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10 Must Reads for the CRE Industry Today (October 2, 2017)

Struggles in securing financing, Toys ‘R’ Us bankruptcy might derail Nordstrom’s plans to go private, reports the New York Post. Amazon could be to blame for the low rate of inflation, according to The Street. These are among today’s must reads from around the commercial real estate industry.

  1. Talks to Take Nordstrom Private Are Faltering “Discussions to take Nordstrom private are in danger of falling apart. The family behind the Seattle-based retailer — which stunned Wall Street in June when it announced it was exploring a possible buyout — has since struggled to cobble together the financing and may not be able to close the deal, estimated to be worth upwards of $10 billion, sources told The Post. Jitters about dwindling mall traffic dogged discussions throughout the summer, but the surprise bankruptcy filing of Toys ‘R’ Us on Sept. 23 added to the anxiety among lenders and the Nordstroms alike, insiders said.” (New York Post)
  2. Forest City Sells Ownership Interest in 10 Malls to QIC as Part of a $3.2 Billion Deal “Forest City Realty Trust Inc. announced Monday a deal in which QIC will buy its ownership interest in 10 regional malls, in a deal that values the malls at $3.2 billion. Forest City's share of the malls is $1.55 billion. The sale of six of the malls, which are located in Denver, Yonkers, NY, Tampa, Fla., Pittsburgh, Palmdale, Calif. and Redondo Beach, Calif., are expected to close by the end of the year. The other four malls are located in Rancho Cucamonga, Calif., Henderson, Nev., Temecula, Calif. and Richmond, VA.” (MarketWatch)
  3. California Will Charge New Fees on Real Estate Deals to Pay for Affordable Housing “California will enact new fees on real-estate transactions and ask voters to approve a $4 billion bond measure on next year’s ballot, among other measures aimed at creating more affordable housing. The bond measure and the new fees—intended to pay for new affordable housing units and homes for veterans—are part of a package of 15 bills that California Gov. Jerry Brown signed into law Friday.” (The Wall Street Journal, subscription required)
  4. Amazon Effects One Cause of Low U.S. Inflation, According to Goldman Sachs “Goldman Sachs Group Inc. economists partly blame e-commerce giant Amazon.com Inc. for low U.S. inflation. Over the past six months, ‘many investors worry that structural drags in the retail sector will prevent a return to the Fed's 2% target,’ Goldman Sachs chief economist Jan Hatzius wrote Saturday, Sept. 30. One potential culprit is the ‘Amazon effect,’ through which bricks-and-mortar retailers are forced to ‘cut prices in a desperate bid to stay alive’ to compete with online retailers and their increasingly large market share.” (The Street)
  5. Here are the Retailers Opting to Stay Closed on Thanksgiving This Year “With weeks still to go until Halloween, many retailers have already made plans ahead of the all-important Black Friday — a day to hypothetically turn from unprofitable, in the red, to profitable, in the black. In recent years, though, there's been a trend toward companies trying to squeeze as many sales out of the holiday weekend as possible, opting to remain open the day before, on Thanksgiving. The so-called creep from Friday to Thursday began in 2010, when department store chain Sears opened on Thanksgiving.” (CNBC)
  6. Some Advice in This Crazy Commercial Real Estate Market “This commercial real estate market reminds me of an open bag of potato chips — with 98.5 percent of them eaten. The full chips are consumed — functional buildings with good owner motivation, priced aggressively but still within reason. What remains are the remnants of the whole crunch — dysfunctional, overpriced locations with zero owner motivation to meet the market and make a deal! A normal ebb and flow of availabilities and interested buyers have been usurped with feeding frenzies and bidding wars.” (Orange County Register)
  7. Toys ‘R’ Us Has a Plan to Save Itself and It’s Unreal “All you have to do to feel the rush of racing a truck, watch wildlife while on safari, and nab a shark while fishing is head over to your local Toys R Us store. Just don't forget your smartphone. Two weeks after filing for bankruptcy protection, the toy giant is debuting an augmented reality experience that it hopes will help reinvigorate its stores and make them destinations for shoppers who might otherwise choose to shop online.” (USA Today)
  8. Phoenix: Maintaining Momentum in the Desert “Outpacing the country in job creation and population growth, Phoenix is appealing to multifamily developers and investors looking for opportunities in second-tier markets. Although rent growth decelerated in the first half of 2017, rents rose by 3.4 percent year-over-year through July, which is still well above the 2.6 percent national average. Employment growth is diversified, with leisure and hospitality, education and health services, and professional and business services occupying top positions in the number of jobs added.” (Commercial Property Executive)
  9. Starbucks Closes Online Store to Focus on In-Person Experience “As customers increasingly shift their retail shopping toward e-commerce, Starbucks is bucking the trend: It shuttered its online store on Sunday. The company posted a notice in late August on its online store notifying shoppers that the site would soon close. The digital store stocked items like Starbucks coffee and branded mugs and tumblers, along with a selection of espresso machines, brewing tools and other accessories.” (The New York Times)
  10. Majestic Realty Buys 228-Acre Wisconsin Development Site “Acting on behalf of Rime Investments LLP, Transwestern recently orchestrated the sale of the former Dairyland Greyhound Park, a 228-acre site in Kenosha, Wis., to Majestic Realty Co. All parties involved in the Southeastern Wisconsin trade are remaining mum on the transaction price. The investment community was more than a little keen on the opportunity at 5522 104th Ave.” (Commercial Property Executive)
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