apartment has been rented within three months of completion — was 58% in the second quarter of this year, down from 66% in the same period in 2015 — for a smaller pool of apartments. That’s happening even as builders have been breaking ground on more single-family homes, and fewer multi-family. Through the first eleven months of 2016, multi-family starts are 4% lower than during the same period a year ago, while single-family starts are 11% higher.” (MarketWatch)
  3. Empty storefronts find new savior in an unexpected place “It took just five weeks to transform the 1970s-inspired accounting office into a modern hair salon. After covering the drab white paint with coats of gray and purple, and knocking down the wooden doors that had divided the space into offices, online beauty retailer Madison Reed opened its first physical shop last week. The 1,500-square-foot space in Manhattan's Flatiron District is just the latest example of an e-commerce start-up taking the leap from clicks to bricks. But it isn't making the jump alone. It enlisted the help of The Lion'esque Group — a firm that helps digital-first retailers find vacant space and transition into physical pop-up stores. Founded in 2009 by former investment banker Melissa Gonzalez, Lion'esque has helped brands cut the ribbon on more than 100 temporary stores. It also is one of several companies reinventing the role of temporary stores, which no longer merely plug holes in landlords' portfolios. Instead, the tenant base is shifting toward trendy up-and-coming brands, and are increasingly seen as a way to bring excitement to a street or property.” (CNBC)
  4. Amazon Is Opening Distribution Centers in Michigan and Illinois “Amazon.com plans to open distribution centers in Livonia, Mich. and Aurora, Ill. the e-commerce giant said Tuesday. In Livonia, the Michigan Strategic Fund Board approved a grant Tuesday that will fund the previously unannounced project. The new facility is expected to create at least 1,000 jobs through 2020, the Detroit News reports. Amazon already operates a sort center in the state, and employs about 277 people there. According to the Detroit News, the company is slated to invest nearly $90 million on construction, machinery, equipment, and other improvements on the facility’s property.” (Fortune)
  5. American Apparel gets nod to shutter nine stores “American Apparel’s financial saga is winding down. A week after getting court approval to use the remainder of its $30 million bankruptcy loan, the specialty retailer is entering the next phase of its journey — the closure of nine under-performing stores. These units, located in New York, Washington, D.C., Seattle, Atlanta, Dallas, Memphis, Santa Cruz, Calif., Evanston, Ill., and Burlington, Vt., will close by Dec. 31. U.S. Bankruptcy court judge Brendan Shannon approved an agreement with American Apparel’s liquidators Merchant Resources LLC and Gordon Brothers Retail Partners LLC, on Monday, Dec. 19, a move that gives the company permission to begin 'going out of business' sales for the next two weeks. Stores that remain unsold during an auction on Jan. 9, will be closed and sold by the liquidators by April 30, 2017, according to The Wall Street Journal.” (Chain Store Age)
  6. Economy Watch: Job Seekers Fare Better in Tech Towns, State Capitals “Where are the best cities in the country for job seekers in 2017? It’s a question that has ramifications for office and multifamily space demand in particular. NerdWallet recently analyzed Bureau of Labor Statistics and Census Bureau data for the 100 largest U.S. cities to determine where Americans will find the most opportunities, but also where their paychecks will go further. The top five cities are Austin, Denver, Nashville, Seattle and Durham, N.C. Nine of the 10 best cities for job seekers have higher-than-average concentrations of Millennials, according to 2015 census data (for convenience, that means people in their 20s). In the 100 cities the company analyzed, 20- to 29-year-olds make up 17.2 percent of the population (on average), while nationwide that figure is 13.9 percent. Minneapolis, Seattle, Atlanta and Austin all have a 20-something population from 20.3 percent to 21.8 percent, according to NerdWallet. Technology industries, such as software publishing, telecommunications and computer manufacturing, are among the fastest-growing in terms of output, according to the BLS’ 2014-2024 employment projection. The health care and social assistance sectors are on the rise as well. Thus in several of the cities that topped the list, technology and health care are major industries.” (MultiHousing News)
