10 Must Reads for the CRE Industry Today (June 10, 2016)

10 Must Reads for the CRE Industry Today (June 10, 2016)


  1. Get Real: Billions Set to Pour Into Real Estate Investments “A big change is coming in how stock indexes measure the market, one that's likely to push tens of billions of dollars into real estate investments, according to estimates. All that cash could drive further gains for a group of stocks that's already done quite well since the financial crisis. Critics say it could also make an area of the market that they call overvalued even more so. The deluge of cash is the result of a rethink by index providers about how they see the market's construction. The Standard & Poor's 500 and other indexes have long split the market into 10 main sectors, such as technology companies or utilities or industrials. After the market closes on Aug. 31, S&P Dow Jones Indices and MSCI will carve out real estate to become the 11th sector. For investors who own only broad index funds, the change won't mean much. Real estate investment trusts (REITs) —which own apartments, office buildings and shopping mallswill still make up about 3 percent of the S&P 500, and they'll make up the same percentage of S&P 500 index funds.” (ABC News)
  2. The hidden real estate boom that's creating businesses you didn't realize exist “This is Hannibal Industries, the new Gulf Coast outlet of an L.A. company that makes the sturdy skeletons for storing goods in massive warehouses. Think of it as the Container Store for wholesale shipping. ‘We looked at the Midwest, which I think was our first instinct," said Steve Rogers, the company's CEO. "But after exploring it a little further, population drives our product. So where there's high-density population, theres high consumption of industrial storage racks." Few populations, of course, are growing faster than Houston. The parts of that expansion that residents touch, like shopping malls and grocery stores, all require a type of real estate that they don't: Places to store stuff on the way to market, somewhere tucked away between urban places. Developers added an all-time high of 60.1 million square feet of warehouse space in the first quarter of 2016, according to the real estate data provider Colliers International, up from the previous record of 55.8 million square feet in the last quarter of 2007. Dallas-Fort Worth added 4 million square feet in the first quarter, and still has 20 million under construction. Houston added 3.2 million square feet and has 11 million under construction — slightly off from highs of last year due to the oil downturn, but still robust growth that's barely keeping up with demand.” (Houston Chronicle)
  3. Amazon keeps expanding supply chain infrastructure “Amazon.com has been announcing a lot of new distribution centers lately, and now is opening a new IT office dedicated to logistics, as well as a new physical pick-up location. The e-tail giant is planning a new technology development center in downtown Minneapolis that will create 100 full-time, technology-focused jobs. Amazon currently has hundreds of employees in Minnesota and is also in the process of hiring an additional 1,000 full-time employees for its new Shakopee, Minnesota, fulfillment center. ‘Amazon is always looking for the best and brightest software engineers to join our team,’ said Dave Glick, VP of operations technology for Amazon. ‘The commitment to education, growth of the local high-tech industry, and caliber of technical talent in Minneapolis make it an ideal place for our expansion. We’re excited to create new technology jobs in Minneapolis and look forward to growing our operations technology team to help us develop cutting-edge software applications that fuel Amazon’s rapidly growing operations, fulfillment and delivery capabilities.’” (Chain Store Age)
  4. NYC makes $100 million land bid: NBC New York “New York City has offered to shell out $100 million on land, including a bid for a park at the site of a high-profile fire, NBC New York reports.  A $100 million purchase was approved in the city's 2017 budget, NBC 4 reports. Among the land parcels is the former CitiStorage site in Williamsburg, Brooklyn, according to a letter tweeted out by Mayor Bill de Blasio.” (CNBC)
  5. Revised state law would clear the way for bigger resi buildings “New York City may soon see another surge in supertall skyscrapers. The city is pushing for changes to a state law that would allow developers to nearly double the maximum square footage permitted in new residential developments. Two new bills propose to revise zoning rules that currently limit the size of the city’s residential buildings, Crain’s reported. Mayor Bill de Blasio’s administration hopes the law change will help encourage the creation of affordable housing in high-density commercial areas. The mayor first announced that he wanted to change the state law in 2014 as part of his efforts to bring more affordable housing to the city. The city on Thursday requested changes to the bills — which were proposed by Assemblyman Keith Wright and state Sen. Simcha Felder — that would limit the areas that could be rezoned and how much bigger the buildings could be. ‘It would allow the city, through full public review and approvals, to permit more residential growth in high-density commercial areas,’ a City Planning spokesperson told the website. ‘We’ll be able to secure mandatory affordable housing where right now only luxury condos are rising.’” (The Real Deal)
