10 Must Reads for the CRE Industry Today (June 17, 2016) circa 1945: Sunset Boulevard, Hollywood in the 1940's. The Palladium, where Jimmy Dorsey is playing, and the CBS building are visible on the left. Photo by Fox Photos/Getty Images

10 Must Reads for the CRE Industry Today (June 17, 2016)

 

  1. Real estate pros see recession by 2017, survey shows “The real estate sector is getting a little more pessimistic about the economy and a majority of professionals in the industry now see a recession ahead in the next 18 months. A survey of 400 people in the real estate business by PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI) showed a drop in positive sentiment to 69% from 84% six months ago. Current levels are at the lowest in two years. ‘There’s a lot of weird stuff going on in the world—China, interest rates, volatility in the equity market—all of which is creating anxiety,’ said Mitch Roschelle, a partner at PwC. And while a majorit y of those surveyed remain positive for now, more than half expect a recession by the end of 2017, notes Roschelle, who adds that two out of the last four recessions have been in part due to a slowdown in the real estate market.” (Yahoo Finance)
  2. Digital Realty Trust: A REIT That Will Thrive in the New Real Estate Sector “Real estate is about to gain its own sector, the 11th in the Global Classification Standard, the leading global equity classification system. Real estate was previously part of the financial sector. The move underscores the growing importance of the industry. "It's an acknowledgement that REITs are now mainstream," said Rich Moore, a REIT analyst at RBC Capital Markets, of the change. One real estate investment trust (REIT), Digital Realty Trust (DLR), looks particularly well-situated to prosper in this changing environment. Last month, the company replaced Time Warner Cable in the the S&P 500. That should continue to increase Digital Realty Trust's attractiveness. The company operates in a growing niche. It owns and operates a global network of data centers that house computer servers on which clients store information. As companies rely increasing on data to run their businesses and serve clients, they have needed locations for an increasing number of servers.” (The Street)
  3. Rent rose at the fastest pace in more than 9 years in May “Rent rose at the fastest monthly pace since 2007 last month, a reminder that one of the biggest expenses for most Americans isn’t easing up. In May, rent was 3.8% higher than a year ago, the strongest 12-month rate of increase since 2008, the Labor Department said in its consumer price index report Thursday. The monthly rise was 0.4%. It’s not only the strongest pace of growth in many years, it’s also much higher than pay increases. Inflation-adjusted hourly wages were up 1.4% in the twelve months ending in May. Many factors are keeping the pressure on rents. The housing market is suffering from a lack of inventory. Home builders pulled back when the bubble burst, and many homeowners are reluctant to try to sell. More people of all ages and income levels are going to rent their home rather than buy, analysts believe. Inflation is a more complicated picture. After years of false starts, it may be finally starting to pick up. The Labor Department on Thursday said its measure of consumer prices that strips out food and energy rose 2.2% for the year.” (MarketWatch)
  4. Art Becomes a Big Factor in Hotel & Commercial Real Estate “Art in hotels and residential and commercial buildings has become a large factor for buyers. How does that relate to what you’re doing?...Emily Santangelo: ‘I’m doing projects with Toll Brothers City Living, which finds fantastic properties to develop. They’ve recognized that art is very powerful, and they believe that their public and amenities spaces should match the level of quality and luxury found in private residences.’ Alexander DiPersia: ‘I just did a project for Related Real Estate at Hudson Yards, where we placed a massive Michel François bronze piece at the front. It’s their most expensive building in Hudson Yards, so we went with a recognizable, gilded, luxurious piece. We’re using art to create an emotional experience.’” (Gotham Magazine)
  5. Ernst & Young eyes New Jersey waterfront office space, may shrink Times Square presence “EY, formerly known as Ernst & Young, plans to vacate a portion of its longtime Times Square home and shift some of its operations to New Jersey. The accounting firm is negotiating to relocate as much as 170,000 square feet at 5 Times Square to the New Jersey waterfront, according to several sources familiar with the London-based company's search. Those sources said the firm is in talks to take space at 121 River St., an office building in Hoboken. The deal in New Jersey would be EY's first step in a potentially bigger move to shift a large segment of its space out of its New York City headquarters at 5 Times Square, where it occupies nearly 1 million square feet, according to CoStar Group Inc. Beginning next year, the firm plans to start searching for space in lower Manhattan, where it is exploring locations for roughly half of its offices, sources said. It will likely keep some space at 5 Times Square or a new location in midtown.” (Crain’s New York)
