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10 Must Reads for the CRE Industry Today (June 19, 2018)

Forbes looks at the potential impact of autonomous cars on commercial and residential real estate. Nashville’s development boom is starting to worry residents, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. As Interest Rates Rise, Real Estate Stocks Lose Luster “The Federal Reserve’s hawkish tilt is upending real-estate investment trusts and other stocks with juicy dividend yields that had been thriving in a lower interest-rate environment. S&P 500 real-estate stocks fell 1.2% last week, hurt by the Fed’s decision to lift interest rates on Wednesday and its signal that the bank could pick up the pace of future rate increases. Those real-estate shares are down 4.3% for the year, among the worst performances of any S&P sector and well below the broader index’s gain of 4%.” (Wall Street Journal, subscription required)
  2. D-FW Investment Property Buys Slowed in the First Quarter “Cushman & Wakefield reports that the volume of investment property sales in North Texas fell by 17 percent from first quarter 2017. The decline follows years of big gains in D-FW real estate activity. There were first quarter, year-over-year declines in almost every type of investment property sales. The biggest decrease was a 58 percent drop in suburban office building sales. Retail property sales were off 35 percent from first quarter 2017.” (Dallas Morning News)
  3. Unintended Consequences? The Potential Impact Autonomous Vehicles Could Have on Your Home “Much has been made about how autonomous vehicles will impact parking. To allow for alternative uses once autonomous vehicles become more pervasive, new commercial parking facilities are now frequently being designed and constructed with flexibility in mind. Developers are even going so far as to explore ways to repurpose existing parking garages. Far less has been made about how autonomous vehicles could change residential real estate, rendering the two-car garage obsolete and increasing livable square footage and home values.” (Forbes)
  4. As Nashville Rapidly Expands, Residents Worry the Metropolis Is Growing Too Fast “Kathleen Ervin moved here 12 years ago from the Northeast, drawn to the relaxed atmosphere, green parks and relatively low cost of living. But in the past five years, her commute time from her 1950s ranch house in the Glendale neighborhood to her job about 12 miles away has tripled on some days to 45 minutes because of increased traffic. Developers are buying nearby properties, tearing them down and building ‘tall skinnies’—multistory homes geared toward wealthier home buyers.” (Wall Street Journal, subscription required)
  5. Hudson Yards Developer Seeking Same Federal Funds Gateway Has Struggled to Access “While a politically fraught battle for funding continues to paralyze the Gateway project, an enormous real estate project on Manhattan's West Side is seeking more than $1 billion in financing from the same tranche of federal funds that Gateway has struggled to access. The Hudson Yards megaproject is pursuing a low-interest federal loan to build a platform over a chunk of the West Side rail yards, several sources told POLITICO. The platform will support millions of square feet of lucrative luxury apartments, office and retail space.” (Politico)
  6. Union Station Developer to Detail Plans “After more than a year of behind-the-scenes negotiations, developer John O'Donnell and a partner appear ready to get working on a huge redevelopment of Union Station and Amtrak-owned property nearby, a longtime priority for the passenger railroad and for City Hall. O'Donnell's Riverside Development & Investment is about to present plans for 330 hotel rooms and 404 residential units atop the historic rail depot, as well as an office tower on what now is a parking garage on the block bound by Clinton, Van Buren, Canal and a Chicago Transit Authority bus facility, according to a constituent newsletter emailed over the weekend by the local alderman, Brendan Reilly, 42nd.” (Crain’s Chicago Business)
  7. What a Distressed CMBS Deal Can Tell Us About Special Servicing “It’s just a fight over a property worth about $10 million—peanuts in big-city commercial real estate. But the issues raised by an ongoing commercial mortgage-backed securities dispute in Northern California shine a spotlight on the ways CMBS special servicers can stand as a roadblock to distressed sponsors trying to resolve debt on assets threatened by foreclosure.” (Commercial Observer)
  8. BJ’s Wholesale IPO: Six Things to Know About the Costco Competitor “BJ’s was taken private in 2011 by private-equity firms Leonard Green & Partners L.P. and CVC Capital Partners in an all-cash deal valued at about $2.8 billion that saddled the company with more than $2 billion in debt. And while its prospectus boasts of operating improvements made since then, the numbers are less than glowing. BJ’s had $12.5 billion in sales in fiscal 2018 through Feb. 3, but net income totaled just $50.3 million.” (MarketWatch)
  9. KKR, Parkway Properties Buy 522 KSF Miami Office Tower “The 522,000-square-foot office tower at 1111 Brickell Ave. in Miami’s vibrant Brickell submarket has changed hands. In a joint venture, affiliates of KKR and Parkway Property Investments purchased the Class A building from PGIM Real Estate. Also known as Sabadell Financial Center, 1111 Brickell made its debut in the city’s central business district in 2000 as part of a mixed-use development that includes a JW Marriott hotel.” (Commercial Property Executive)
  10. Fayetteville Aims to Slow “Retail Leakage” “In an effort to reduce the number of vacant retail properties, the city of Fayetteville has contracted with an Alabama-based firm to identify and attract new commercial tenants. The city is paying NextSite, LLC $16,000 per year for three years to analyze retail recruitment opportunities to lessen the “retail leakage” that results when consumers leave certain retail areas or when stores shut down, as Toys R Us recently did at the Fayette Pavilion.” (Atlanta Journal Constitution)


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