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10 Must Reads for the CRE Industry Today (May 3, 2017)

HUD Secretary Ben Carson’s plan for affordable housing is to not make it too comfortable, reports The New York Times. CNBC looks at how self-driving cars will impact the real estate sector. These are among today’s must reads from around the commercial real estate industry.

  1. Ben Carson Wants to Make Housing Available. Just Not Too Comfy.Ben Carson does not like the creature comforts, at least not for low-income Americans reliant on the government for a helping hand. As he toured facilities for the poor in Ohio last week, Mr. Carson, the neurosurgeon-turned-housing secretary, joked that a relatively well-appointed apartment complex for veterans lacked “only pool tables.” He inquired at one stop whether animals were allowed. At yet another, he nodded, plainly happy, as officials explained how they had stacked dozens of bunk beds inside a homeless shelter and purposefully did not provide televisions. Compassion, Mr. Carson explained in an interview, means not giving people “a comfortable setting that would make somebody want to say: ‘I’ll just stay here. They will take care of me.’” (The New York Times)
  2. How self-driving cars will profoundly change real estate “Menlo Ventures managing director Venky Ganesan says that urban spaces will change dramatically once self-driving cars become widespread…Driverless cars could become a reality in five years, and will profoundly affect real estate within eight or nine years. "When the first driverless car is on the road, I think people will start thinking about zoning changes," said Ganesan. Here are some of the changes he and other experts in the field predict: Urban planning. Each urban area will have a hub, but it won't be in the expensive part of town -- it will be in the cheaper part of town, right off the freeway, Ganesan believes. Fewer parking lots. In 2016, in the D.C. area, commercial underground parking garages added 10-12% to the cost of office construction according to CBRE, the world's largest commercial real estate service firm. In residences, each additional parking space increased the cost of development per unit by 25% according to CBRE data. Driverless cars could make these parking lots a relic of the past and save on costs.” (CNBC)
  3. Treasury's Mnuchin Focused on 'Quick' Changes to Dodd-Frank Banking Rules “Treasury Secretary Steve Mnuchin says a report on the impact of Dodd-Frank banking regulations will emphasize improvements that can be made 'relatively quickly,' some through policy shifts and executive orders. "One of the things we're focused on is that we want to make sure that banks have the ability to lend and make loans," Mnuchin said to furious applause at a community bankers gathering in Washington. "We'll be making a series of recommendations to the president. Some of those recommendations are things regulators can do, and some will be things that be done by executive order and others will need legislation.’” (The Street)
  4. A new venture firm focused on real estate has raised $212 million from real estate industry giants “It isn’t easy to find white space in the world of venture capital, where every venture firm must have a specific vision to sell to the universities, pension funds and family offices that tend to fund them. But Brendan Wallace and business partner Brad Greiwe have a fresh pitch, as well as nontraditional investors. Their L.A.-based venture firm, Fifth Wall Ventures, invests in startups that are benefiting from changes in the real estate market, and they turned to the country’s largest real estate companies to fund it. Just some of the heavy-hitting limited partners to contribute to the firm’s $212 million debut fund include CBRE, the brokerage and real estate services giant; Equity Residential, the largest owner of apartments in the U.S.; Hines, a major developer of office buildings in the U.S.; Lowe’s, the home improvement franchise; Host Hotels & Resorts, a real estate investment trust (REIT) spun off from Marriott in 1993; Lennar, one of the nation’s largest home builders; Macerich, which is the third largest mall operator in the U.S.; and the warehouse operator Prologis.” (TechCrunch)
  5. Two buyout firms ‘actively exploring’ deal to buy Staples  “Cerberus Capital Management and Sycamore Partners are the two private equity firms actively exploring an acquisition of Staples, people familiar with the matter said on Tuesday. The office-supplies retailer has held talks with several private equity firms over the last few weeks about a potential deal, the sources said. Cerberus and Sycamore have emerged as the frontrunners, as other prospective buyers have become discouraged by the challenges Staples faces in shifting its business model from serving consumers to catering to companies, the sources added. Clayton Dubilier & Rice LLC , Advent International Corp and Bain Capital LLC are among the private equity firms that have also held discussions with Staples but are now less actively pursuing a deal, according to the sources.” (The New York Post
