10 Must Reads for the CRE Industry Today (December 13, 2018)

Economists have scaled down their interest rate increase projections to two next year, reports the Wall Street Journal. President Trump plans to steer more spending toward Opportunity Zones, according to The New York Times. These are among today’s must reads from around the commercial real estate industry.

  1. Economists Scale Back Their Projections for Fed Rate Increases “Private economists tempered their expectations for the path of interest rates next year in a new Wall Street Journal survey, and many foresee the Federal Reserve cutting rates starting in 2020. All but one of the 60 economists polled expect the Fed to raise its benchmark federal-funds rate next week to a range between 2.25% and 2.5%. But they dialed back their median forecast for 2019, calling for two rate increases next year rather than the three they expected when surveyed last month.” (Wall Street Journal, subscription required)
  2. Trump to Steer More Money to ‘Opportunity Zones’ “President Trump will direct federal agencies on Wednesday to steer spending toward certain distressed communities across the country — part of his administration’s push to turn a tax break included in last year’s $1.5 trillion tax package into a broader effort to combat poverty and geographic inequality. Mr. Trump plans to sign an executive order at the White House that will push federal resources to so-called opportunity zones — a small but lucrative provision tucked into his signature tax cut that in recent months has vaulted to prominence among real estate developers and other investors.” (The New York Times)
  3. Where a Single-Family House and 100+ Luxury Apartments Cost the Same “A suburban-style house might not seem like much of a trophy property, but what if it were situated in New York City? According to an analysis by real-estate firm NeighborhoodX, a 2,000-square-foot home on a 0.21-acre lot in Manhattan’s Chelsea neighborhood would cost around $61 million. At $60 million for the land, the cost of the house itself ($708,000 based on construction costs of around $354 per square foot according to figures from real-estate consultancy Turner & Townsend) is basically a ‘rounding error,’ says Constantine Valhouli, director of research for NeighborhoodX.” (Wall Street Journal, subscription required)
  4. Los Angeles Passes Regulation Targeting Airbnb and Other Short-Term Rental Services “An ordinance that would add new regulations for short-term rental housing on Airbnb and other home-sharing platforms was approved Tuesday by the Los Angeles City Council. The ordinance would limit short-term rentals to people renting out their primary residence for home sharing and prohibit apartment conversions into what some have called ‘rogue hotels.’ The regulation defines a primary residence as one where the host lives onsite for at least six months.” (CNBC)
  5. Understanding the Nuances of the Hotel Real Estate Investment “Owning a lodging property differs from owning any other type of commercial real estate. Hotels are operating businesses housed in the bricks and mortar of real estate. Hotel owners in the U.S. not only own the real estate, but typically own and oversee the hospitality business housed inside as well. Owners also ultimately control all improvements on the site, such as the building itself.” (Forbes)
  6. 5 Things Landlords Should Do to Protect Themselves from Natural Disasters “The devastating wildfires that recently swept through parts of California — killing nearly scores of people and causing untold billions in property damage — are just part of the story for those who live in affected areas. The truth is, even though the Camp Fire in the northern part of the state is now 100% contained, the challenges for local residents are just getting started. Once the damages are tallied, there will be lives to rebuild, insurance payments to sort out and communities to re-establish.” (MarketWatch)
  7. Scrounging for Cash, NYHCA to Sell Off Air Rights, Turn Over Management of 62,000 Units to Private Developer “Facing the possibility that the Housing Authority will be placed into receivership on his watch, Mayor de Blasio Wednesday will announced a new plan he says will raise enough cash to address three-quarters of NYCHA’s $32 billion in needed upgrades. The plan – the second one proposed by de Blasio’s since he arrived at City Hall in 2014 – would raise $23.7 billion, leaving only an $8.1 billion gap. But it would rely on a steady stream of federal funding from the subsidy-averse Trump administration, millions in state funds promised by Gov. Cuomo and more than $2 billion from the city as part of a consent decree that has been rejected by a federal judge.” (New York Daily News)
  8. 13 Clear Signs of a Smart Real Estate Investment “Most prospective real estate investors can spot red flags indicating a bad investment — a long listing time, steadily declining asking prices, high neighborhood turnover, etc. But what about "green flags"? Signals that an investment might be promising are just as important to consider, and you don't want to overlook them when you're hunting for a great real estate deal. We asked a panel of Forbes Real Estate Council members what aspects of a property or neighborhood they would consider a sign of positive investment potential. Their best answers are below.” (Forbes)
  9. A Look Inside Starbucks’ Newest Reserve Roastery in New York City “Nestled in the meatpacking district between Chelsea Market and Google's New York offices is Starbucks' latest Roastery. Set to open on Friday, the nearly 23,000-square-foot space is far from the typical Starbucks store. Bathed in warm light and teeming with copper features, the Roastery is a cozy haven for coffee fanatics looking to not only get their caffeine fix, but get an up close and personal experience with Starbucks' roasters, baristas and craft mixologists.” (CNBC)
  10. 18 Commercial Real Estate Trends to Dominate in 2019 “Goodbye 2018, hello 2019! As the new year approaches, Bisnow spoke with several industry execs, researchers and economists to uncover the major trends expected to dominate the commercial real estate industry in the coming year. From the rise of opportunity zones to a slowdown in industrial absorption, these are 18 trends experts forecast for 2019.” (Bisnow)
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