10 Must Reads for the CRE Industry Today (October 5, 2016)

10 Must Reads for the CRE Industry Today (October 5, 2016)

 

  1. 5 cool places in America you can live well on less than $40,000 a year “Housing and health-care costs are on the rise and seniors didn’t get a Social Security cost-of-living increase this year, which means that many retirees struggle to afford their lifestyle. But in some cities, it’s easier to live the life you want than in others, according to AARP The Magazine, which on Wednesday released its new list of cities where retirees can live well for under $40,000. The magazine worked with city research site Sperling’s Best Places to compile this list, looking at factors like cost of living, tax rate, unemployment rate, housing cost, crime rate, access to good doctors and hospitals, access to outdoor recreation, and access to educational and cultural institutions.” (MarketWatch)
  2. How Donald Trump and other real-estate developers pay almost nothing in taxes “Donald Trump might have been able to avoid paying taxes on as much as $916 million in income over an 18-year period, according to documents the New York Times published over the weekend. The figure is a sensational one, but the Republican presidential nominee would be far from the only real-estate magnate to find ways of exploiting the rules to cancel tax bills. The average firm in real estate development pays just over 1 percent of its income in taxes, according to data compiled by Aswath Damodaran, a professor at New York University. The average for all the industries in Damodaran's database is almost 11 percent.” (The Washington Post)
  3. The next Big Short? “J. Kyle Bass is famous for predicting the U.S. housing crisis and making millions of dollars shorting subprime mortgage bonds in 2008. So when the hedge fund manager announced this February that he shorted the obscure residential real estate investment trust United Development Funding IV, its other investors apparently decided it was best to get out of the way. Within a day of Bass publishing an open letter announcing his short, the Dallas-based REIT’s share price had dropped by 30 percent. Within a week, those shares had fallen by 69 percent and then stopped trading entirely after the FBI raided the headquarters of its parent company. The hedge fund manager had won again. Bass, who accused UDF of running a Ponzi scheme, wasn’t betting against any particular submarket, let alone the real estate industry as a whole. But his bet stands for something broader — that shorting real estate is increasingly back in vogue.” (The Real Deal)
  4. PetSmart in growth spurt “The retailer opened 11 new stores in the U.S. and Canada for the quarter ending Aug. 1, 2016. This adds to the 12 new stores it opened in the first quarter, bringing the total for the year to 23. PetSmart is on track to achieve its goal of 80 net new stores in 2016. The new stores average around 14,000 sq. ft., with service offerings such as grooming and pet training. ‘We continue to identify opportunities for growth in North America,’ said Brian Amkraut, senior VP of real estate, strategy and initiatives, PetSmart. ‘New store locations provide us with the ability to increase customer convenience and improve our competitive position.’ PetSmart operates 1,477 stores in the U.S., Canada, Puerto Rico and 203 in-store PetSmart PetsHotel dog and cat boarding facilities.
  5. How Wal-Mart is eating Target’s lunch in the U.S. “Moody’s Investors Service is offering Target Corp. some food for thought Tuesday in a report that highlights the advantage Wal-Mart Stores Inc.’s U.S. business enjoys over its smaller rival in the size and scale of its grocery business. Wal-Mart is making progress against Target as investments of the past several years begin to show results, according to a new report from the rating agency. Both retailers have grappled with some big challenges in recent years, said Moody’s. Target is still repairing its reputation after a massive credit-card breach in 2013 and its abrupt decision to withdraw from Canada at a cost of $5.4 billion in 2015.” (MarketWatch)
  6. Sears' Shares Are Soaring After a Report of Craftsman Bidders “It’s the stock’s biggest jump in two years. Sears Holdings’ sales may have declined in recent years, but some of its assets remain prized. The struggling retailer’s stock rose as much as 20% on Tuesday after Bloomberg reported that Sears’ Craftsman tool business has attracted bidders, including big names like Stanley Black & Decker and Hong Kong’s Techtronic Industries, the maker of Dirt Devil vacuum cleaners. Bloomberg also reported that the business could be worth as much as $2 billion. A Sears spokesman declined to comment to Fortune.” (Fortune)
  7. Economy Watch: Multifamily Gains in Mixed Bag for Construction Spending “The Census Bureau reported on Monday that U.S. construction spending during August came in at an annualized rate of $1,142.2 billion, or 0.7 percent below the July total. The August 2016 figure is also 0.3 percent below the August 2015 total. What’s dragging down the totals? There was a bit less private construction in August, 0.3 percent compared to the previous month. But more important, the rate of public construction spending in August was 2 percent below July. Year over year, public construction spending lagged even more, dropping 8.8 percent compared with August 2015. Private construction spending, by contrast, was up 3.3 percent year over year. In the private sphere, construction spending was a mixed bag in August. Multifamily, which tends to be volatile, swung upward by 2.4 percent. Office construction was up 2.3 percent, and hotel construction gained 1.5 percent. Spending on single-family housing, manufacturing, and other commercial projects (including warehouses) all lost ground.” (MultiHousing News)
  8. More condos at South Park's megaproject Metropolis are now up for grabs “The massive $1 billion Metropolis development is quickly rising just one block away from LA Live. The second of four planned towers topped out at 40 floors Friday, and the developer has launched sales for its 514 condos, which include a mix of studios and one- and two-bedroom units. Wedged between the 110 freeway and Francisco Street, Metropolis is the largest mixed-use project under construction right now in Los Angeles. Metropolis sits on 6 acres and is expected to be completed by 2018. The complex will hold 1,500 condos across three residential towers, plus an 18-story hotel, 65,000 square feet of retail space, 3.5 acres of "sky parks," and public art installations by Susan Narduli and Refik Anadol. KPCC has reported that about one-third of the condos might be sold to foreign investors. The developer, Greenland Holding Group, which has a major business presence in China, is actively marketing the project in Asia and anticipates more than 30 percent of its sales to be made to be overseas buyers.” (Los Angeles Curbed)
  9. Target Swings Open The Doors To A Trendy New Store In Downtown New York CityTarget can now call bustling downtown Manhattan home. On Wednesday, the discount retailer, known for its cheap chic apparel and home goods, will swing open the doors to a two-floor, 45,000 square foot store in the Tribeca neighborhood of New York City. Target refers to the store as "flexible format", which is basically one that hawks a highly edited assortment of apparel and home goods and offers more grab and go food such as prepared sandwiches that cater to city dwellers. The Tribeca store will be the second flexible format location to open in New York City following the July debut of one in Forest Hills, Queens. In total, Target now has 26 of the smaller store formats scattered across the country in areas such as Chicago and Philadelphia, and plans to open several more, including in Downtown Brooklyn, later this year. TheStreet's Brian Sozzi reports from inside the new location.” (The Street)
  10. A record year for D-FW office leasing and construction? Strong third quarter helped “The North Texas office market is headed for a record leasing year in 2016. Expanding and relocating companies fueled net office leasing of 1.7 million square feet in the just-completed third quarter, according to a new report from commercial real estate firm CBRE. Through the first nine months of the year, net leasing has totaled about 4.5 million square feet — close to what was rented in all of last year. Office leasing in the area is at the highest volume in more than a decade. ‘There is a great deal of momentum in the market. I spend a lot of time explaining how this cycle is very unique to Dallas-Fort Worth,’ said Robert Kramp, CBRE's director of research and analysis. ‘It has become a hotbed of corporate expansions and relocations.’” (Dallas News)
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