  6. Bankrupt Gander Mountain acquired “The largest U.S. chain dedicated to recreational vehicles and a group of liquidations have come together to thrown a lifeline of sorts to outdoor retailer Gander Mountain.  Camping World Holdings was chosen as the winning bidder at a bankruptcy auction for certain assets of Gander Mountain and its Overton’s boating business. Under the terms of the deal, Camping World, which is run by Marcus Lemonis, the host of CNBC TV's reality show "The Profit,” is obligated to run 17 of Gander Mountain’s 160 stores as a going concern.” (Chain Store Age
  7. EMMES Nabs OC Towers in $220M Value-Add Deal “An affiliate of The EMMES Group of Companies has acquired Main Plaza, two Class A, 12-story office towers in Irvine, Calif., marking the firm’s return to the Orange County commercial real estate scene. The development also includes two retail pads with restaurants El Torito Grill and McCormick & Schmick’s as tenants. The privately owned real estate services advisory firm did not disclose the amount it paid for the 625,000-square-foot office development but Yardi Matrix data shows that the transaction closed in April for $220 million. The portfolio was sold by San Francisco-based Shorenstein, which had owned the property in the Airport Area submarket since 2008, when it bought the buildings from MPG Office Trust for $211 million, according to Yardi Matrix. The property was part of a $2.9 billion, 24-property portfolio MPG Office Trust acquired from Equity Office Properties Trust in April 2007. Yardi Matrix reported that the acquisition by the EMMES affiliate, EMMES Asset Management, was funded by a $162.1 million loan held by KKR.” (Commercial Property Executive)
  8. Concrete construction on the rise citywide “In the midst of negotiating a 50,000-square-foot office lease at 55 Hudson Yards, executives at The Related Cos. were hit with what should have been an impossible request. Prospective tenant Silver Lake, a $24 billion investment fund, wanted to add an outdoor terrace to the space it was looking to take in the under-construction building. Making such a late-breaking modification would have been a nonstarter if the 51-story tower were being built from steel, the material of choice for most office towers. But 55 Hudson Yards is part of a new wave of properties being constructed with concrete. That allowed Related simply to adjust the mold for Silver Lake’s prospective floors and pour in the concrete to create the balcony. ‘With steel, it takes months to engineer and fabricate, and once you have it, changes are costly,’ said Related’s president, Bruce Beal, who could not comment on the Silver Lake deal, which has been reported but has yet to be signed. ‘Concrete is great. It can be less expensive [and] faster to build with, and if you need to, you can make changes right up to the moment before the pour.’” (Crain’s New York)
  9. What Duke Realty's medical office portfolio sale to Healthcare Trust means for N.C. “Two national real estate investment trusts with a big presence in the Triangle, Duke Realty Corp. and Healthcare Trust of America have reached a mutual agreement for Healthcare Trust to buy all of Duke Realty’s portfolio of medical office buildings across the U.S. for $2.75 billion. The transaction will include three fully occupied, hospital-affiliated medical office buildings in Raleigh and Holly Springs and one in Charlotte, according to company filings… The deal shrinks Duke Realty’s footprint in the Triangle even more as the company focuses its efforts toward expanding its industrial property holdings in the U.S. The Indianapolis-based real estate investment trust, formerly one of the largest office landlords in the Triangle, had in 2015 sold off 26 buildings in the region with a combined value of $520 million to a partnership led by Starwood Capital Group, Trinity Capital Advisors of Charlotte and Vanderbilt Partners.” (Triangle Business Journals)
  10. Arlington Community Changes Hands “A Dallas-based limited-liability corporation has acquired Garden Park Apartments, a 252-unit multifamily community in Arlington, Texas, from a limited-liability corporation from California. Marcus & Millichap represented both parties in the transaction. The Garden Park Apartments consist of floor plans that range from 589-square-foot one-bedroom/one-bath units to 1,065-square-foot two-bedroom townhomes with one-and-one-half baths. Select apartments have wood-burning fireplaces.” (MultiHousing News)
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