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10 Must Reads for the CRE Industry Today (February 5, 2018)

Jerome Powell was sworn in as the new Federal Reserve chairman, reports MarketWatch. Department store chain Bon-Ton Stores has filed for Chapter 11 protection, according to CNBC. These are among today’s just reads from around the commercial real estate industry.

  1. Jerome Powell Sworn In as Fed Chairman “Jerome Powell officially took the helm of the Federal Reserve Board on Monday, replacing Janet Yellen in a carefully choreographed transition. Powell was sworn in early Monday morning in a private ceremony. In a brief video statement posted on the Fed’s website, Powell promised to explain ‘what we are doing and why we are doing it.’ Powell noted that unemployment inflation are low and the economy is growing.” (MarketWatch)
  2. Department Store Chain Bon-Ton Files for Bankruptcy Protection “Bon-Ton Stores has filed for Chapter 11 bankruptcy protection, the largest retailer to do so this year. The regional department store chain, which has dual headquarters in Milwaukee and York, Pennsylvania, has been burdened with massive debt as it struggles to grow sales and move operations online in the face of Amazon. Bon-Ton said Sunday it received a commitment of as much as $725 million in financing from existing lenders to support its operations.” (CNBC)
  3. Yellen Says Prices ‘High’ for Stocks, Commercial Real Estate “Outgoing Federal Reserve Chair Janet Yellen said U.S. stocks and commercial real estate prices are elevated but stopped short of saying those markets are in a bubble. ‘Well, I don’t want to say too high. But I do want to say high,’ Yellen said on CBS’ ‘Sunday Morning’ in an interview recorded Friday as she prepared to leave the central bank. ‘Price-earnings ratios are near the high end of their historical ranges.’ Commercial real estate prices are now ‘quite high relative to rents,’ Yellen said. ‘Now, is that a bubble or is it too high?’” (Daily Republic)
  4. Rent Controls, a Bain of Landlords, Are Gaining Support as Costs Rise “Calls for rent-control legislation are growing across the U.S. as apartment tenants endure sharply rising rents and memories fade of the downsides of price caps. Lawmakers and advocates in California, Illinois and Washington state are pushing to repeal state laws that forbid rent control or place limits on cities’ ability to regulate rent increases.” (Wall Street Journal, subscription required)
  5. Finding Fortress REITs to Buy “Many publicly-traded Real Estate Investment Trusts (REITs) have managed to survive and thrive for decades using risk-aligned practices distinguished by sound balance sheet fundamentals and rhino-focused dividend performance. While many public U.S. stocks are paying out modest dividend yields, high-quality REITs, characterized as rhino-like alternatives, seem to be resonating with income-oriented investors.” (Forbes)
  6. A Skyscraper Made of Wood? Newark Developers Give It a Try “In the contest to attract office tenants, many developers stick with the tried-and-true combination of concrete, steel and gleaming glass. Lotus Equity Group is embracing a more natural material: wood. The Manhattan developer said it is planning an 11-story Newark office building made with a wood structure for Riverfront Square.” (Wall Street Journal, subscription required)
  7. Jared Kushner’s Property Empire Had to Thrive Under Trump, Right? Wrong “A year into the Trump presidency that was supposed to bring prosperity to the nation, Jared Kushner, a key member of the president’s inner circle, has yet to see dividends. The Trump presidency has so far proved more bane than boon to Kushner Companies, the family firm of the White House senior adviser. The former New York Times building on West 44th Street in Manhattan is a case in point. Amid an economy that Trump constantly touts as “tremendous” the part-owned Kushner property near Times Square is facing a number of tenant defaults and presents a forlorn face to the world.” (Guardian)
  8. Evolving Technologies, Consumer Consumption Driving Massive Data Center Demand “According to CBRE's 2018 U.S. Real Estate Market Outlook, despite record-setting wholesale absorption levels for three consecutive years, ever-increasing data consumption and the rapid evolution of technology will fuel strong demand for data center space in 2018. The rapid adoption of cloud solutions has bifurcated demand from traditional enterprise end-users and hyperscale cloud service providers (CSPs). Enterprise end-users (financial services, insurance, retail companies, etc.) are migrating from owning and operating their own facilities to a hybrid mix of third-party colocation and the cloud.” (World Property Journal)
  9. New York Wheel Developers Reach Agreement with Fired Contractor “The developers of the stalled New York Wheel project, the proposed 630-foot attraction on Staten Island, have agreed to fork over $460,000 to cover storage costs for some of the structure’s parts, according to court documents. A dispute between the the developers and the project’s former contractor, Mammoet-Starneth, delayed the ambitious project, which is being built on city land on the St. George waterfront, Crain’s reported.” (The Real Deal)
  10. BKM Capital Completes Two Industrial Buys for $175M “In two transactions totaling more than $175 million, BKM Capital Partners has acquired more than 1 million square feet of multi-tenant industrial space in Las Vegas and the San Francisco Bay Area, the company announced. The larger and more recent purchase was Hughes Airport Center, a 670,900 square-foot, 13-building Class A complex in the Las Vegas Airport submarket. The property, at 420-770 Pilot Road and 711-839 Pilot Road, features clear heights ranging from 16 to 24 feet, 44 dock-high loading doors and 59 grade-level loading doors.” (Commercial Property Executive)
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