  6. Ivanhoe, Callahan Seal $895M NYC Deal “It’s all theirs. Ivanhoé Cambridge and Callahan Capital Properties have gone from majority owners to full owners of 1211 Avenue of the Americas, a 2 million-square-foot office tower in Midtown Manhattan. The joint venture partners purchased the remaining 49 percent interest in the Class A property from Beacon Capital Partners for approximately $895 million. The transaction comes three years after Ivanhoé Cambridge and Callahan Capital purchased a 51 percent share of 1211 Avenue of the Americas from Beacon for $850 million. Taking full ownership of the LEED Silver certified asset was apparently part of the plan all along. In a prepared statement, Arthur Lloyd, executive vice president with Ivanhoé Cambridge, described the acquisition of the 49 percent interest as ‘the completion of our phased investment strategy for 1211 Avenue of the Americas.’” (Commercial Property Executive)
  7. Honolulu Senior Living Community to Open in Late June “Scheduled to welcome its first residents later this month, Kalakaua Gardens is the first senior living community in Hawaii to provide a comprehensive continuum of care under the same roof, including independent living, assisted living, memory care, rehabilitation services and Medicare approved skilled nursing and hospice.The 17-story high-rise building is located at 1723 Kalakaua Ave. in Honolulu, across the street from the Convention Center. Offering a people-first approach to fees, the property is also the only monthly rental retirement community in the Aloha State that does not require a long-term endowment. Kalakaua Gardens will be managed by nursing home operator Avalon Health Care Group and will be centered on the ‘ohana (family-style) living, as well as friendships, community, hobbies, exceptional health and well-being.” (MultiHousing News)
  8. New Baltimore industrial hub announces retail development “Tradepoint Atlantic, a 3,100-acre industrial hub now taking shape in Baltimore Harbor, this week unveiled plans for a 130-acre, mixed-use retail park on the former site of the nation’s largest steelmaking facility. FedEx has signed a lease for a 300,000 sq.-ft. distribution facility and Harley-Davidson will move its training facility to the site, which offers 3,000 ft. of frontage on I-695 and exposure to 43,000 households in the surrounding area. Tradepoint Atlantic’s management envisions a 50,000-sq.-ft. grocery store, a drug store, a gym, and QSRs on the 150,000-sq.-ft. retail tract. It has set aside two hotel sites and seven freestanding pads, with one designated for a gas station and convenience store. Research from JLL, which has been retained as the retail leasing agent, shows that $68 million in consumer spending leaves the neighboring town of Dundalk, Maryland, each year due to lack of retail options.” (Chain Store Age)
  9. 340 Acres Near LAX Getting Total Overhaul “The total reboot of about 340 vacant acres owned by Los Angeles International Airport north of LAX has been a long time in the making, but now, an update to the LAX Northside Plan has been approved, and it’s going to mean big changes to the empty land, says KPCC. The plan aims to mix office space, retail, pedestrian and bike areas, and green space on the large site, and will include eco-friendly features, like "permeable pavement and green roofs," area councilman Mike Bonin tells KPCC. The plan calls for a three-mile pedestrian path connecting Westchester to Playa del Rey and the beach, plus as much as 49 acres of open space. Rios Clementi Hale Studios was the master planner for the project….The plan won the go-ahead from airport commissioners, planning commissioners and the Los Angeles County Airport Land Use Commission, but still needs to be reviewed by the Federal Aviation Administration, because it’s so close to the airport.” (Los Angeles Curbed)
  10. Sunset Boulevard: From Louche to Luxury “To understand the transformation on Sunset Boulevard, consider Larry Flynt’s Hustler Hollywood flagship store. The venue for sexy lingerie and other erotica was purchased last year for $18.3 million to make way for the Arts Club, an elite, members-only social club. The Hustler store is among the symbols of Sunset Boulevard’s louche past that are being razed to make way for upscale residences, shopping and dining. The luxury developments represent a dramatic cultural shift on Sunset. The boulevard—and particularly the 1½-mile-long West Hollywood portion known as the Sunset Strip—has throughout its history been famous for nightlife, counterculture, and sex, drugs and rock ’n’ roll. Sunset’s notoriety began in the 1930s and ’40s, when it was a glamorous nightlife destination for Hollywood stars. Even when its famous nightclubs closed down one by one, Sunset’s fame drew crowds of young people from around the country, said Hans Fjellestad, director of the 2012 documentary ‘Sunset Strip.’” (Wall Street Journal)
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