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10 Must Reads for the CRE Industry Today (August 1, 2017)

Los Angeles won the bid to host 2028 Summer Olympics, reports CNBC. Banks are tightening lending on commercial real estate properties, according to Reuters. These are among today’s must reads from around the commercial real estate industry.

  1. Los Angeles Strikes Deal to Host 2028 Summer Olympics: Source “Los Angeles has reached an agreement to host the Olympics in the summer of 2028 instead of 2024, a source familiar with the negotiations tells CNBC. Los Angeles was bidding to host the 2024 games. Then in June, the International Olympic Committee decided that with two strong candidates, Los Angeles and Paris, it would give one city the 2024 games and the other the 2028 games.” (CNBC)
  2. Chinese Overseas Real Estate Buying Spree Slows, Delayed by Tightened Capital Controls “Tighter capital controls and a slowing domestic Chinese economy are making it harder for Chinese to buy property overseas. A recent report by Chinese property search portal Juwai estimated that outbound real estate investment by Chinese companies and individuals would drop by as much as 20% this year to $80 billion, down from $101.4 billion last year. Overall, Chinese outbound investment dropped nearly 46% to $48.19 billion in the first half of the year, according to data released by China’s Ministry of Commerce, after hitting a record high in 2016.” (Forbes)
  3. Banks Tightened Lending Standards for Commercial Real Estate in Second Quarter: Fed “Loan officers at U.S. banks reported tightening lending standards on commercial real estate loans while terms for business loans remained largely unchanged, the Federal Reserve reported on Monday in a quarterly survey. The officers surveyed also reported a weakening in demand for both types of loans in the second quarter. ‘A moderate net fraction of banks reported tightening standards for construction and land development loans and loans secured by multifamily residential properties’ in commercial real estate, the U.S. central bank said in its survey.” (Reuters)
  4. For Some, Home Ownership Not Part of Their American Dream “Remember when the dream of every American was to own their own home? It wasn’t, all things considered, all that long ago. In a speech back in 2002, then president George W. Bush pinned the hopes of a nation on it. ‘We can put light where there’s darkness, and hope where there’s despondency in this country,’ he said in a speech on minority homeownership in October of that year. ‘And part of it is working together as a nation to encourage folks to own their own home.’” (Forbes)
  5. Four Major U.S. Cities Ring Housing Bubble Alarm “Home price gains are accelerating again, and in some cities those values are overheating. Four of the nation's largest cities are now considered overvalued, according to CoreLogic. Home prices in Denver, Houston, Miami and the Washington, D.C., metropolitan area now exceed sustainable levels. To determine if a market is overvalued, CoreLogic compares current prices to their long-run, sustainable levels, which are supported by local economic fundamentals like disposable income. An overvalued market is one in which home prices are at least 10 percent higher than that level.” (CNBC)
  6. Foxconn Announces $10B Wisconsin Campus “Taiwan-based Foxconn, the largest electronics manufacturing services provider in the world, has selected the Badger State for the location of a cutting-edge manufacturing plant and technology campus, in which Foxconn will invest $10 billion by 2020. The campus, to be called Wisconn Valley, will be built in Southeastern Wisconsin and result in the creation of 12,000 new positions, 10,000 construction jobs and an additional 22,000 indirect jobs. Foxconn will use the location to manufacture 8K LCD screens that will be utilized in industries ranging from entertainment to self-driving cars to healthcare.” (Commercial Property Executive)
  7. Tour the Obscure California City That’s Suddenly the Hottest Housing Market in America “Vallejo, California, a small city across the bay from San Francisco, was named the hottest housing market in America by in June. It's the last place that many Bay Area locals might expect to take the title. Vallejo, which briefly hosted the state capital between 1852 and 1853, became the largest city in California to declare bankruptcy in 2008. Its reputation for crime and squalor has previously landed the "’Up Bay’ city on Forbes' list of most miserable cities and Newsweek's list of dying cities.” (Business Insider)
  8. Home Furnishings Chain Adds New Hotel Location “West Elm is expanding its hotel portfolio — even before it opens its first location. The retailer, a division of Williams-Sonoma, announced Portland, Maine as the newest location for its West Elm Hotels collection. Expected to open in 2020, the 150 room, full-service boutique hotel  will be developed on Portland’s waterfront by Portland Foreside Development Company LLC, and operated by hotel development and management company DDK, which is West Elm Hotels’ exclusive operator.” (Chain Store Age)
  9. There Are No Good Guys in This Cutthroat Real Estate Battle “In a 57th Street struggle without heroes, landlord Sheldon Solow and the owners of Metropolitan Arts & Antiques have locked tusks over his bid to evict the store, which just pleaded guilty to illegally trying to sell $4.5 million in elephant ivory — the largest such haul in city history. The antiques shop also happens to be the last tenant preventing Solow from razing the building it’s in, 10 W. 57th St., to make room for a 54-story condo/hotel tower.” (New York Post)
  10. Growing Inventory Caps Rent Growth in Austin “Austin’s economy is strong and population is booming, but a heavy new supply of apartments is limiting rent growth. Rents in the metro were flat year-over-year compared to a 1.5 percent national growth rate as of May. The metro attracts Millennials to its urban core, as well as Baby Boomers retiring to the Texas Hill Country. However, with more than 16,000 units under construction, Yardi Matrix forecasts a modest rent growth of 1.1 percent in 2017, as the heavy new supply is absorbed.” (Commercial Property Executive)
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