  7. U.S. Hotel Stock Index Jumps 11.8 Percent in November “Hotel consultant STR is reporting this week that the Baird/STR Hotel Stock Index increased 11.8% in November 2016 to close the month at 3,474. Year to date, the index has grown 12.3%. ‘Investor sentiment shifted after the election, and stock gains accelerated much like weekly RevPAR (revenue per available room) growth,’ said Amanda Hite, STR's president and CEO. ‘RevPAR figures were much stronger than expected, and we think November will go in the books as an outlier. We do not expect the election result to serve as a demand catalyst beyond forecasted levels, but perhaps the overall growth slowdown the industry is facing will ease a bit in 2017.’ ‘Hotel stocks experienced huge gains in November, especially after the election, as investors embraced the prospects for stronger economic growth,’ said David Loeb, senior hotel research analyst and managing director at Baird. ‘November RevPAR growth trends were solid, potentially due to the realization of pent-up pre-election demand, and hotel stock valuations today are pricing in a much lower probability of slower or slowing RevPAR growth in 2017.’” (World Property Journal)
  8. Japanese company in advanced talks to buy Google’s Spruce Goose hangar for $300M-plus: sources “The future centerpiece of Google’s Southern California campus, the “Spruce Goose” airplane hangar in Playa Vista, is set to fall into Japanese hands. Downtown Los Angeles-based Ratkovich Company is in advanced talks to sell the site for a price in the ballpark of $310 million to $320 million, The Real Deal has learned. The prospective buyer is a Japan-based finance and insurance company, sources said, but TRD could not immediately verify the firm’s name. If it sells for $320 million, the deal for the roughly 358,000-square-foot property would pencil out to about $890 per square foot. It includes the existing 251,674-square-foot hangar and the three other buildings that surround it. Ratkovich paid $32.4 million in 2010 for the hangar and 10 other buildings. It has been shopping the four-building complex at 12475 West Bluff Creek Drive, known as the Hercules Campus West, since October. A representative of the firm did not immediately respond to questions about the pending sale. HFF’s John Crump, Doug Bond, Andrew Harper, Ryan Gallagher, Michael Leggett, and Mark West are the listing brokers, according to marketing materials from October seen by TRD. Some of them could not be reached, while others declined to comment.” (The Real Deal Los Angeles)
  9. How Owning Great Retail Real Estate Is Only Half The Battle “It’s been a milestone year for Inland Real Estate Acquisitions.  The firm has just topped $44 billion in total sales, with $2.9 billion of that acquired in the past two years alone.  But the secret, says Mark Cosenza, SVP of Inland Acquisitions, isn’t just the portfolio. ‘Owning great real estate is half the battle,’ he says. ‘The other half is attracting people to come more than they normally would, and any way we can help our tenants do more business is great for all of us.’ As he describes it, the firm’s long-term support of its acquired properties has helped fuel their sales volume figures… Naturally, tenanting is also key, especially in village-style centers, where there’s typically high-density populations surrounding the retail. Such is the case at Coastal North Town Center in Myrtle Beach, SC, which Inland purchased earlier this year. The center will soon be able to draw traffic from the 140 townhomes currently going up.” (Globe St.)
  10. Retail real estate giant GGP promotes Khan to president “GGP has promoted Shobi Khan to president and chief operating officer of the company. Khan began his career with GGP in 2011 as chief operating officer, overseeing all aspects of asset management and investments. Khan will continue reporting to Sandeep Mathrani, CEO of GGP. ‘Shobi has been one of my trusted colleagues during the transformation of GGP into one of the leading retail real estate companies in the U.S.’ Mathrani said. ‘Over the last five years, Shobi’s responsibilities have broadened and it gives me great pleasure to recognize him with this promotion.’ GGP is an S&P 500 company that owns, manages, leases and redevelops quality retail properties across the United States.” (Illinois Business Daily)
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