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10 Must Reads for the CRE Industry Today (August 23, 2019)

Fed Chair Jerome Powell says central bank faces limitations in countering the impact of the administration’s trade wars, reports The New York Times. Mini-stores are working out for Target, according to CNBC. These are among today’s must reads from around the commercial real estate industry.

  1. As Trump Calls for Cuts, Powell Stresses Limits of Fed Policy “Federal Reserve Chair Jerome H. Powell on Friday kept future interest rate cuts squarely on the table but suggested the central bank is limited in its ability to counteract President Trump’s trade policies, which are stoking uncertainty and posing risks to the economic outlook. ‘While monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rule book for international trade,’ Mr. Powell, speaking in Jackson, Wyo., said at the Federal Reserve Bank of Kansas City’s annual symposium.” (The New York Times)
  2. Simon Property Group Wants to be More Than Just a Mall Operator “As stores close and space becomes available at malls, real estate operators typically have just sought to replace the vacating tenants with new ones. While Simon still does this in most cases, it has been breaking the mold with what it calls ‘densification’ projects to add new types of businesses at its malls. Listed in Simon Property Group's press release for its second quarter 2019 earnings are more than 20 projects seeking to turn areas formerly occupied by retail stores into hotels, offices, and residences.” (The Motley Fool)
  3. Chinese Owner Secures $1.1B Loan Against Lower Manhattan Office Tower “Chinese real estate investment firm Fosun International is negotiating to take a huge mortgage against 28 Liberty St., sources said. After an unsuccessful attempt to sell an ownership stake in the building last year, the deal will allow the firm to potentially reap hundreds of millions of dollars.” (Crain’s New York Business)
  4. Don’t Worry, That Big Hole Near the Dallas Galleria Isn’t Abandoned “A big hole sitting empty near Dallas' Galleria has folks wondering what's up with a planned high-rise project. The huge excavation on Noel Road north of the Galleria was dug to make way for a luxury hotel tower. The building groundbreaking was back in February. But work stopped on the project several months ago and nothing much is going on at the site.” (Dallas Morning News)
  5. Economic Momentum, Monetary Policy Sustain Commercial Real Estate Pricing in U.S. “According to global property advisor CBRE, an advantageous balance of moderate growth, low inflation, and falling long-term interest rates in the U.S. kept capitalization rates for commercial real estate assets broadly stable in the first half of 2019. The CBRE North America Cap Rate Survey found that multifamily and industrial cap rates tightened the most in H1 2019, while office, retail and hotel cap rate movements were more modest. Continued cap rate stability is expected in the remainder of 2019, with the hotel sector experiencing the most mixed sentiment.” (World Property Journal)
  6. CRE’s Top 10 Issues: A Deeper Dive “Counselors of Real Estate chair Julie Melander takes a more intensive look into the key issues impacting the commercial real estate industry this year. She examines the issues with the greatest surprise factor and the biggest impact—and offers advice to prepare for what’s to come.” (Commercial Property Executive)
  7. GameStop Spikes After Investor Michael Burry Goes Long on Video Game Retailer “GameStop shares jumped more than 11% Thursday after Barron's published a report in which famed investor Michael Burry said that he is long the video game retailer despite the stock's 75% decline over the past 12 months. Burry said he believes that GameStop's ‘balance sheet is actually in very good shape,’ and that ‘they will have the cash flow to justify a much higher share price,’ according to Barron's. ‘Technical factors driving the stock to lows has created an opportunity for substantial buybacks at below private market prices,’ Burry said.” (The Street)
  8. The Cursed Legacy of the Most Expensive Plot of Land in Los Angeles “A giant vacant lot that sits atop Beverly Hills, known as both “The Mountain” and “The Vineyard,” finally sold this week after sitting on the market for a year — not for the billion dollars at which it was initially priced but for $100,000, in foreclosure, to a lone bidder. It’s an oddity in the Los Angeles real estate scene. Despite the fact that this city is in a housing crisis, with homelessness at record highs and home prices (and rent) far outpacing what the average Angeleno can afford, there are still plenty of billionaires around the world to whom this 157-acre plot could have appealed.” (The New York Times)
  9. Target Has Opened 100 Mini Stores and Remodeled 500 Big Ones. And It’s Paying Off “Target is surpassing major milestones this week on its store investments, days after the retailer reported earnings that blew past analysts’ estimates and sent its shares surging to new highs. Target announced Friday it has opened its 100th small-format location and finished remodeling its 500th location since it unveiled a $7 billion investment plan in 2017.” (CNBC)
  10. Is Your Real Estate Firm Cyber Safe? “Aside from phishing scams, more cases are emerging and are far more alarming, including ransomware, wire fraud, and, even, controlling equipment used on-site in the construction process to cause harm. Last year, a study commissioned by Bromium, a company that protects brand, data and people using virtualization-based security, estimated that the cybercrime economy has grown to $1.5 trillion dollars annually.” (D Magazine)
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