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10 Must Reads for the CRE Industry Today (August 21, 2019)

A New York University professor rips apart WeWork’s valuation, according to Business Insider. Investors are about to take a flight to quality, reports Kiplinger’s. These are among today’s must reads from around the commercial real estate industry.

  1. Banks Want Efficiency. Critics Warn of Backsliding. “A decade after big banks needed government support to dig out of the financial crisis, the Federal Reserve is slowly, but steadily, making a series of regulatory changes that could chip away at new requirements put in place to prevent a repeat of the 2008 meltdown. Some of the changes, seemingly incremental and technical on their own, could add up to a weakening of capital requirements installed in the wake of the crisis to prevent the largest banks from suffering the kind of destabilizing losses that imperiled the United States economy.” (The New York Times)
  2. NYU Professor Calls WeWork ‘WeWTF,’ Says Any Wall Street Analyst Who Believes It’s Worth Over $10 Billion Is ‘Lying, Stupid, or Both’ “In frothy markets, it's easy to enter into a consensual hallucination, with investors and markets, that you're creating value. And it's easy to wallpaper over the shortcomings of the business with a bull market's halcyon: cheap capital. WeWork has brought new meaning to the word wallpaper. This is more reminiscent of the cheap marbled paneling you'd find in Mike Brady's home office — paneling whose mucilaginous coating will dissipate at the first whiff of a recession, revealing a family of raccoons or the mummified corpses of drug mules.” (Business Insider)
  3. The Collective Memory of American Shoppers “Changes in retail spaces — say, new cash registers at the nearest big-box store — are met by most shoppers with a ‘huh,’ if anything. But for some, even the most seemingly minor tweaks are noticed and documented online as part of modern American history. On Facebook and Reddit, private groups and public forums like All Retail, Off the Rack or r/RetailNews are cataloging brick-and-mortar shifts.” (The New York Times)
  4. How Artificial Intelligence Can Help Real Estate Investors Buy and Sell More Intelligently “Artificial intelligence is changing our daily lifestyle and work. It’s hard to find an industry not using machine learning in some capacity to improve business operations. While the real estate space has traditionally been slow to incorporate new technologies, AI’s offerings are turning heads. Tech-based companies are forming to capitalize on the advantages of AI, and corporate brokers and investors are incorporating the technologies to improve customer acquisition leads, satisfaction and service, with the understanding that these programs reduce some of the routine employee tasks and can increase profits.” (Forbes)
  5. Fasten Your Seatbelts: Commercial Real Estate Is Taking a Flight to Quality “The commercial real estate market has been so strong the past few years that property appreciation alone has turned otherwise marginal deals into windfalls. A low-risk/high-return market atmosphere has conditioned today’s real estate investors into believing outsized return metrics are the new normal. But real estate, just like the stock market, has its share of ups and downs. And now, after a period of record highs, softening fundamentals are bringing real estate down for a landing.” (Kiplinger’s)
  6. How a Ukrainian Tycoon Became Cleveland’s Commercial Real Estate Kingpin “The lawsuit, filed in Delaware in May, alleges that Kolomoisky and his colleagues at Ukraine’s PrivatBank utilized a series of American shell companies — many based in Delaware, a haven for foreign money — to launder hundreds of million of dollars through Ohio-based real estate. All told, Kolomoisky’s alleged schemes allowed him and Gennadiy Bogolyubov, who had joined Kolomoisky as a co-owner at Ukraine’s PrivatBank, to become ‘the largest commercial real estate holders in Cleveland, Ohio.’” (ThinkProgress)
  7. This Company Is Changing the Real Estate Investment Game “They say the best investment on earth is earth, but more often than not, only the 1 percent — or anyone who has the capability to cough up millions — gets to have the chance to grow a profit through real estate. But a company called DiversyFund has devised a way to lower the barrier and allow everyone who previously had no access to investing in real estate to create a diversified portfolio of real estate assets. For as little as $500, you can invest in DiversyFund's commercial real estate investment trust (REIT), which is composed of projects personally handpicked by a team of professionals.” (Entrepreneur)
  8. Trump’s Trade War Comes for Consumers: Tariffs Could Cost U.S. Families Up to $1,000 a Year, JP Morgan Forecasts “More than a year into the U.S.-China trade war, American consumers are about to find themselves squarely in the crosshairs for the first time, with households estimated to face up to $1,000 in additional costs each year from tariffs, according to research from JPMorgan Chase. Consumers, whose spending fuels about 70 percent of the U.S. economy, have been largely shielded from previous rounds of tariffs, which have left businesses reeling and upended global supply chain.” (Washington Post)
  9. Back on Campus, Students Confront a Challenging Housing Market “Carla Yanni can’t decide if the most over-the-top student housing amenity she’s seen is the pet-washing station at a LaSalle University dorm or the lazy river winding through an apartment complex near Arizona State. A professor at Rutgers, Yanni did extensive research on the evolution of how and where students live for her new book, ‘Living on Campus: An Architectural History of the American Dormitory.’” (Curbed)
  10. Big Wicker Apartment Project Lands the City in Court “A dispute over a big Wicker Park apartment project has moved from City Hall to the courtroom. The Chicago City Council violated the law by approving the 17-story tower near the intersection of Milwaukee and Ashland avenues and Division Street in April, according to two lawsuits filed against the city. Former Ald. Proco ‘Joe’ Moreno, 1st, who represented the neighborhood until May, slipped a zoning change for the project through a lame-duck council ‘as his parting gift’ to the building’s developer, RDM Development, the suits say.” (Crain’s Chicago Business)
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