10 Must Reads for the CRE Industry Today (January 6, 2016)

10 Must Reads for the CRE Industry Today (January 6, 2016)


  1. U.S. Apartment Vacancies Climb as New Buildings Crowd the Market “U.S. apartment vacancies rose in the fourth quarter as a construction surge in pricier urban locations overshadowed rising demand for older properties in the suburbs, Reis Inc. said. The national vacancy rate averaged 4.4 percent in the three months through December, up from 4.3 percent a year earlier and in the third quarter, the New York-based research company said Tuesday. Vacancies rose from the previous three months for a second straight quarter -- the first time that’s happened since 2009.” (Bloomberg)
  2. Why the Best Investment in 2016 Might Be Global Real Estate “Market consensus now has equities flat to negative in 2016. Much of it is due to rate hikes and an end of QE in the U.S. After that, China and oil are to blame for everything else. It’s hard to find an equity bull except at the value funds. Bonds? Forget about it. Outside of a handful of emerging market local currency debt, global bond fund managers are bracing for a drought. So where’s the safe haven with a plausible return on investment this year? For Colliers International, 2016 is the year of real estate.” (Forbes)
  3. Commercial Developers Build Small to Score Big “A growing number of builders have seized on what they believe is an underserved segment of the city’s office market: pint-size, yet deep-pocketed tenants who want to be in new, high-end buildings tailored to their diminutive footprints. At least six developers are constructing or readying to break ground on boutique office properties. The buildings are generally smaller than 200,000 square feet, a fraction of the size of recently opened 1 World Trade Center, which is 3 million square feet, or the 2.6 million-square-foot office skyscraper rising at 30 Hudson Yards.” (Crain’s New York Business)
  4. Why More Retailers Could Default in 2016 “Last year was grim for retailers. This year could be even worse. Despite a late surge in holiday sales, companies like J. Crew Group Inc. and 99 Cents Only Stores are struggling under debt they took on in leveraged buyouts years ago. Their bond prices have plummeted -- in some cases to as little as 25 cents on the dollar -- as investors brace for possible defaults. The industry has been limping along for a while now due to a variety of forces.” (Bloomberg)
  5. Behind a Shopping Center in New Jersey, Signs of Mass Extinction “Behind a Lowe’s home improvement store here, scientists are methodically scraping and sifting through a quarry pit that may contain unique insights to the mass extinction that eliminated the dinosaurs. Back then, about 66 million years ago, the oceans were higher, and this part of southern New Jersey was a shallow sea, 10 to 15 miles offshore from an ancient mountain range that rose from the water.” (New York Times)
  6. Sears: Auto Centers Reveal Big Picture Problems for Company “We believe that many investors have artificially inflated the value of Sears by valuing the real estate of Sears independent of the underlying retail business. Because Sears continues to lose money the net asset valuation calculations used by investors fail to account for these ongoing losses, and thus their calculations might be artificially high.” (Seeking Alpha)
  7. The City That Shelly Built “Sheldon Silver may have had just one vote, but a “no” from him carried more weight than any other politician in the state legislature. For developers, it could be the kiss of death. The former state Assembly speaker — who was recently convicted on federal corruption charges involving $4 million in kickbacks — was one of the three most powerful men in Albany, along with the governor and Senate majority leader.” (The Real Deal)
  8. U.S. Home Prices Forecasted to Uptick 5.4 Percent in the Coming Year “According to CoreLogic's Home Price Index (HPI) for November 2015, U.S. home prices are up both year-over-year and month-over-month. U.S. home prices nationwide, including distressed sales, increased by 6.3 percent in November 2015 compared with November 2014 and increased by 0.5 percent in November 2015 compared with October 2015, according to the CoreLogic HPI.” (World Property Journal)
  9. New Mixed-Use Development Planned Across from Westin Book Cadillac Downtown “If you’ve been outside the Westin Book Cadillac Hotel in the past year or so, you’ve likely noticed the building directly across the street and its colorful, distinctive artwork that wraps around its first floor. You can expect to say goodbye to it soon, developer Richard Karp told me this morning. He plans to tear the building down to make way for a mixed-use development with a multifamily component.” (Crain’s Detroit Business)
  10. Do Brokerage Alliances Matter? “Both Sotheby’s and its main rival, Christie’s, have real estate ties – Christie’s via affiliated firms like Brown Harris Stevens in New York, and Sotheby’s through wholly-owned offices as well as affiliated brokerages. These affiliations are touted by property brokerage chiefs as an elite referral network that can generate buyer and seller leads and result in lucrative property sales. ‘The same people who buy important art buy important real estate,’ Hall Willkie, president of BHS, said in a promotional video on Christie’s website.” (The Real Deal)
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