10 Must Reads for the CRE Industry Today (December 5, 2017)

The Wall Street Journal looks at the success of Dollar General with rural consumers. Fortune predicts that CVS stores will soon look like health clinics. These are among today’s must reads from around the commercial real estate industry.

  1. How Dollar General Became Rural America’s Store of Choice “The local Dollar General store, built on a rural highway and surrounded by farmland, sells no fresh meat, greens or fruit. Yet the 7,400-square-foot steel-sided store has most of what Eddie Watson needs. The selection echoes a suburban drugstore chain, from shower curtains to breakfast cereal, toilet paper, plastic toys and camouflage-pattern socks. Refrigerators and freezers on one wall hold milk, eggs and frozen pizza.” (Wall Street Journal, subscription required)
  2. The GOP is Set to Eliminate One of the Biggest Benefits of Owning a Home “If the House's plan to cut the mortgage interest deduction to the first $500,000 of a loan becomes law, it would remove the benefit for new homeowners in many high-cost markets. The share of recent purchase loans between $500,000 and $1 million, which would benefit from deductions under current law, is as high as 48% in San Francisco, 38% in Los Angeles, and 22% in the Washington DC area, Hale said. ‘For some of those homebuyers, the lack of those deductions might mean it makes sense to buy a home, or it doesn't make sense to buy a home,’ Hale said.” (Business Insider)
  3. Your Local CVS Drugstore Will Soon Look More Like a Health Clinic “One of the rationales behind the blockbuster $69 billion CVS Health -Aetna merger announced on Sunday is to help the drugstore giant make better use of its thousands of stores that dot the country. At 9,700 pharmacy locations, including those within Target stores, CVS has a sprawling footprint with which to offer customers everything from drug prescription pickup to health consultations to toilet paper. Once the Aetna deal closes sometime in 2018, assuming it passes muster with regulators, customers are likely to see more health clinic-style services at CVS stores.” (Fortune)
  4. Real Estate Developer Woodbridge Group Files for Bankruptcy “Real-estate developer Woodbridge Group of Companies has filed for chapter 11 bankruptcy protection as it grapples with questions about its fundraising practices from the Securities and Exchange Commission. The bankruptcy filing means thousands of individual investors, including retirees that helped finance Woodbridge’s real estate dealings, are at risk of losing hundreds of millions of dollars in Woodbridge’s chapter 11 case.” (Wall Street Journal, subscription required)
  5. Office Towers Beef Up Amenities to Lure Picky Tenants “Office leasing in the city remains balanced with healthy concessions but good rents. Large tenants continue to firm up new locations, while smaller ones are actively making deals for a plethora of sizes, shapes and terms. Geography is less focused as tenants seriously consider space in all neighborhoods. Lower Manhattan is continuing to attract diverse firms. ‘The initial primary motivator was price, and now the decisions are being made because of the neighborhood,’ says John Wheeler, managing director of JLL.” (New York Post)
  6. Retail Reality: It’s Death in the Middle “Most of the retailers that have recently made their way to the retail graveyard or find themselves at the precipice, suffer from a decided lack of relevance and remarkability. They have decent prices, but not the best price. They have some service, but nothing to get excited about. Their product assortments and presentations are drowning in a sea of sameness. The overall experience is dull, dull, dull. It's not surprising that a quick perusal of a store closing tracker features names like Sears, JC Penney, Macy's and Radio Shack.” (Forbes)
  7. Here’s How Much EB-5 Money SL Green Wants for One Vanderbilt “SL Green Realty is considering raising more than $200 million in EB-5 funding to help fund construction of One Vanderbilt, the company said during its annual investor conference Monday. The real estate investment trust called the visa-for-cash program an ‘interesting, incrementally positive source of financing for this project.’ Last year, a syndicate led by Wells Fargo committed to funding the $3.1 billion project with a $1.5 billion construction loan. And in January, the National Pension Service of Korea bought a minority stake, pumping $525 million into the building.” (The Real Deal)
  8. 3 REITs About to Surge on Retiring Boomers “It’s the biggest demographic tidal wave ever to sweep the US. And today I’m going to give you 3 quick ways to profit from it. I’m talking about the retirement of the baby boomers—60,000 of whom are clocking out of the workforce every day. And if you’ve been reading my columns, you know I’ve been banging the drum on the most obvious way to cash in: by investing in real estate investment trusts (REITs) that own senior-care facilities. But that’s not the only way.” (Forbes)
  9. From Bezos to Walton, Big Investors Back Fund for ‘Flyover’ Start-Ups “Mr. Case and Mr. Vance hope to seed investments in start-ups in underserved cities and then bring in some of their big names to invest even more money in them. ‘We’ll be curating interesting companies,’ Mr. Case said. In other words, if they discover a nascent but promising e-commerce company in Allentown, Pa., they will not only invest in it, but they might also help it establish a relationship with one of the fund’s investors — Mr. Bezos, for example — who might invest even more.” (The New York Times)
  10. Worsening Housing Affordability in U.S. Costs Renters $2,000 per Year “According to Zillow, rising U.S. housing rents are eating up an increasingly large share of American incomes, costing the typical renter $2,000 per year. Currently, the median U.S. rental requires 29.1 percent of the median monthly income. However, in the years leading up to the housing bubble, renters spent just 25.8 percent of their income on housing. That means renters are spending $1,957 more on rent in 2017 than they would be if the percentage had remained the same.” (World Property Journal)
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