10 Must Reads for the CRE Industry Today (September 27, 2016) Photo by Anthony Behar-Pool/Getty Images

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

 

  1. Incumbency Bodes Well for the Real Estate Market “The presidential election season can be a difficult time for the commercial real estate market. Uncertainty about the future financial and regulatory climate often leaves investors, developers and owners waiting on the sidelines for the outcome of the election. As the 2016 presidential election approaches, we began to wonder whether there is a predictable trend in the commercial real estate market’s reaction to presidential elections. If the post-election market trends over the last thirty years are any indication, it is good to be in the real estate space when the incumbent party remains in the White House. Since 1980, five out of the nine election cycles ended with the incumbent party remaining in power.” (Commercial Property Executive)
  2. Barrack: Rate Hike Good for Overall Real Estate Business  “[Video] Thomas Barrack, founder and executive chairman at Colony Capital, explains why an interest rate hike would benefit the real estate industry and discusses the state of the U.S. real estate market and the availability of mortgages for potential homeowners. He speaks on "Bloomberg GO." (Bloomberg)
  3. German Investor Creates $1B Fund Targeting US Apartments “Hansainvest Hanseatische Investment-GmbH, the asset management arm of Signal Iduna Group, is creating a real estate fund specifically to invest in residential real estate in the United States. The fund—to be known as HANSA US Residential—will be geared towards institutional investors who want a stake in core American residential properties. The target fund volume is $1 billion, with plans for equity of about $500 million. According to HANSA US Residential, the distribution yield for investors is forecast at 4.5 percent. The fund will be traded under the legal form of a German real estate special fund in accordance with the German Capital Investment Code (KAGB).” (MultiHousing News)
  4. Obama hopes to change America through upzoning “It’s not every day that real estate developers find themselves in agreement with the Obama administration. On Monday, the White House released a “toolkit” of economic facts and talking points encouraging local and county governments to overhaul their zoning laws and housing policies. The takeaway? The president wants more development — and higher densities — to combat a nationwide housing shortage that’s dragging down the economy. The report calls out local resistance to development and suggests ways for city and county governments to combat community opposition and NIMBYism. ‘Over the past three decades, local barriers to housing development have intensified,’ the report notes, particularly in areas of high job growth like New York City, San Francisco and Los Angeles. ‘The intensity and impact of such barriers are most evident in the vibrant job-generating regions where fervent demand far outstrips supply.’” (The Real Deal Miami)
  5. The Resurrection of Greenwich Street “A quarter-mile stretch of Greenwich Street disappeared from the map of Lower Manhattan in 1967, then from the face of New York on Sept. 11, 2001. Now, it is reappearing as an important boulevard...The future of Greenwich Street includes a performing arts center in 2020, named for and bankrolled in part by the billionaire businessman Ronald O. Perelman. That will stand opposite 2 World Trade Center, to begin construction when the developer Larry A. Silverstein finds a major tenant. The Cortlandt Street subway station on the No. 1 line, damaged in the 2001 terrorist attack and closed since then, should reopen in two years, with entrances on Greenwich Street. Greenwich Street is also where the last unresolved battle over the future of the World Trade Center is being fought. The city and the Lower Manhattan Development Corporation favor the construction of housing on a parcel known as Site 5, where the Deutsche Bank building stood. The Port Authority of New York and New Jersey believes the site should to be used for offices, a conference center and a hotel.” (The New York Times)
  6. Germany Will Rescue Deutsche Bank If Necessary, Allianz Says “The German government will have to bail out Deutsche Bank AG if its financial situation gets bad enough, Allianz Global Investors AG Chief Investment Officer Andreas Utermann said. ‘I don’t buy at all what’s coming out of Germany in terms of Germany not wanting to step in ultimately if Deutsche Bank was really in trouble ,” Utermann said Monday in a Bloomberg Television interview with Francine Lacqua and Tom Keene. “It’s too important for the German economy.” German officials have tried to shut down talk of a potential rescue for the country’s biggest bank, with Chancellor Angela Merkel’s spokesman Steffen Seibert saying Monday there are “no grounds” for speculation over state funding for the $2 trillion-asset lender. Focus magazine reported Sunday that Merkel has ruled out any state assistance for Deutsche Bank AG as she considers whether to run for a fourth term next year.” (Bloomberg)
  7. U.S. Commercial, Multifamily Mortgage Debt Hits $2.9 Trillion in Mid 2016 “According to the Mortgage Bankers Association's latest Commercial/Multifamily Mortgage Debt Outstanding Report released this week, the level of commercial and multifamily mortgage debt outstanding increased by $39.9 billion in the second quarter of 2016, as three of the four major investor groups increased their holdings. Total commercial/multifamily debt outstanding rose 1.4 percent over the first quarter of 2016 to $2.90 trillion at the end of the second quarter.  Multifamily mortgage debt outstanding rose to $1.09 trillion, an increase of $27.6 billion, or 2.6 percent, from the first quarter of 2016. ‘The amount of commercial and multifamily mortgage debt outstanding grew to a new record during the second quarter, despite a record drop in the balance of CMBS loans outstanding,’ said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  ‘The CMBS market is seeing far more loans paying-off and paying down than new loans being originated.  At the same time, banks, Fannie Mae, Freddie Mac, life companies and others continue to increase their holdings of commercial and multifamily mortgages.’” (World Property Journal)
  8. Economy Watch: Emerging Tech Hot Spots to Enjoy Office Rental Growth “Rental growth for office space isn’t over yet, according to a new report by NGKF (NGKF and Knight Frank’s 2017 Global Cities Report). In some places, that is. Investors will need to focus on emerging tech hot spots around the world to find such growth, with the highest rental growth over the next three years in places where tech companies look to grow by taking advantage of high concentrations of creative talent. U.S. cities are among the top places for emerging tech talent, and thus for rental growth between now and 2019, but Sydney actually leads the pack. Office rents in Australia’s largest city are forecast to increase by 27.5 percent over the three-year period, followed by Berlin and Austin, both of which will experience rental growth of more than 20 percent (25 percent and 24.9 percent, respectively). Rental growth will be less pronounced in mature tech markets such as London (7.1 percent) and San Francisco (5.1 percent).”
  9. Short supply to boost Charleston-area commercial real estate rental prices “Rental prices will continue to escalate as commercial real estate in the Charleston region tightens amid dropping vacancy rates. That’s one of the key takeaways from the 13th annual Commercial Real Estate Market Forecast for the Lowcountry. While apartment demand will continue to accelerate but likely peaked in 2015, the industrial sector is expected to grow and expand at a faster pace than other sectors such as retail, office and multifamily, though they, too, will grow, said Todd Garrett of Avison Young.” (The Post and Courier)
  10. Deputy Mayor Tony Shorris to testify at City Council hearing on Rivington House “First Deputy Mayor Tony Shorris is expected to testify at a City Council hearing Thursday over the city-enabled sale of the Rivington House nursing home to Slate Property Group, Adam America Real Estate and China Vanke in a scandal that’s embroiled Mayor Bill de Blasio’s administration. Shorris is scheduled to attend the hearing, which is expected to be a long and contentious grilling over the scandal, Politico reported. The deputy mayor had previously been interviewed for two and a half hours by an investigator looking into the removal of two deed restrictions by the Department of Citywide Administrative Services that facilitated the $116 million sale in November. During the questioning by the chief of staff to City Comptroller Scott Stringer, Shorris said he was unaware of the details of the deal until it was essentially over.” (The Real Deal)
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