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10 Must Reads for the CRE Industry Today (March 26, 2018)

A proposed California ballot initiative aimed at seniors could help ease the state’s housing crises, reports CNBC. Forbes looks at five workplace trends that could impact the commercial real estate industry. These are among today’s must reads from around the commercial real estate industry.

  1. Toys ‘R’ Us Is Still Facing Major Challenges in the Liquidation Process “Shuttering all of its U.S. stores may seem to be the biggest problem facing troubled retailer Toys ‘R’ Us, but the liquidation process will throw up a fresh set of major challenges, said analysts and experts. The liquidation of the company’s 735 U.S. locations is ‘an extremely big undertaking,’ according to Chuck Tatelbaum, chair of the creditors rights practice group at law firm Tripp Scott, involving as many as 33,000 jobs and inventory that, even at a discounted price, must appeal to fickle consumers: children and their parents.” (MarketWatch)
  2. California Measure Could Spur More Seniors to Sell Homes, Easing the State’s Housing Crunch “A proposed ballot initiative in California could encourage older homeowners with larger homes to downsize and move to other counties, freeing homes for younger families and potentially easing the state's chronic housing shortage. The real estate industry is leading the charge to qualify the measure for the Nov. 6 election ballot and has already raised about $6.7 million for the effort. Monday is the deadline for proponents of the measure to turn in signatures to qualify the measure for the November ballot.” (CNBC)
  3. Five Workplace Trends the Commercial Real Estate Industry Should Prepare For “The most significant innovations of the last century have a couple of common elements: They solved simple problems in the lives of everyday people, and almost nobody recognized that these problems needed to be solved. Legend has it that Henry Ford said, ‘If I had asked people what they wanted, they would have said faster horses.’ Modern transportation, internet you can take with you, the ability to easily connect with someone on the other side of the planet — no one really wanted these things before they were invented.” (Forbes)
  4. Ulta, Gap, Target and More: These Retailers Are Still Opening Stores in 2018 “The retail sector is flush with store closures taking place later this year. Toys R Us marks the latest company to deal a blow to the industry, leaving real estate owners scrambling to find replacements for vacated boxes. There are, meanwhile, some retailers planning meaningful expansions in 2018 and beyond. The idea of having bricks and mortar is still an important part of the business — most companies admit they can't succeed in retail without stores.” (CNBC)
  5. Investment Grade Companies Predicted to Sell More Real Estate “In the last few years corporate debt has been very cheap. “With investment grade credit rating, you could call up Goldman and Barclay’s and raise very cheap corporate debt and bonds with limitless amounts of debt out there,” says Glen. D Kunofsky, executive managing director investments, Marcus & Millichap, and founder and chairman of NNN Pro Group. ‘Now, with the tax change, companies can only write off a certain amount of corporate debt.’” (GlobeSt.com)
  6. The Long Shadow of GE Capital Looms Over GE “After a difficult year marred by a slumping share price and promises to jettison major units, General Electric Co. investors face another uncertainty: risks left over from the industrial giant’s once-massive lending business. GE sold off much of GE Capital, which at its peak in 2008 had more than $600 billion in assets ranging from commercial real estate to Thai auto loans, so investors wouldn’t have to worry about its financial risks and focus instead on GE’s jet engines and power turbines.” (Wall Street Journal, subscription required)
  7. Residential Rents Accelerating in U.S., Fastest Pace in 21 Months “According to the February 2018 Zillow Real Estate Market Report, residential median rent across the nation is accelerating at its fastest pace in 21 months. Over the past year, the median rent in the U.S. rose 2.8 percent to a Zillow Rent Index (ZRI) of $1,445. The fastest appreciating rental markets are along the West Coast in Sacramento, Calif., Riverside, Calif., and Seattle. This is the seventh month in a row that Sacramento has topped the list of markets with the fastest rental growth. Median rent in Sacramento rose more than 8 percent since last February to a ZRI of $1,849.” (World Property Journal)
  8. JetBlue Selects Developer for Proposed JFK Expansion “JetBlue Airways Corp. has selected Vantage Airport Group and RXR Realty LLC to lead its proposed multibillion-dollar terminal expansion at John F. Kennedy International Airport. JetBlue’s planned expansion, estimated to cost between $2 billion and $3 billion depending upon the final design, is intended to add gates that can accommodate modern, wide-body planes.” (Wall Street Journal, subscription required)
  9. Blackstone Snaps Up Industrial Portfolio for $359M “FRP Holdings Inc. has agreed to sell 41 industrial properties and two adjacent parcels in the Mid-Atlantic region to an affiliate of Blackstone Real Estate Partners VIII LP for a total purchase price of $358.9 million, FRP announced. The sale is expected to close in the second or third quarter. ‘The reduction in corporate income tax rates in a low cap rate environment created too good an opportunity to forgo,’ John Baker II, FRP’s executive chairman & CEO, said in a prepared statement.” (Commercial Property Executive)
  10. How Google Became a Manhattan Landlord “If Google’s $2.4 billion buy of 75 Ninth Avenue last week from Jamestown Properties is any indication, the tech giant has started to piece together something of a second headquarters in Manhattan. Between its monster $1.77 billion deal for 111 Eighth Avenue in 2010 and its lease deals at 85 10th Avenue and RXR Realty and Youngwoo Associate’s upcoming Pier 57 project, Google has assembled a fiefdom that stretches along West 15th Street from Eighth Avenue out to the waterfront pier.” (The Real Deal)
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