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10 Must Reads for the CRE Industry Today (October 4, 2017)

The Amazon deal is working out for Whole Foods, according to the New York Post. MarketWatch looks at the 10 best cities with low apartment rents. These are among today’s must reads from around the commercial real estate industry.

  1. Whole Foods Dominating the Competition since Amazon Takeover “Whole Foods is feasting on its competitors’ customers — with Trader Joe’s shoppers defecting at the highest rate, according to a new report. In the first week of the Amazon takeover in late August and lowered prices, the upscale grocer gained nearly 10 percent of the scrappy German-owned grocer’s customers compared with a year ago, according to a report by Thasos Group, a research company, which tracked shoppers’ mobile phone location data.” (New York Post)
  2. Retail Real Estate Holds Steady Despite Store Closures “The increase in store closures across the U.S. this year has had only a moderate impact on national retail vacancy rates and rents, a new report shows. Vacancy rates in shopping centers rose in 34 of 77 U.S. metro areas in the third quarter from the same period a year earlier, according to data from real-estate researcher Reis Inc. That was an improvement from the second quarter, when 39 metro areas recorded year-over-year increases.” (Wall Street Journal, subscription required)
  3. Off-Price Retailers Are Starting to Cannibalize Themselves “Off-price retail, an area of the retail sector that has been a bright spot at a time when many others are facing hurdles, is facing a few challenges of its own, driven in part by its own footprint. Moody’s analysts led by Christina Boni note signs of slowing in the off-price sector, even as they think it will continue to outperform full-line, full-price department stores like Macy’s Inc. and J.C. Penney Co. Inc., which are looking for ways to drive traffic and sales.” (MarketWatch)
  4. Notorious Manhattan Slumlord Steve Croman Gets One Year at Rikers for Fraud Charges “For years notorious Manhattan landlord Steve Croman has dodged accusations that he engaged in aggressive harassment campaigns to force rent-regulated tenants out so he could charge higher rents. Early Tuesday Croman finally faced the music when he was sentenced by a judge to one year behind bars on Rikers Island for multiple tax and mortgage fraud charges related to many of his 140 Manhattan buildings.” (New York Daily News)
  5. 5 REITs to Help You Sleep at Night “I just finished the October edition of the Forbes Real Estate Investor and included in the upcoming issue is a detailed analysis of some of the most reliable dividend payers in the REIT universe. To filter out the ‘best from the rest’ I decided to select the REITs with the best dividend growth record. In addition, I opted to select the REITs with the highest dividend growth forecasted over the next few years.” (Forbes)
  6. 10 Cities Where the Pay Is Good and the Rent Is Cheap “For this list, we turned to a recent report by Glassdoor, which looked at salaries and housing costs for the 50 most populated metro areas across the US. With that data, Glassdoor determined each city’s cost-of-living ratio—the median annual base salary divided by the median home value. The results show that where you live and how much you make are directly related.” (MarketWatch)
  7. Rescuing 2 Herald Square “Two Herald Square is waiting for its white knight, but some are wondering whether its most likely savior is having second thoughts about a rescue. The 11-story building — which sits on Broadway between 34th and 35th streets — is teetering on the brink of foreclosure. In July, a New York State Supreme Court judge gave the Paramount Group, which owns the preferred equity in the building, the green light to close on its planned bid to take control of the pricey leasehold on the property.” (The Real Deal)
  8. Office Depot Makes $1 Billion Acquisition “Office Depot took a first step toward its goal of transforming itself from a traditional office products retailer to a broader business services and technology products platform. The company announced it has entered into a definitive agreement to acquire CompuCom Systems, a provider of IT services, products and solutions that enable the digital workplace for enterprise, small and midsize businesses, from private equity firm Thomas H. Lee Partners. The transaction is put at approximately $1 billion.” (Chain Store Age)
  9. Venture Capitalists Are Betting Big on Real Estate Tech “While the Great Recession did a lot of harm to the US real estate market, start ups in the sector are finally making a come back. Real estate technology companies are finally getting some major attention from venture capitalists, according to data from PitchBook. After a near dry-spell from 2009 to 2012, investors are starting to show faith that real estate tech is a worthy investment. At least two startups have already hit unicorn status with a $1 billion valuation —  Opendoor, which does online real estate sales, and Compass, which is an online brokerage.” (Business Insider)
  10. Net Lease Cap Rates Trend Lower “Single-tenant net lease cap rates in the third quarter of 2017 decreased across all asset classes when compared to the previous quarter. Cap rates for retail properties decreased by 12 basis points to 6.11 percent, representing the lowest level in the net lease retail sector since the third quarter of 2016, when cap rates were at a historical low of 6.10 percent. Cap rates for net lease office and industrial properties decreased by 16 and 10 basis points to 6.98 percent and 7.27 percent, respectively.” (Commercial Property Executive)
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