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10 Must Reads for the CRE Industry (January 11, 2019)

Amazon is looking at vacant Sears stores as possible Whole Foods locations, reports Yahoo! Finance. MarketWatch examines in which cities it is less expensive to rent an apartment than buy a house. These are among today’s must reads from around the commercial real estate industry.

  1. Starboard Building Stake in MGM Resorts: Sources “Activist hedge fund Starboard Value LP is building a stake in MGM Resorts (MGM.N), two people familiar with the matter said on Thursday, as the U.S. hotel and casino operator comes under investor scrutiny over its profit targets. MGM Resorts is aware of Starboard’s investment, the sources said, asking not to be identified because the matter is confidential. Starboard’s strategy for targeting MGM could not be immediately established. ‘The company does not comment on market rumors,’ MGM Resorts said in a statement. Starboard did not respond to a request for comment.” (Reuters)
  2. Amazon Eyes Closed Sears Stores for Whole Foods Expansion “While some traditional retailers are having a hard time keeping their doors open, Amazon-owned Whole Foods has been gearing up to rapidly expand into more regions. Grocery chain Whole Foods is eyeing sites that were previously home to Sears, Kmart and other struggling retailers, sources told Yahoo Finance. Last month, for instance, Whole Foods managers visited a site in Utah that used to host a Kmart store. The store shut down in mid-2017 among its parent company’s financial woes and has been vacant ever since.” (Yahoo! Finance)
  3. Strong Economy Can’t Save Macy’s from Retail Shifts “The negative sentiment even weighed on discounters like Target Corp. and Costco Wholesale Corp., which reported strong holiday sales. Those chains, which are less dependent on apparel, and Amazon.com Inc. have been taking market share from department stores. Target cited strong demand for toys and baby products along with seasonal gifts. ‘The rising tide of retail sales hasn’t floated all boats,’ said Neil Saunders, managing director of research firm GlobalData. ‘We are seeing a polarization between winners and losers.’” (Wall Street Journal, subscription required)
  4. Here Are the Cities with the Most Indebted Seniors “Hello, San Antonio! Seniors residing in this Texas city have the have the largest non-mortgage debt balances. Those were the findings from a study by LendingTree. The site, an online loan marketplace, analyzed the data of more than 75,000 of its users. Excluding mortgages, residents of San Antonio between 65 and 70 years of age carried a median debt balance of $29,993, LendingTree found. It must be a Texas thing: Austin followed in second place, with older residents had a median debt balance of $26,424.’ (CNBC)
  5. Where It Makes More Sense to Rent Than Buy “A majority of Americans are renting on the cheap — at least, compared to what they’d be paying if they bought a home. In more than half (59%) of housing markets nationwide — 442 of 755 U.S. counties — renting a three-bedroom property is now more affordable than buying a median-priced home, according to a new report from real-estate data firm Attom Data Solutions. Among the 40 counties across the country with more than 1 million residents, only three had housing markets where it was still cheaper to buy a home than rent one: Wayne County (Detroit), Mich.; Philadelphia County, Pa.; and Cuyahoga County, Ohio.” (MarketWatch)
  6. Better Than the Powerball “Winning a spot in one of New York City’s affordable housing lotteries might seem completely out of reach, the stuff of urban legend. But every day across the five boroughs, tens of thousands of New Yorkers play the odds, and a lucky few check their inboxes to discover they have won an affordable new home. For some, the welcome news may have come just months after they first applied, while for others, it may have taken years.’ (The New York Times)
  7. Rental Price Growth Is the Slowest in Nearly Four Years “Rental costs increased at the slowest pace in three and a half years in December, a small bit of happy news for consumers in a housing market that’s seemed relentlessly strained for some time. Nationwide annual rent was up 3.5% compared to a year ago, the Labor Department said Friday. While that’s down only one tick from November, it still counts as the slowest yearly increase since June 2015, and continues a two-year trend of slowing rental price growth.” (MarketWatch)
  8. 11 Commercial Real Estate Lessons to Learn from Amazon’s HQ2 Announcement “In December 2018, Amazon made its long-awaited announcement of where its second headquarters location would be. Much to the competing cities' surprise, the e-commerce giant chose to split ‘HQ2’ between Long Island City, New York and Arlington, Virginia. Since the announcement, there's been much speculation about the impact on the real estate and job markets in these two cities, especially since Amazon is planning to invest $2.5 billion in each location.” (Forbes)
  9. J.P. Morgan JBG Smith Sell DC Office Tower for $385M “Spain-based Ponte Gadea has added The Investment Building, a trophy office property in Washington, D.C., to its holdings. The investment arm of billionaire Amancio Ortega purchased the asset from a joint venture of JP Morgan Asset Management and JBG Smith for $385.4 million. Samantha Ahuja, an attorney with law firm Greenberg Traurig LLP, which represented the buyer in the transaction, described the asset in a prepared statement as an ‘incredible business opportunity.’” (Commercial Property Executive)
  10. CRE Opinion: North Texas Land Absorption Report “For many years, our investments/land division (formerly Novus Realty Advisors, now a division of Younger Partners), has produced a report to assist investors in deciding the viability of acquiring undeveloped land for mid-range and long-term positive returns. Since our 2017 report was distributed, DFW has experienced continued active growth in virtually every commercial and residential product type. As the accompanying exhibits indicate, transaction volume held steady for both user and investment product.” (D Magazine)
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