10 Must Reads for the CRE Industry Today (May 27, 2016) Photo by Spencer Platt/Getty Images

10 Must Reads for the CRE Industry Today (May 27, 2016)

 

  1. This may be the tell-tale sign the Fed is about to hike rates  “Bank stocks are saying it's more likely that Federal Reserve officials will decide to increase interest rates in a few weeks. Over the last two weeks, Goldman Sachs, JPMorgan Chase and Wells Fargo saw stock prices appreciate at an accelerated pace compared to that of the S&P 500. That's even factoring in financials' decline Thursday. It's making some Fed-watchers think the market is finally ready to see rates rise again. Between reassuring data including retail figures and home sales, economists and analysts are yet again revising predictions about what the Federal Open Market Committee will do, and when. ‘It's making markets think the Fed can go sooner,’ Deutsche Bank chief U.S. economist Joe LaVorgna said. ‘The likelihood of more than one move has increased.’” (CNBC)
  2. CRE Merger Mania Continues with JBG-NYRT Deal “New York REIT Inc. and JBG Cos. just made a move that will change the list of the largest U.S. REITs owning premier office and mixed-use properties in infill locations. The companies have entered into an agreement calling for NYRT to acquire substantially all of JBG’s properties and its management business in a transaction that will create a REIT with an estimated enterprise value of $8.4 billion. In a prepared statement, Randolph Read, chairman of the Board of NYRT, described the deal as “nothing short of transformative for New York REIT.” JBG Realty Trust is the entity that will emerge from the transaction, which will leave JBG with 319.9 million shares of NYRT common stock and operating partnership units for contributing its properties and management arm to the new REIT. Per terms of the agreement, JBG equityholders will claim approximately 65.2 percent of JBG Realty’s shares and units as its own, and NYRT stockholders will own the remaining 34.8 percent.” (Commercial Property Executive)
  3. Bair: 3% down payment mortgage comes with risk “Borrowers who only put 3 percent down on a new home could be taking a risk, former FDIC Chair Sheila Bair said Thursday. Earlier in the day, Wells Fargo announced it is now offering fixed-rate conventional mortgages with a minimum 3 percent down payment. ‘The good news is these are fixed-rate mortgages, so you don't have the problem with the payments shocks where you have to refinance to make the payment affordable,’ Bair said in an interview with CNBC's "Closing Bell." However, ‘you're exposing yourself to risk if home prices take a dip.’ Wells Fargo, the nation's largest mortgage lender, is targeting first-time home buyers and low- to moderate-income buyers who have been sidelined in the housing recovery. The bank is underwriting the borrowers and Fannie Mae is originating and selling the loans. Borrowers may take out a mortgage up to $417,000.” (CNBC)
  4. Opinion: These retailers give the best insight into the economy “Falling prices help kill sales results at the big retailers. But it doesn’t mean the consumer is weak. And it’s not the only thing bugging traditional retailers. If you’re like most people, you’ve noticed much more of your budget goes to basics like health care, insurance, utilities and bank fees. But the spending trends aren’t all a slog. We’re also opening our wallets more for fun stuff like restaurants, hotel stays and sporting events. The key takeaway here is that we’re spending a lot more on services than stuff. As of March, spending on goods was down sharply to 23% of personal consumption, from 43% 50 years ago (excluding cars, gasoline and medicine). Here’s another measure of this trend. Services now account for 70% of consumption. Goods? Just 30%. But over a century ago, when the golden era of department stores just began, it was almost exactly the reverse. About three-quarters of consumer spending went to goods rather than services.” (MarketWatch)
  5. Abercrombie chairman bets you're tired of $5 T-shirts “Executive Chairman Arthur Martinez told CNBC on Thursday ‘there's a theory’ out there that shoppers are tiring of disposable fashion, and are willing to spend more for quality clothing that's built to last. As such, the Abercrombie brand is shifting its sights from teens, as it attempts to become a more "sophisticated" label for 20-somethings with an 'eye for style.' The change comes as consumers continue to clamp down on apparel spending, causing specialty clothing and department stores to struggle against fast-fashion, value and off-price chains. ‘We are not playing the fast-fashion game with Abercrombie,’ Martinez said. Though the brand's goal is to be associated more with luxury than back to school, the shift shouldn't drive its price tags much higher, Martinez said. Instead, the company will lean on better sourcing, a smarter supply chain and fewer promotions to profitably grow sales, and invest more value into its product. Like other apparel retailers, Abercrombie also has the benefit of cheap cotton prices.” (CNBC
