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10 Must Reads for the CRE Industry Today (August 9, 2019)

Economist now see a greater possibility of another rate cut in September, reports the Wall Street Journal. Forbes offers real estate investing tips for family offices. These are among today’s must reads from around the commercial real estate industry.

  1. Economists See Greater Chance of a September Rate Cut, WSJ Survey Says “Economists’ expectations for a September Federal Reserve rate cut rose sharply this month, along with their expectations for a recession in the next year. Private-sector economic forecasters surveyed in recent days by The Wall Street Journal on average saw a 63.9% probability for a rate cut at the Fed’s Sept. 17-18 meeting, up from 49.8% in the prior month’s survey. ‘The Fed doesn’t have the tools to fully offset the compound effects of trade wars and weaker growth abroad,’ said Diane Swonk, chief economist at Grant Thornton.” (Wall Street Journal, subscription required)
  2. Old Wonderland Greyhound Track Spurs New Bets: On Real Estate “Developers are lining up to place their bets at the old Wonderland dog track. Yes, the greyhounds stopped racing there a decade ago. This is a new kind of gamble: figuring out the right mix of uses for the 33.6-acre property, and calculating how much to risk on it. Pretty much everyone in Revere wants to know how this will play out, and the high-profile property’s fate could come up during the mayoral race this fall as the incumbent, Brian Arrigo, gears up for a rematch against former mayor Dan Rizzo.” (Boston Globe)
  3. New Fed Rate Pulls Ahead in Race to Replace LIBOR “Federal agencies, banks and investment firms are pushing Wall Street to install their preferred replacement for the London interbank offered rate, the interest-rate benchmark underpinning trillions of dollars in financial contracts. The Treasury Department Wednesday said it was considering floating-rate notes linked to a new rate created by the Fed—known as the secured overnight financing rate, or SOFR. That came after a Federal Reserve Bank of New York working group in July endorsed using SOFR in adjustable-rate mortgages.” (Wall Street Journal, subscription required)
  4. Two Important Real Estate Lessons for the Family Office “Family offices understand the importance of real estate and will continue to use this asset within their portfolio. However, I see too many family offices not maximizing the additional tax benefits that are available to them through real estate investment, nor are they conducting the detailed due diligence that is needed to make the best decisions possible — or perhaps, they may be overlooking the type of sponsors they invest with.” (Forbes)
  5. Does Tokenization Lead to Democratization in Real Estate? “In early 2016 the price of the then relatively unknown blockchain cryptocurrency Bitcoin skyrocketed. Between the non-stop news coverage trying to explain the phenomenon and the freshly minted millionaires flaunting their “Lambos” the whole world’s attention seemed to turn to the promise of the technology. One intrepid publicly traded company, The Long Island Iced Tea Company, was even able to capitalize on the fervor by changing their name to Long Island Blockchain Corp. and saw their stock jump 289%. The real estate industry had a similar fascination with the technology at the time.” (Propmodo)
  6. While Public Seethes Over Trump Donor Ross, Real Estate Industry Shrugs “Hudson Yards developer Stephen Ross is being blasted on social media for the fundraiser he is hosting Friday for President Donald Trump. Some consumers are threatening to boycott Equinox and SoulCycle, fitness businesses owned by Ross’ real estate firm, The Related Companies. And a player on the Miami Dolphins, the NFL football team Ross owns, suggested the billionaire is a hypocrite for backing Trump. But in the New York City real estate industry, where Ross has been a prominent figure for decades, his support for a president deeply unpopular here is being met with shrugs.” (Crain’s New York Business)
  7. Why Retailers Need to Revisit Their Real Estate Strategies “The longstanding formula for ramping up real estate — running a competitor analysis once a year, shuttering the worst of your stores and trying to win some concessions from landlords — needs an update. mNo, Amazon is not destroying all of brick-and-mortar retail in one fell swoop. The truth is that stores that fail to resonate with today's customers are the likeliest to run into trouble. Nevertheless, the market is changing in ways that call for new approaches to retail portfolios — especially among chains that expanded aggressively during the go-go years. Below are four steps toward ramping up real estate productivity.” (Retail Dive)
  8. Here's How Much Space $1,000 in Rent Will Get You in 11 Major U.S. Cities “Business Insider teamed up with Zillow's rental site, HotPads, to find out just how much space around $1,000 in rent will get you across 11 major US cities. To compile the data, Joshua Clark, an economist at HotPads, analyzed all rentals that were uploaded to HotPads' or Zillow's databases within the last three months for roughly $1,000 per month. By calculating the median price per square foot in each city, Clark was able to identify how much space you can get for around $1,000 per month in each.” (Business Insider)
  9. Venture Capital and Commercial Real Estate “Venture capital is changing commercial real estate at an astonishing pace. GlobeSt.com recently caught up with Andrea Jang, head of growth Americas for JLL Spark, to gain insight on how venture capitalists choose what to fund, how their funding will change CRE, and how to keep pace with the changes. The topics we focused on will be part of a larger breakout session she will serve as a panelist on at the upcoming CREW Network Convention and Marketplace here in Orlando, Fl.” (GlobeSt.com)
  10. These Companies Are Trying to Predict What Climate Change Will Do to Real Estate Investments “Investors are turning to a new breed of high-tech start-ups that can measure the risk climate change poses to real estate — from an hour to decades into the future. And these firms count major corporations and cities as clients. One of them is Jupiter. Launched barely three years ago, the Silicon Valley-based company already has over $40 million in investor capital from firms including Energize Ventures, Ignition Partners and Data Collective.” (CNBC)
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