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10 Must Reads for the CRE Industry Today (August 15, 2019)

The inverted yield curve could make another interest rate cut more likely, reports CNBC. AT&T has set an October auction for 37 surplus properties, according to Telecompaper. These are among today’s stories from around the commercial real estate industry.

  1. Recession Signal Could Put More Pressure on the Fed to Keep Cutting Rates “A red-flashing recession indicator in the bond market only adds to the pressure the Federal Reserve will face when it meets next month to deliver what markets anticipate will be another rate cut. The spread between yields on the two- and 10-year Treasurys flipped Wednesday morning as the shorter-duration debt rose above the level of the benchmark rate. That’s a classic recession indicator, predicting the past seven periods of negative U.S. growth.” (CNBC)
  2. AT&T Surplus Real Estate Auction Set for October "AT&T will sell 37 real estate properties this fall through Williams & Williams, a specialist in global live and interactive real estate auctions. The assets are located in nine states and are selling in a combination of on-site and online auctions organised between 16 and 25 October. Williams & Williams will conduct the auctions in conjunction with strategic broker partner JLL. AT&T is offering each property separately for auction and most will come with leaseback deals in place. The properties include industrial and office, and several have potential for significant redevelopment." (Telecompaper)
  3. Manhattan, Brooklyn Rents Soar to New Heights “Manhattan and Brooklyn rents in July surged to their highest levels in at least a decade, turning the hunt for an apartment into a madcap ordeal for some renters. In Brooklyn the median rent rose to $3,000 a month, a record. Manhattan rents hit $3,595 a month, which was only $100 a month below the record set in February 2009, according to a market report by Douglas Elliman Real Estate. Rising rents reflect a reduction in the number of apartments available in new developments during a period of strong job growth, said Nancy Packes, a rental market consultant.” (Wall Street Journal, subscription required)
  4. Macy’s Teams Up with Google to Help Run its Warehouses “Macy’s has six so-called mega centers in the U.S., fulfilling customers’ online orders directly to their homes, and then 16 fulfillment centers servicing its stores. Google is already helping to power the supply chains of other retailers including Kohl’s, Home Depot and Target. At the core, Google assists with managing merchandise and keeping items in stock, while ensuring deliveries arrive on time. It uses data analytics and other algorithms it’s created to do this.” (CNBC)
  5. Ridgecrest Earthquake Swayed L.A. Skyscraper More Than 1 Foot in Each Direction “If you were sitting in the lobby of one particular downtown Los Angeles skyscraper when energy from the magnitude 7.1 Ridgecrest earthquake arrived, you might have felt a few seconds of light shaking. But up on the 50th floor, the experience was terrifying. The building — equipped on each floor with seismic sensors — swayed back and forth for perhaps two to three minutes and as much as one foot in each direction, said Caltech research professor of civil engineering Monica Kohler.” (KTLA)
  6. Dallas Skyscraper Owner’s Austin Offices Raided by FBI “Austin-based investor World Class Holdings bought downtown Dallas' 34-story 717 N. Harwood office tower in 2014. The company has done other deals in North Texas, too. On Wednesday agents of the FBI raided World Class Holdings' downtown Austin office and were seen removing documents and other materials from the firm, according to reports from The Austin American-Statesman and other local media.” (Dallas Morning News)
  7. These REIT Sectors Often Outperform After the Yield Curve Inverts “The yield curve’s inversion on Wednesday spooked the stock market. Real-estate investment trusts held up a little better—and, if history is any indicator, some could be in for a period of outperformance. On Wednesday, the yield of the 10-year U.S. Treasury note dropped below that of the 2-year note in a frequent recession indicator known as an inverted yield curve. Most of the time the curve is upward sloping, with yields on longer-term holdings above those of shorter-term ones.” (Barron’s, subscription required)
  8. J.C. Penney Follows Macy’s in Offering Used Apparel from ThredUp “ThredUp's brick-and-mortar strategy appears to be centered on partnerships with major retail chains. In addition to Macy's and now J.C. Penney, the secondhand apparel purveyor sells clothing through Stage Stores. Like Macy's CEO Jeff Gennette, who told analysts on Wednesday that ThredUp will help the retailer offer labels it doesn't normally sell and is a way to attract younger customers interested in the value and sustainability interest in buying secondhand, J.C. Penney Chief Merchant Michelle Wlazlo noted the rise of resale in her statement Thursday.” (Retail Dive)
  9. Jeffrey Epstein’s Curious Ties to His Brother’s Real Estate Business “Last month, Mark told Crain’s New York that he had no business connection to his brother, but documents show that Mark’s real-estate business, Ossa Properties, is linked to J. Epstein & Co., the company through which Jeffrey managed retail billionaire Leslie Wexner’s assets. The person in charge of running Ossa Properties, Jonathan Barrett, was also an asset manager for J. Epstein & Co. Mark told Crain’s that the connection between the two companies was “a mistake,” reminiscent of the “recording error” that linked private-equity tycoon Leon Black’s foundation to Jeffrey years after he was convicted of soliciting a minor for prostitution in Florida.” (New York Magazine)
  10. Stockbridge Scores $350M Financing for Logistics Deal “Stockbridge Capital Group has landed $350 million in financing to acquire a 26-property industrial portfolio comprising 6.3 million square feet across nine markets in the U.S., with most of the properties located on the West Coast. The seller was San Diego-based Westcore Properties, which did not disclose a sale price. An Eastdil Secured team of Stephen Silk, Jay Borzi and Adam Pastor represented Westcore Properties in the deal, while Stockbridge represented itself.” (Commercial Property Executive)
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