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10 Must Reads for the CRE Industry Today (June 20, 2017)

Google is buying more land parcels in downtown San Jose, reports The Mercury News. CNBC profiles activist investor Jonathan Litt. These are among today’s must reads from around the commercial real estate industry.

  1. Amazon-Whole Foods Deal Hurts Grocery Stores in My District, Says Silicon Valley Congressman “Khanna spoke after he called for the Justice Department and the Federal Trade Commission to review the impact the deal would have on food prices and wages. On Monday, Amazon's stock jumped to an all-time intraday high, three days after the company announced its blockbuster agreement to acquire Whole Foods. Khanna said Wal-Mart's dominance in the grocery space has already had a negative impact on wages and local grocery stores.” (CNBC)
  2. Opinion: Another Part of the Real Estate Market is Starting to Crumble “While the struggles of mall REITs are no secret given Amazon’s increased dominance of the retail sector, real estate investors may also contemplate putting apartment REITs on their warning lists. That’s because although apartment real estate investment trusts have done well this year — and since the end of the housing crisis, in general — rent growth is starting to slow. To understand the current situation of multifamily rental housing, some recent history is necessary. In the lead-up to the housing crisis, homeownership in the U.S. rose from 64% to 69% at its peak in 2005 and 2006.” (MarketWatch)
  3. Google Village Property Buys Continue in Downtown San Jose “Google’s massive downtown San Jose development plan has prompted four more property purchases, including some that indicate the search giant’s area of interest has begun to widen. The property deals occurred just a few days ahead of a key San Jose City Council meeting, during which the council is scheduled Tuesday to approve the launch of exclusive negotiations with Google for the purchase of 16 government- and city-agency-owned parcels. The parcels would be part of a land assembly for the tech giant’s proposed tech campus and transit-focused village near Diridon Station and SAP Center.” (The Mercury News)
  4. Infrastructure Spending Could Be Hindered by a Shortage of Skilled Labor “A joint report from lobbying group U.S. Chamber of Commerce and construction materials manufacturer USG Corporation shows commercial contractors anticipate they'll have more trouble hiring workers during the second half of 2017. The USG and Chamber of Commerce Commercial Construction Index is a quarterly economic report that gauge the outlook for the commercial construction industry. Each quarter, researchers survey a panel of 2,700 commercial construction decision-makers and provide findings that are representative of the entire U.S. construction industry by geography, size, and type of company.” (Fortune)
  5. Meet Jonathan Litt, the Real Estate Investor Pushing Retailer Hudson’s Bay to Change “His playbook has largely focused on finding ways to monetize real estate to enhance shareholder value. That was the case at BRE Properties, which sold to Essex Property Trust for $4.3 billion in 2013, as well as Associated Estates, which sold itself to Brookfield for $2.5 billion in 2015. It was also the case at MGM Resorts, which spun off some of its real estate through an initial public offering in 2016.” (CNBC)
  6. Miami Owes its Life to Foreigners “Miami is done (well, never entirely) building residential or mixed use towers for money laundering foreigners. They are now building entire towns for them, and everyone else in between. The developers will call it ‘lifestyle properties,’ but it is even more than that. In Swire's case in particular, the BCC and its surroundings is a work and entertainment complex that hires hundreds if not thousands of locals.” (Forbes)
  7. DDR, Madison International Recap $1B Retail Portfolio “DDR Corp., of Beachwood, Ohio, and an affiliate of Madison International Realty, of New York City, have agreed to recapitalize a $1 billion, 52–shopping center joint venture previously owned by DDR and various partners through the DDR Domestic Retail Fund I, the two companies announced last week. In the transaction, Madison International Real Estate Liquidity Fund VI, an investment fund managed by Madison International Realty, acquired 80 percent of the joint venture’s common equity and a DDR affiliate retained 20 percent.” (Commercial Property Executive)
  8. Amazon Is Finally Opening One of its Mega-Warehouses in New York “Amazon’s ability to quickly ship stuff to New Yorkers, from Kindle readers to kayaks, is about to get a major boost. The Seattle-based Web giant headed by billionaire Jeff Bezos is preparing to open a massive distribution hub in the Big Apple — the company’s first major facility in New York state — by summer’s end, The Post has learned. The Amazon ‘fulfillment center’ will span nearly 1 million square feet on the west shore of Staten Island.” (New York Post)
  9. Whole Foods CEO Hints at Launching Another Brand Under Amazon “After Amazon completes its takeover of high-end grocer Whole Foods Market, it might launch another brand with different standards, the grocery chain's chief executive said in remarks reported in a securities filing on Monday. Amazon plans to keep the natural grocer's high standards, Whole Foods Chief Executive John Mackey said, adding, ‘They’re not stupid enough to go change that.’ The filing contained a transcript of a town hall meeting for Whole Foods employees.” (Fortune)
  10. Seattle Office Building Commands $330M “Union Investment has acquired Midtown21, a 21-story, Class A office building in Seattle, from developers MetLife Real Estate and Trammell Crow Co., for $330 million. The acquisition will be transferred to the holdings of open-ended real estate fund Unilmmo: Europa, which focuses on investments in Europe but occasionally buys properties overseas. The fund also owns Seattle-based properties, Amazon Phase VI office building and Hilton Garden Inn Hotel.” (Commercial Property Executive)
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