  6. 6 things we know about new German grocery chain coming to N.J. “Originating in Germany, Lidl is planning to jump over the Atlantic Ocean and into the United States. Lidl is focusing its efforts on the East Coast and is pursuing locations in New Jersey. Never heard of Lidl? Wonder what the big deal is? Here's six things to know about one of the biggest European grocery chains and its plans in the United States. According to Lidl, it has 10,000 stores in 26 countries across Europe and more than 230,000 employees. It plans on opening up stores in the United States by 2018 along the East Coast — from New Jersey to Georgia. According to Reuters, Lidl plans on opening 100 stores in America… The Lidl store layout is similar to Aldi, where products are sold in cases that customers grab from. According to Northjersey.com, Lidl is smaller than other supermarkets — offering 2,000 items compared to other places that might have 30,000 items.” (NJ.com)
  7. Arts District Getting Huge 600-Condo Project “A huge, recently proposed project plans to create a large new project near the Fourth Street Bridge, and it "may be the largest residential development proposed in the Arts District thus far," says Urbanize LA. The site, along Fourth Place between Santa Fe and Mateo and just around the corner from Villains Tavern, would contain 600 live/work condos and about 60,000 square feet of commercial space. The single-story building on the site now will be demolished at some point to make way for the new residential. (The location of the possible mixed-user would put it just next to another shopping opportunity, the classy At Mateo open-air mall.)” (Los Angeles Curbed)
  8. NRIG-West Completes Tacoma Retail Center Deal “Lincoln Plaza, a community shopping center in Tacoma, was recently sold by PASSCO Cos. to a local privately-held partnership. Worth about $26.7 million, the deal was arranged by a National Retail Investment Group – West team led by CBRE Executive Vice President Philip Voorhees. Located within the city’s retail hub at the northwest corner of S. Steele Street and S. 38th Street, Lincoln Plaza is an 80,922-square-foot unanchored neighborhood retail property. Currently operating at roughly 95 percent occupancy, the asset has a tenant roster that includes names such as Jared The Galleria of Jewelry, Men’s Warehouse, Skechers, Starbucks, Wingstop, Sprint and Big 5. Built in 1988, the asset stands on a 7.5-acre lot located in the proximity of the I-5 and Tacoma Mall.” (Commercial Property Executive)
  9. De Blasio distracted by multiple investigations: report “The de Blasio administration’s alleged fundraising and management scandals are apparently catching up to the mayor, distracting him from his primary duties running the city. Bill de Blasio is reportedly spending more time away from the public eye and from City Hall, working to tamp down the fallout out of the various investigations affecting his office. De Blasio has delivered five speeches in the last two weeks that were closed to the media, more than in previous months, the Wall Street Journal reported.” (The Real Deal)
  10. Serbian Orthodox cathedral attempts a real estate resurrection “On a sunny afternoon in mid-May, the Serbian Orthodox Cathedral of St. Sava in the Flatiron district stood gutted. Less than a month after a fire engulfed the building, the charred roof beams had been torn down and a construction fence erected in anticipation of cleanup. The church expects an insurance settlement, and raised about $8,000 a day in the week after the fire. ‘The parish is taking it very hard, but with God’s help we will rebuild,’ the Rev. Djokan Majstorovic, the congregation’s leader, told Crain’s. How it will rebuild is another story. The church’s stone exterior and now-destroyed roof were designated a city landmark in 1968. But the parish has air rights: A deal to sell 200,000 square feet to Madison Equities fell through in 2014. The developer claimed the church's broker had not been disclosed, but a lawsuit faulting St. Sava was dismissed.” (Crain’s New York Business)
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