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10 Must Reads for the CRE Industry Today (January 3, 2019)

If Eddie Lampert’s offer to buy out Sears is rejected, he plans to bid for the company’s real estate, reports the Wall Street Journal. Fortune looks at how Detroit became a model for successful urban renewal. These are among today’s must reads from around the commercial real estate industry.

  1. Investors Are Betting That the Fed Hits Pause on Rate Hikes “Investors are betting that U.S. interest rates will end 2019 no higher than where they started, a sign of diminished confidence in the economy. Fed funds futures, which investors use to bet on the direction of Federal Reserve policy, early Wednesday showed an 87% probability that policy makers will finish the year with interest rates at or below their current level. Those bets represent a dramatic shift in market sentiment. As recently as early November, futures prices were showing a 90% probability that rates would end the year higher in 2019.” (Wall Street Journal, subscription required)
  2. Debunking the Three Myths of Commercial Real Estate Technology “The world of commercial real estate (CRE) is filled with misunderstandings and myths, especially in light of new technology startups that are poised to shift the status quo. To date, three ideas about new CRE tech remain especially pervasive across the industry, yet do little more than conjure fear about tech solutions that are sure to help the industry flourish.” (Forbes)
  3. Lampert to Bid for Sears Real Estate If Rescue Attempt Fails “Sears Chairman Eddie Lampert’s hedge fund, ESL Investments Inc., is interested in scooping up Sears Holdings Corp.’s real estate for $1.8 billion if its offer to buy the company out of bankruptcy as a going concern fails, Sears disclosed in a filing on Wednesday. The billionaire’s hedge fund, which had controlled Sears, last week made a $4.4 billion bid to carve out a chunk of Sears stores and keep them open.” (Wall Street Journal, subscription required)
  4. How Detroit Became a Model for Urban Renewal “Imagine a bustling downtown filled with inviting shops, restaurants, and happy patrons. Just a few blocks away sit neighborhoods with dilapidated houses, buildings, and vacant lots, high unemployment and high poverty rates. This isn’t the story of any one city. In fact, we see this playing out in far too many urban areas across the U.S. and around the world. Some of the wealthiest cities with vibrant and growing economies have neighborhoods that are struggling from lack of investment, jobs, education, and training.” (Fortune)
  5. As Retail Withers, Bay Area Gyms Flex Their Muscles “Bay Area residents who have resolved to work out more in 2019 have plenty of options. National chains and boutique studios alike are bulking up with new locations, fueled by health-conscious customers with growing appetites for tangible experiences, according to operators and retail experts. Fitness operators signed 28 San Francisco leases from 2016 to 2018, according to real estate firms Cushman & Wakefield and CoStar.” (San Francisco Chronicle)
  6. Loop Office Tower Trading for Double 2015 Price “A pair of real estate investors that renovated and leased up a 28-story Loop office tower are selling it for twice as much as they paid in 2015. A joint venture of Rosemont-based White Oak Realty Partners and New York-based Angelo Gordon has reached a deal to sell 200 W. Jackson Blvd. to a venture of New York Life Real Estate Investors for around $150 million, according to sources familiar with the agreement.” (Crain’s Chicago Business)
  7. More People Moved Out of This State Than Any Other in America “New Jersey residents are on the outs with their state. More people moved out of the Garden State in 2018 than any other state, according to a new study by United Van Lines – though New York wasn’t far behind. New Jersey, which topped the list of the ‘most moved from’ states, was followed by Illinois, Connecticut and the Empire State, the moving company’s study found.” (New York Post)
  8. 3 High-Quality REITs to Buy Right Now “The fourth quarter has been anything but smooth sailing. After most major U.S. stock market indices came into the quarter at or near the highs, they've been assaulted by volatility as their prices were hammered. After putting in a low on Christmas Eve, the S&P 500 has been working on putting in a bottom. However, it still fell almost 15% for the quarter. That's a tough pill for bulls to swallow and has set up an interesting start to 2019. However, there have been some areas where investors have been able to park their money and protect themselves from some of the downside.” (The Street)
  9. Five Ways to Increase Profits on Your Investment Property “Choosing to invest in a rental property is a great way to generate a regular income and build equity in a relatively safe and easy manner. There are many ways for real estate investors to see exceptional returns on their investment, especially with the right know-how and a careful eye. Monitoring your investment’s performance and making changes as you go is the best way to maintain profitability and achieve your financial goals. Here are five simple ways to help you increase profits at your investment properties.” (Forbes)
  10. Bricks-and-Mortar Retail Is Dead? Don’t Tell Hot Online Brands Rushing to Open Stores, Often in Chicago “Four days before Christmas, athletic apparel retailer Outdoor Voices opened a store in Chicago’s Ranch Triangle neighborhood. It should feel at home among neighbors like Bonobos, Warby Parker and Marine Layer. All are within a block of one another, and all began as online retailers before opening bricks-and-mortar stores. Soon, Outdoor Voices will be sandwiched between two more: home goods brand Parachute to the east and shoe retailer Allbirds to the west. Parachute opened temporarily for the holidays, but both plan to open their permanent stores this spring.” (Chicago Tribune)
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