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10 Must Reads for the CRE Industry Today (July 18, 2018)

Values in alternative property sectors, such as student housing, continued to rise over the past year, the Wall Street Journal reports. The Trump Organization has been paying property taxes late, according to The Washington Post. These are among today’s must reads from around the commercial real estate industry.

  1. U.S. Commercial Property Values Surge in Niche Sectors “Student housing, manufactured homes and industrial property were the top performing commercial real-estate sectors in the past 12 months, according to new data from Green Street Advisors. These three sectors outperformed the broader commercial property market, which saw values remain flat between June 2017 and the end of the first half of this year. Meanwhile, values fell 10% in the hard-hit retail sector during the 12-month period, according to Newport Beach, Calif.-based Green Street.” (Wall Street Journal, subscription required)
  2. U.S. Housing Starts Plunge 12% in June to a Nine-Month Low “U.S. homebuilding fell to a nine-month low in June and permits declined for a third straight month, dealing a blow to the housing market as it struggles with an acute shortage of properties available for sale. Housing starts tumbled 12.3 percent to a seasonally adjusted annual rate of 1.173 million units last month, the Commerce Department said on Wednesday. That was the lowest level since September 2017.” (CNBC)
  3. ‘It’s Just Not Wise’: In Past Year, Trump’s Company Repeatedly Paid Property Taxes Late “President Trump’s company missed deadlines to pay property-tax bills in five states over the past year — and those delays cost the company $61,800 extra in penalties, interest and missed discounts, according to government records and local officials. This spate of missed deadlines was out of character for the Trump Organization, which receives hundreds of property-tax bills every year. Previously, records show, it had a good record of paying them on time. But records show that between last November and this April, Trump’s company failed to pay property taxes on time in New Jersey, New York, Illinois and California.” (The Washington Post)
  4. Gap Sues Westfield Mall Over Expenses as Tensions Rise in Retail World “Gap Inc. is suing high-end-mall operator Westfield for allegedly overcharging the fashion retailer in an action that underscores the sometimes-tense relationship between landlords and tenants as e-commerce transforms the retail sector. Other well-known U.S. retailers, such as Starbucks and Saks Fifth Avenue, have duked it out with landlords in court recently as they’ve sought to trim costs amidst a glut of shopping-center space.” (Wall Street Journal, subscription required)
  5. Less Than 20% of Apartments Are Affordable for Middle-Income Black Renters “Millions of Americans rent because they can’t afford to buy. And many of those people struggle to pay the rent, new research suggests, more so if they are African-American or Hispanic. A renter who earned $39,647 per year, the median black household income in the U.S., could afford just 16.2% of rentals available on Zillow Z, +1.38% if they kept their housing costs below 30% of their pretax income, according to a new analysis from the real-estate company.” (MarketWatch)
  6. Money360 Is the Latest Bridge Lender to Tap CRE CLO Market “Money360 joins a growing list of ‘transitional’ or ‘bridge’ lenders tapping the commercial mortgage bond market for financing. The firm’s inaugural transaction, M360 2018-CRE1, will initially be collateralized by 48 mortgages with a total balance of $329.7 million, according to Kroll Bond Rating Agency. That represents over half of the lender's $517.7 million of assets under management.” (Asset Securitization Report, subscription required)
  7. Petco Tries to ‘Amazon-Proof’ its Business with New Store “Petco is trying to Amazon-proof its business. Time will tell if the strategy really works. The privately held pet-goods retailer has just opened a new service-focused store that aims to give shoppers something they can't buy online. A pilot location opened this past Friday in San Marcos, California. Called PetCoach, it offers grooming, training, veterinary care, dog walking and more to pet parents, in addition to a limited assortment of products.” (CNBC)
  8. Seattle Could Make a Dent in Housing Crisis With its Own Property “The City of Seattle has a terrific opportunity to build hundreds of affordable apartments on two full blocks of surplus public land in the heart of South Lake Union. This opportunity for much needed workforce housing has emerged unexpectedly, and we should seize it. Olympia recently passed House Bill 2382, allowing local governments to transfer surplus property for affordable housing. The high cost of land has been a barrier to affordable housing in our city. This new law removes that barrier, allowing the city to transfer surplus land for free, or below market price, specifically for the development of affordable housing.” (Crosscut)
  9. Q&A: Georgia’s Supercharged Data Center Ecosystem “The state of Georgia is in for a surge of data center development, well on its way to becoming a top-tier market for IT providers and operators. In May, the Georgia General Assembly passed House Bill 696, aimed directly at data center developers and operators, four years after several large companies, along with the Technology Association of Georgia (TAG), started working on updating the state’s legislation. Governor Nathan Deal signed on the new sales and use tax bill which came into effect on June 1 and will expire in 10 years.” (Commercial Property Executive)
  10. The Death of Rollout: Reframing Retail Expansion “As the planned store closures by Starbucks and Chipotle makes clear, the pendulum certainly seems to have swung away from the growth of store counts simply for growth’s sake. With traditional retail rollout models in their waning days, here are a few considerations to keep in mind.” (Chain Store Age)
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