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10 Must Reads for the CRE Industry Today (June 11, 2018)

Philadelphia’s City Council is considering a novel way to raise money for affordable housing, reports the Wall Street Journal. The Fed will aim to raise interest rates at a gradual pace going forward, according to MarketWatch. These are among today’s must reads from around the commercial real estate industry.

  1. Fed Goal is to Signal an ‘Unhurried’ Pace of Interest Rate Hikes “The Federal Reserve will raise its short-term target rate while trying to keep markets calm by signaling future interest-rate hikes will come at an ‘unhurried’ pace. The Fed will make few wrinkles because ‘it is in a good spot,’ said Ellen Zentner, chief U.S. economist at Morgan Stanley. ‘The data since March is pretty much in line with the outlook and the rate path clearly remains a gradual one,’ she said in an interview.” (MarketWatch)
  2. Philadelphia’s Affordable Housing Plan: A Tax on New Buildings “Philadelphia’s City Council is weighing a proposed 1% tax on construction to raise millions of dollars for affordable-housing programs, marking the latest push by a U.S. city to address rising residential costs. The council could pass the new tax this week, setting up a possible showdown with Democratic Mayor Jim Kenney, whose administration warns the levy would hurt the city’s competitiveness as it vies to land Amazon.com Inc.’s second headquarters.” (Wall Street Journal, subscription required)
  3. What to Consider in a Telecom Tower Deal “As the commercial real estate industry evolves, so too will the Internet and wireless networking. By 2022, it is expected that the number of U.S. smart phone users will climb to 271 million. As this happens, telecom providers must add capacity, and tower companies will provide them with infrastructure to support that capacity. This should present some unique opportunities for commercial property owners to pursue additional revenue channels.” (GlobeSt.com)
  4. The Crypto Test Cases “While there are few statistics on how many real estate deals have been done in crypto, sources say the handful of deals that have been publicized — both in New York City and beyond — are important test cases for the market. As of late May, there were 47 homes listed on Zillow nationwide, including four in New York, that mentioned Bitcoin.” (The Real Deal)
  5. Multifamily Builders, Developers in U.S. Remain Positive as Demand Continues “According to the National Association of Home Builders, confidence in the U.S. multifamily housing market remained positive in the first quarter of 2018. The MPI remained unchanged from last quarter, coming in at a reading of 53, while the MVI remained essentially unchanged at 42. The MPI measures builder and developer sentiment about current conditions in the apartment and condo market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.” (World Property Journal)
  6. New York City to Spend $2 Billion Over Decade in Public Housing Agreement “New York City has agreed to spend more than $2 billion over a decade to settle federal prosecutors’ investigation into health and safety issues at the country’s largest public-housing authority, according to a person familiar with the negotiations. An announcement of the settlement is expected as soon as Monday, people familiar with the negotiations said.” (Wall Street Journal, subscription required)
  7. Ho, Ho, Ho, It’s REIT Magic “At last week’s annual REITweek conference in New York, I spent some time with Nareit’s VP of Research, Dr. Brad Case, a distinguished economist and industry expert. He’s been a frequent ‘go-to’ source especially when I’m hoping to gaze into the REIT sector crystal ball. Unfortunately, Dr. Case couldn’t provide a guaranteed success path, but he did deliver several valuable clues to help me and my readers sleep well at night.” (Forbes)
  8. How E-Commerce Growth Benefits the Industrial Sector “E-commerce hit brick-and-mortar stores heavily and, at the same time, boosted the industrial sector. According to Amherst Capital Management’s 2018 Market Outlook, strong warehouse demand coming from e-commerce tenants is most likely to exceed supply this year. As expected, construction is picking up, with metros such as Chicago and Atlanta leading the way.” (Commercial Property Executive)
  9. Medical District Sells Parcels, Easing Crushing Debt Load “After near defaults, the Illinois Medical District redeemed $40 million in bonds whose debt service consumed more than half of revenue, freeing funds to accelerate long-planned redevelopment of the West Side complex. ‘This was a big victory and a tale of responsible financial management in our state,’ said Christopher Meister, executive director of the Illinois Financial Authority, which backed the bonds. ‘It's a man-bites-dog story.’” (Crain’s Chicago Business)
  10. Kushner Real Estate Proposes 607 Housing Units in East Hanover “Kushner Real Estate Acquisitions wants to build 607 townhouses and apartments on River Road land currently owned by the maker of Oreos, Triscuits, Chips Ahoy! and other snacks.” (Daily Record, subscription required)
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