  6. Microsoft to Anchor 224 KSF Office Complex in Metro Atlanta “International real estate firm Hines, along with Atlanta-based Cousins Properties, have signed a 43,000 square-foot lease with Microsoft Corp. at 8000 Avalon, a 224,000-square-foot Class A office building in Alpharetta, Ga. Microsoft was represented in the lease negotiations by Pete Shelton and Drew Levine of Colliers Atlanta. ‘We are thrilled that Microsoft will anchor our new 8000 Avalon office development with Cousins,’ stated John Heagy, senior managing director at Hines. ‘Microsoft is an exceptional global company at the forefront of technology and innovation. We look forward to a strong relationship with Microsoft for many years to come.’ Hines and Cousins entered into a joint venture to develop the 10-story, $72 million project, which is still currently under construction. The mixed-use development will feature 580,000 square-feet of retail and restaurant, as well as the 325-key Hotel Avalon and Alpharetta Conference Center, both part of a first class Marriott-affiliated Autograph Collection hotel. Initial occupancy is slated for the second quarter 2017, and with the signing of the Fortune 500 software company, 8000 Avalon is now 19 percent leased.” (Commercial Property Executive)
  7. CA Residential, Habitat Co. Form Multifamily Partnership “CA Residential LLC, the multifamily investment and development division of CA Ventures, and the Habitat Co. have launched a partnership in which Habitat will assume management of a five-building, 1,215-unit apartment portfolio in the Midwest owned by CA. Also, the Chicago-based firms will pursue co-development and investment deal in various markets nationwide, targeting properties between $40 million and $120 million. The two firms’ first project together was 1136 S. Wabash in Chicago, which Habitat began consulting on last year and will manage when it opens in 2018. The property is a 26-story, 320-unit rental tower under way in Chicago’s South Loop neighborhood with 4,921 square feet of lower-level retail. Under the terms of the partnership, Habitat will oversee operations at the following other CA Residential communities as well, which are in various stages of development.” (MultiHousingNews)
  8. Downtown LA Office Property Commands $210M A joint venture between H.I.G. Realty Partners, Silverpeak Real Estate Partners, and Rising Realty Partners has acquired The Garland Center, a 733,000-square-foot office building and data center in downtown Los Angeles, for a price the Real Deal reported as $210 million. The acquisition also included a detached 1,600-spot parking structure. ‘The Garland Center serves a unique niche in the Downtown Los Angeles submarket for tenants that appreciate the large floor plates, unrivaled connectivity, above standard power and cooling infrastructure, efficient parking, and proximity to the 7th Street/Metro Center station,’ Christopher Rising, Rising’s president, said in a prepared release. ‘We intend to bring our expertise in new technologies, through our 5×5 Telecom subsidiary, to this asset, which is already well positioned to serve Telecom and Internet Service Providers experiencing tremendous growth from increased demand for more connectivity and data storage.’… Downtown L.A. has seen significant new housing, office, and retail development over the past few years. According to Colliers’ Q1 2016 Los Angeles Office Report, the Downtown market started 2016 with 531,000 square feet of leasing activity and the total overall vacancy rate decreased to 17.5 percent from 17.9 percent the previous quarter.” (Commercial Property Executive)
  9. Commissioner: Douglas housing fiscal impact study focus more than multi-family “A newly-approved fiscal impact study will focus on the best locations and ways to access a variety of housing types in unincorporated Douglas County, a commissioner says. Douglas County Commission voted last week to hire a consultant to “perform a housing market study and evaluate the fiscal impacts of multifamily housing in the county,” according to information included with the board’s agenda. Staff members estimated the cost at more than $24,000 depending on the bids received. The study approval follows the commission’s May 3 action to place a 180-day moratorium on accepting rezoning requests and development plans and reviewing and issuing development permits for multi-family housing in unincorporated Douglas County until the study is completed, records show. However, Commissioner Mike Mulcare said the goal of the study was not to “micro-focus” on any one type of housing. ‘This study is a broad spectrum study and not just about multi-family housing,’ he said. Mulcare said it will have a “broader goal” of assessing the entire housing market to ‘help guide and shape county planning in terms of future land use and transportation needs.’ It needs to study the effect of senior housing, housing for step-up buyers, affordable housing and executive housing – as well as multi-family housing, Mulcare said.” (The Marietta Daily Journal)
  10. Sinkhole Opens Under Busy Street in Downtown Ottawa A large section of a major street in downtown Ottawa collapsed into a sinkhole on Wednesday, bursting water and gas lines and swallowing a minivan. Officials said that there was no immediate indication of any injuries or deaths. Still, a major shopping center, hotel, convention center, retail stores and offices near the site were evacuated. The sinkhole began to form just east of Canada’s Parliament buildings around 10:30 a.m. and eventually grew to the full width of Rideau Street. A tunnel for a new rail transit system is being constructed under the street, but Jim Watson, the city’s mayor, told reporters on Wednesday that it was not clear whether the sinkhole was connected to the project. Much of Ottawa is built on Leda clay, also known as quick clay, a type of soil that can become unstable and is prone to sudden collapse. Leda clay was blamed for a sinkhole that swallowed a house northeast of Montreal six years ago, killing four people. Because of the tunneling and the renovation work in progress at the Rideau Centre shopping mall, Rideau Street had been open only to buses, taxis and pedestrians on Wednesday when the sinkhole appeared. Gas, electrical and water services were cut off to a section of downtown Ottawa, and roadblocks closed off several major routes through the city, snarling traffic and bus service.” (The New York Times)
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