10 Must Reads for the CRE Industry Today (January 25, 2017) Photo by Mario Tama/Getty Images

10 Must Reads for the CRE Industry Today (January 25, 2017)

 

  1. Thanks Amazon! Now Indie Bookstores Are Booming “Print is dead? Long live print! Amazon may have conquered the book-selling market, but word nerds are finding their way back to indie bookstores. Even as the internet superstore sinks its claws into America’s literary capital with its first brick and mortar Big Apple bookstore this spring, bookworms will tell you that paper books and the community around them are alive and kicking. In the latest sign of the power of print, a spate of indie bookstores will enter the New York City area in the coming months, even as larger chains have exited.” (MarketWatch)

  2. DNA of CRE survey: Commercial real estate remains male-dominated, doesn’t make instant millionaires “The vast majority of commercial real estate professionals — 80 percent — are male, and most don’t rank among the super rich, with 24 percent of commercial real estate agents reporting that they earned less than $100,000 in gross commission income each year and 16 percent from $101,000 to $150,000 each year. Those are two of the statistical nuggets unearthed in this year’s DNA of CRE survey compiled by online brokerage theBrokerList and Buildout, a company that produces marketing software for CRE brokerages. This is the second year that these two companies have partnered on the survey. Some things haven’t changed much since the first survey last year. There’s the fact that commercial real estate remains a male-dominated industry. It’s also an industry led by older brokers. The survey found that 27 percent of CRE pros were from the ages of 50 to 59, while 20 percent were 60 to 69. Only 6 percent of CRE pros were from the ages of 21 to 29, while 20 percent were 30 to 39.” (REJournals.com)

