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10 Must Reads for the CRE Industry Today (July 16, 2018)

There was a boost in retail spending in June, the Wall Street Journal reports. A protectionism culture could curb real estate investment by sovereign wealth funds, according to South China Morning Post. These are among today’s must reads from around the commercial real estate industry.

  1. Kushner Family Accused of Pushing Out Low-Rent Tenants “The hammering and drilling began just months after Jared Kushner’s family real estate firm bought a converted warehouse apartment building in the hip, Williamsburg section of Brooklyn. Tenants say it started early in the morning and went on until nightfall, so loud that it drowned out normal conversation, so violent it rattled pictures off the walls. So much dust wafted through ducts and under doorways that it coated beds and clothes in closets. Rats crawled through holes in the walls.” (New York Post)
  2. People Haven’t Been This Optimistic About House Prices Since Just Before the Crash “House prices are soaring and, despite warnings from some analysts, most Americans believe they will continue to soar. A majority of U.S. adults (64%) continue to believe home prices in their local area will increase over the next year, a recent survey released by polling firm Gallup concluded. That’s up nine percentage points over the past two years and is the highest percentage since before the housing market crash and Great Recession in the mid-2000s.” (MarketWatch)
  3. U.S. Retail Sales Remained Strong in June “Americans boosted their spending at retailers in June, capping a strong quarter of consumption that is expected to help ramp up economic growth. Retail sales—a measure of spending at U.S. stores, websites and restaurants—rose 0.5% in June from the prior month, the Commerce Department said Monday. Economists polled by The Wall Street Journal expected a 0.5% increase.” (Wall Street Journal, subscription required)
  4. Tracking E-Commerce to a Career in Industrial Real Estate Brokerage “Doubts of growing your retail brick-and-mortar clientele have you reaching for antacid from the bubble wrap parcel on your porch? Don’t post a ‘closed’ sign on your commercial real estate journey. Instead, consider pivoting to 32-foot clear heights and secured trailer parking. E-commerce keeps growing. In 2017, U.S. online retail sales increased 16% year-over-year, up four out of five years running, and yielded $453.5 billion in total sales, according to CBRE.  Of the 50 largest industrial leases finalized last year, approximately 43% involved e-commerce companies.” (Forbes)
  5. Growing Protectionism Could Slow Investment in Real Estate, Infrastructure by Sovereign Wealth Funds “Bernardo Bortolotti, director of the sovereign investment lab at Bocconi University and co-author of a report showing a slowdown in sovereign wealth fund real estate and infrastructure investment in 2017, said the high watermark for private deal making had passed. This is partly because some Middle East funds have rebalanced their portfolios towards more liquid assets, such as equities, to accommodate draw downs from cash-strapped governments needing to plug budget gaps.” (South China Morning Post)
  6. Gymboree, a Rare Retailer to Emerge from Bankruptcy Last Year, Launches its Reboot on Amazon Prime Day “Amazon has changed consumer expectations for shipping and service, and that has been one of the reasons retailers are going through dramatic transformations trying to keep up. It makes the beginning of Amazon Prime Day strange timing for recently bankrupt Gymboree to choose for its brand refresh, but that’s exactly what the children’s retailer is doing. Gymboree Group is the parent company of kids clothing brands Gymboree, Janie and Jack, and Crazy 8. It filed for chapter 11 bankruptcy on June 11, 2017, and officially re-emerged on Sept. 29, 2017.” (CNBC)
  7. How to Choose Your First Real Estate Crowdfunding Investment “Real estate could be a safe bet if you’re worried about a bear market setting in. If you don’t want the hassle of owning an investment property directly, crowdfunding may be the answer. Crowdfunded real estate investments account for $2.5 billion of the $7 trillion commercial real estate market, according to CFX Markets. There’s major growth potential in the industry as more investors lock in on the benefits of investing in real estate through crowdfunding platforms.” (U.S. News & World Report)
  8. GGP Signs Five-Dollar Store on Prime Fifth Avenue—Some Brokers Say, WTF? “Five Below, a national chain where “everything, every day, is just $5 and below,” is opening a flagship at General Growth Properties’ 530 Fifth Avenue retail condominium unit for its first Manhattan location. The 10,800-square-foot store—about 2,800 square feet bigger than Five Below’s average outpost—will open later this year at the property between West 44th and West 45th Streets, according to CNBC, which broke the news of the deal. Lease details weren’t immediately available.” (Commercial Observer)
  9. VICI Properties Shells Out $508M for Las Vegas Hotel “VICI Properties has completed the $507.5 million purchase, subject to a leaseback agreement, of the Octavius Tower at Caesars Palace in Las Vegas. The purchase, from Caesars Entertainment Corp., used available cash. Caesars will continue to operate Octavius Tower under the terms of an existing ground lease until the Caesars Palace Las Vegas lease is amended to incorporate the Octavius Tower ground lease, which will happen concurrently with the closing of Harrah’s Philadelphia.” (Commercial Property Executive)
  10. How Property Managers Are Changing Every Asset Class “Property managers are moving into the limelight, and they are showing off just how important they are across asset classes. According to CBRE’s 2018 Global Tenant Occupier Survey, property managers play a crucial role in tenant retention and lease renewals. In the survey, 88% of tenants of office, retail and industrial assets said that the quality of the property management team had a “strong” or “very strong” impact on lease renewal decisions. In terms of what makes a quality property manager, tenants listed “responsiveness” as the most important characteristic.” (GlobeSt.com)
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