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10 Must Reads for the CRE Industry Today (August 19, 2019)

The New York Times looks at what it would take to bring about a recession next year. The U.S. Department of Housing and Urban Development to investigate whether San Francisco violated non-discrimination laws, reports the San Francisco Chronicle. These are among today’s must reads from around the commercial real estate industry.

  1. How the Recession of 2020 Could Happen “These three things are all true: The United States almost certainly isn’t in a recession right now. It may well avoid one for the foreseeable future. But the chances that the nation will fall into recession have increased sharply in the last two weeks. That is the unmistakable message that global investors in the bond market are sending. Longer-term interest rates have plunged since the end of July — a shift that historically tends to predict slower growth, interest rate cuts from the Federal Reserve, and a heightened risk that the economy slips into outright contraction.” (The New York Times)
  2. Feds Open Investigation into SF Affordable Housing Policies “The U.S. Department of Housing and Urban Development has opened an investigation into whether San Francisco’s housing policies violate federal nondiscrimination laws. The agency’s probe appears broad in scope, but according to documents obtained by The Chronicle, the investigation will focus on policies around affordable housing development.” (San Francisco Chronicle)
  3. Danish PM: The Idea of Trump Buying Greenland Is ‘Absurd’ “Greenland is not for sale and U.S. President Donald Trump's idea of buying the semi-autonomous Danish territory in the Arctic from Denmark is ‘an absurd discussion,’ Denmark's prime minister said. Mette Frederiksen, who was visiting the world's largest island to meet Premier Kim Kielsen, told reporters: ‘Greenland is not Danish. Greenland is Greenlandic. I persistently hope that this is not something that is seriously meant.’” (Associated Press)
  4. Real Estate Roundtable Survey: Q3 Sentiment Balanced and Stable “Commercial real estate industry leaders continue to see balanced and stable economic market conditions, according to The Real Estate Roundtable’s 2019 Q3 Sentiment Index. The latest survey registered a score of 50, a one-point decrease from the previous quarter. Both the Current-Conditions Index of 53 and Future-Conditions Index of 48 for this quarter remained the same from the previous quarter, reflecting the stabilized real estate market conditions and the overall economy.” (Connect Commercial Real Estate)
  5. Starwood Property Closes $1.1B CRE CLO “Starwood Property Trust closes a $1.1B managed commercial real estate collateralized loan obligtation, the largest CRE CLO issued since the financial crisis. Named STWD 2019-FL1, the CRE CLO accretively finances interests in 21 loans with an 85.125% initial advance rate at a weighted average coupon at issuance of L+1.34%, before transaction costs.” (Seeking Alpha)
  6. Fitness Spending Is Flying High, but a Recession Could Hit Boutique Brands First “As quickly as retail storefronts are disappearing, specialty fitness studios are appearing. There are now more fitness options than ever — from big box gyms, to boutique studios, to streaming classes and even virtual reality workouts. So it’s no surprise that more people than ever are spending more than ever on fitness. A record 71.5 million consumers used close to 40,000 for-profit health clubs in 2018, according to the International Health, Racquet & Sportsclub Association. The number of individual members totaled 62.5 million, up 2.6% from 2017.” (CNBC)
  7. Downtown Oakland Businesses Strain Under Weight of Apartment Building Boom “A slab of steak sizzled on the grill at Molcajete, a Mexican restaurant in downtown Oakland, as Manuel Torres grabbed tortilla mix from the refrigerator. The rumble of construction outside drowned out the clanking of pots and pans and laughter from the staff. Signs on the front door reading “Construction Worker Specials” were barely visible on Webster Street from across sidewalk barricades — and weren’t drawing many hard hats into the nearly empty restaurant.” (San Francisco Chronicle)
  8. Nordstrom Did So Much Right, But It’s Still in Trouble “Nordstrom Inc. invested heavily in e-commerce, didn’t open too many cavernous stores and has been quick to experiment with new types of shopping formats, including stores that don’t carry any clothes. Yet, it’s suffering the same fate as department stores that innovated less, with year-over-year sales and profits expected to fall for the second consecutive quarter when it reports results on Wednesday. Its stock is the second-worst performing in the S&P 500 retail index behind shares of Macy’s Inc., falling 52% over the past 12 months through Friday’s close. During that period, the index was roughly flat.” (Wall Street Journal, subscription required)
  9. $250M Manhattan Tech Hub Breaks Ground “The New York City Economic Development Corp. and RAL Development Services has broken ground on an expansive tech center in Union Square. The 240,000-square-foot building is expected to be completed next year. Located at 124 E. 14th St., the Union Square Tech Training Center is the result of the local community working alongside the city’s administration and the tech industry to create a resource that can bolster the tech talent in New York City. The plans for this $250 million tech hub was first revealed in February 2017.” (Commercial Property Executive)
  10. Avison Young Adds Flexible Office Solutions Leader “Shortly after appointing a new president for its Canada division, Avison Young selected Charlie Morris to lead its flexible office solutions practice. The newly appointed executive will report directly to CEO Mark Rose and will be responsible for the platform’s national development and management, as well as its global expansion in the future. He will also work on upgrading the practice’s processes and technologies with Chief Innovation Officer John Sikaitis.” (Commercial Property Executive)
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