  3. Economy Watch: Millennial Impact on Urban Markets Could Fade Soon “Will the influence of the Millennial generation, which has had an outsized impact on cities—and on urban multifamily developments in particular—start to wane in the coming years? That’s a distinct possibility, according to a paper published by Dowell Myers, University of Southern California professor of demography and urban planning. He says that U.S. cities reached ‘peak Millennial’ status in 2015. The rise and fall of the Millennial generation congregating in central cities is a product of unusual circumstance, Myers said. Namely, their lives meeting (or rather, crashing into) a unique historical context set in place by the recession beginning nearly 10 years ago. Circumstances conspired before 2010 to maximize Millennial presence in core urban markets, and they will do so again by 2020 to reduce the generation’s presence. (MultiHousing News)
  4. Perfecting public transportation: 10 U.S. cities with progressive plans “All cities are connected, both literally and figuratively, through transportation. Whether it’s by car, bike, bus, rail, or our own two feet, urban dwellers share the common problem of navigating quickly and easily, and cities share the burden of putting systems in place to make that possible. And now, in an era of Trump, when federal transportation funding might be drastically cut, they also may need to be even more creative, and independent, in funding and figuring out how to make getting there less painful. Luckily, cities are increasingly making the rights investments, and as these 10 demonstrate, finding new ways to move forward. After consulting with a number of transportation experts, including Jeffrey Wood from the Overhead Wire, Alex Dodds from Smart Growth America, and Alex Engel from the National Association of City Transportation Officials, we came up with 10 project that move beyond the gridlock of standard practices and traditional thinking. None of these cities has devised the perfect transportation system, but each showcases a solution that could make any commute better.” (Los Angeles Curbed)
  5. REITs rally in Trump era despite climbing interest rates “Despite rising interest rates, U.S. real estate investment trusts are enjoying some upward momentum in the Donald Trump era. REIT shares have climbed 5.8 percent since interest rates started rising after Election Day as investors expect looser regulations and economic growth, the Wall Street Journal reported. Office-centric REITs such as SL Green Realty and Vornado Realty Trust have seen shares rise in particular as new policies out of Washington are expected to spur jobs. Net-lease REITs typically feel the pinch most when interest rates rise, but they’ve bounced back after a short period of uneasiness when the 10-year Treasury yield climbed to 2.6 percent in December. Shares of the largest net-lease REIT by market capitalization, Realty Income Inc., have climbed 3 percent since Election Day. Publicly traded REITs trimmed their debt levels from 58 percent of total book-assets ratio in early 2009 to 49 percent this past September, according to the National Association of Real Estate Investment Trusts.” (The Real Deal Miami)
  6. Some Helpful Tips For Investing In Real Estate Using Retirement Funds “Most people mistakenly believe that their retirement accounts must be invested in traditional financial related investments such as stocks, mutual funds, exchange traded funds, etc. Few Investors realize that the Internal Revenue Service (“IRS”) permits retirement accounts, such as an IRA or 401(k) plan, to invest in real estate and other alternative types of investments.  In fact, IRS rules permit one to invest retirement funds in almost any type of investment, aside generally from any investment involving a disqualified person, collectibles and life insurance. One of the primary advantages of purchasing real estate with retirement funds is that all gains are tax-deferred until a distribution is made or tax-free in the case of a Roth account (after-tax). For example, if one purchased a piece of property with retirement funds for $100,000 and later sold the property for $300,000, the $200,000 of gain appreciation would generally be tax-deferred. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income tax and in most cases state income tax. The two most common vehicles for purchasing real estate with retirement funds is the self-directed IRA or an employer sponsored 401(k) plan.” (Forbes)
  7. Ruffin: Investing in commercial real estate? Do the math first “Often when evaluating a commercial real estate investment, you will hear the term “cap rate” mentioned. The cap rate is shorthand for capitalization rate. Very simply put, it is the rate of return of your investment in the property. It is very similar to the yield on a bond. However, buying a commercial real estate building is more similar to buying a small business than purchasing a bond. For example, what net operating income do you use for the cap rate calculation? If an appraiser is determining the net operating income they will generally deduct between five and 10 percent to reflect the impact of credit losses and vacancy losses. Many brokers will advertise the pro forma income of the building when calculating the cap rate. The pro forma income reflects the rent that should be achieved if all vacant suites are rented. The difficulty here is determining when the suite will be leased and at what rent amount.” (Reno Gazette Journal)
  8. Real estate gurus who know Donald say he’s a good guy “New Yorker Donald Trump’s inauguration festivities were packed with locals from the real estate industry delighted to say they now know the president. Although the weather was frightful — but not as cold as in many past years — guests dressed in finery braved long lines, riot geared security forces, protestors, pat-downs and hours of waiting for events to start. Waiting for President Trump and the first lady to take their first dance at the Liberty Ball, Bruce Mosler said he had never been to an inaugural ball. The Cushman & Wakefield honcho had been in Manhattan at the Real Estate Board of New York gala the night before but flew into DC for the celebrations.” (The New York Post)
  9. Loop buildings likely to fetch over $100 million each “Two Wacker Drive office towers completed in the 1970s are going up for sale, in deals each likely to be well over $100 million. The owners of the 35-story tower at 300 S. Wacker and the 31-story tower at 125 S. Wacker have hired brokers at Jones Lang LaSalle, led by International Director Bruce Miller, to seek buyers, according to people familiar with the buildings. Boston-based Beacon Capital Partners bought the 563,638-square-foot building at 300 S. Wacker for $112.5 million in August 2013. New York-based MetLife bought 125 S. Wacker, whose approximately 575,000 square feet include some below-grade space, for $107 million in December 2012. Owners of both buildings are believed to be expecting prices significantly higher than they paid.” (Crain’s Chicago Business)
  10. Transformative Mixed-Use Developments Revive Newark “An historic department store in downtown Newark, N.J., that had fallen into disrepair has been transformed into an arts and cultural center, new retail and housing through a $174 million project financed by a partnership of public, profit and private groups. The 400,000-square-foot mixed-use project restored the Hahne & Co. building and is part of several recent multi-million commercial real estate investments in Newark, including the planned $100 million Mulberry Commons project that will also feature residences and retail along with a park and a bridge connecting to downtown. ‘As Newark continues to attract innovators and dreamers who see the promise of our great city, it is imperative that we incorporate aspects of Newark’s history and authentic character into our continuing development,” Mayor Ras Baraka said in a prepared statement. “This is a transformative moment for our city.” (Commercial Property Executive)
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