Crocker Galleria David Yu

10 Must Reads for the CRE Industry Today (February 20, 2019)

Investment banks and money managers are raising tens of billions of dollars for opportunity zone funds, reports The New York Times. Forbes looks at 14 things necessary for success in real estate development. These are among today’s must reads from around the commercial real estate industry.

  1. Wall Street, Seeking Big Tax Breaks, Sets Sights on Distressed Main Streets “Hedge funds, investment banks and money managers are trying to raise tens of billions of dollars this year for so-called opportunity funds, a creation of President Trump’s 2017 tax package meant to steer money to poor areas by offering potentially large tax breaks. Little noticed at first, the provision has unleashed a flurry of investment activity by wealthy families, some of Wall Street’s biggest investors and other investors who want to put money into projects ostensibly meant to help struggling Americans.” (The New York Times)
  2. Fed’s Loretta Mester Sees Interest Rates Slightly Higher This Year “The president of the Federal Reserve Bank of Cleveland said Tuesday that interest rates will likely rise slightly this year, assuming the economy grows at the healthy clip she anticipates. ‘If the economy performs along the lines that I’ve outlined as most likely, the fed-funds rate may need to move a bit higher than current levels,’ said Cleveland Fed President Loretta Mester in a speech at the University of Delaware, referring to the central bank’s benchmark policy rate.” (Wall Street Journal, subscription required)
  3. Park Avenue’s Lever House CMBS Loan Lost $68.3M: Report “The CMBS loan backing Lever House at 390 Park Ave. lost $68.3 million, the financial advisory firm Trepp reported on Tuesday. The loan was sold for $12.8 million, below the most recent valuation of the “collateral” of $14.9 million and down from $150 million in 2005. ‘This has value from a nuisance point of view, and someone could come in and buy [the lease] for $20 million,’ suggested Manus Clancy of Trepp.” (New York Post)
  4. SF’s 1982-Era Crocker Galleria Mall Seeks Facelift in Bid for New Shops “The owners of the 1982-era Crocker Galleria mall in San Francisco want to revamp the Financial District property with an updated exterior, open-air restaurant space and new staircases. Developers hope the $30 million in proposed renovations will help the three-story property at 50 Post St. attract local food vendors and shops.” (San Francisco Chronicle)
  5. Marijuana Tax in New Jersey? It Could Be $42 an Ounce “Gov. Philip D. Murphy and Democratic legislative leaders in New Jersey have reached an agreement that could place the state on a path to legalizing recreational marijuana this year if they are able to win enough support in the state legislature.       The agreement, which establishes how marijuana would be taxed and sets parameters on a committee to regulate the drug, marks a significant step forward for Mr. Murphy’s promise to introduce the roughly $50 billion national recreational cannabis market to a major population center on the East Coast and on New York City’s doorstep.” (The New York Times)
  6. New to Real Estate Development? 14 Things You Need to Know to Build Success “Like most industries, real estate has changed over the years. If new real estate developers want to be successful, they must not only get a feel for what the current market values, they must stay aware of — and plan for — future changes in what people look for in a property. This might seem intimidating, but with the right guidance, people getting established in the industry can start off on the right foot and establish a name for themselves.” (Forbes)
  7. Dog Days Aren’t Over for Pet Store Rivals “Private-equity firms bought America’s two biggest pet-store owners within months of each other. One spent billions to boost its online business by acquiring the top internet pet retailer. The other focused on getting people back in stores. About three years later, neither strategy is a clear winner. PetSmart Inc., which acquired for $3.35 billion in 2017, is struggling to pay down debt as growth has slowed at the e-commerce company. Petco Animal Supplies Inc., which is dedicating more of its stores to grooming and other services customers can’t get online, said it returned to growth in late 2018 after a stretch of declines.” (Wall Street Journal, subscription required)
  8. TIAA’s Nuveen Real Estate Plans Massive Expansion in Multifamily Market “Nuveen Real Estate, a global real estate investment manager owned by TIAA, is planning a significant expansion of its multifamily real estate business in the U.S. Nuveen announced this week that it launching what it calls the “U.S. Cities Multifamily Fund,” a real estate investment vehicle that will acquire and manage multifamily rental properties in the U.S. The fund just closed on its first investment round, which raised $550 million to invest in multifamily real estate.” (Housing Wire)
  9. Charlotte Russe May Go the Way of Toys ‘R’ Us in March If Buyer Can’t Be Found “Charlotte Russe, the bankrupt women's clothing chain, is talking to potential buyers, but if a winning bid doesn't emerge, it expects to start shutting down its stores and operations in early March. As it discusses a sale that could keep it in business, the San Diego-based company said Tuesday that it asked for court approval of a team that could oversee its possible liquidation. A tentative timeline has potential bids being offered by March 3, then an auction would occur two days later.” (USA Today)
  10. Construction Outlook Calls for Continued Momentum “Despite concerns about tariffs, rising costs, labor shortages and deteriorating macroeconomic conditions, JLL’s Construction Outlook for 2019 predicts strong construction momentum will continue in the first half of the year from 2018. Last year, there was a 5.1 percent increase in total construction value and a 4.5 percent increase in employment, thanks to the robust U.S. economy.” (Commercial Property Executive)
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