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10 Must Reads for the CRE Industry Today (March 12, 2019)

Potential rent increases at biotechnology and other life-science buildings are attracting more large property investors, according to the Wall Street Journal. A tax on second multimillion-dollar homes in New York edges closer to reality, reports The New York Times. These are among today’s must reads from around the commercial real estate industry.

  1. Fast-Growing Lab Properties Attracting New Wave of Cash “The prospect of big rent increases is drawing more large property investors to the risky but fast-growing niche of biotechnology and other life-science buildings. These laboratory businesses have taken off in recent years. New drugs, treatments and devices used to be created mostly in-house by large companies. Increasingly, they are now developed by entrepreneurial scientists at startup firms. Venture-capital funds poured $14.8 billion into life-science companies last year, a 33% increase from the previous year, according to real-estate services firm CBRE Group Inc.” (Wall Street Journal, subscription required)
  2. Lawmakers Support ‘Pied-à-Terre’ Tax on Multimillion-Dollar Second Homes “A plan to tax the rich on multimillion-dollar second homes in New York City has rapidly moved closer to reality, as legislative leaders in Albany and Gov. Andrew M. Cuomo have all signed off on the idea as a funding stream for the city’s beleaguered subway system. Mr. Cuomo said on Monday there was a consensus among the state’s leaders, all Democrats, that a so-called pied-à-terre tax was a good idea, calling it the “only agreed-to new money” for a state facing a significant drop in tax revenue.” (The New York Times)
  3. ‘Airbnb Tax’ in N.J. Opens New Front in Battle Over Internet Economy “The Jersey Shore, a storied summer vacation spot, has become the newest national battleground over regulating and taxing the internet economy. New Jersey is one of the first big states to adopt a surcharge on short-term rentals — a so-called Airbnb tax. It kicked in Oct. 1 and is causing vacationers to rethink their summer travels and stirring anxiety among the homeowners who rely on them. The fallout over the 11.6 percent tax has inserted New Jersey into a broader debate as states and communities grapple with the explosive growth of the online home-sharing economy.” (The New York Times)
  4. Real-Estate Startups Try Their Hand at Private-Equity Investing “Five months after the co-working firm Bond Collective signed a 42,000-square-foot lease in a Brooklyn office building, the property’s owners flipped it for a hefty profit. ‘Hey, we can essentially do the same thing,’ Bond Collective founder Shlomo Silber recalled thinking after learning of the sale. Four years later, the firm is co-managing its own real-estate fund. The fund owns stakes in properties in Miami, Nashville, Chicago and New York City and is in contract to buy two more.” (Wall Street Journal, subscription required)
  5. Changing the Conversation About the “Right Way” to Own Real Estate “The way we speak about and educate the consumer about real estate in the U.S. needs to change. I enjoy reading universal buyer’s guides: reasons in favor of buying a home, rent versus buy comparisons, finance articles on why buying a home is a good investment, finance articles about why buying a home is a bad investment, why you should (or shouldn’t) buy real estate. Actually, I don’t enjoy reading them, but rather I enjoy knowing what advice people are being given and the narratives they are told about the market.” (Forbes)
  6. The Gap Between Retail ‘Winners’ and ‘Losers’ Is Growing: Formers Toys ‘R’ Us CEO “The latest figures on retail sales don't necessarily paint a complete picture of what's happening in the sector, two former CEOs told CNBC on Monday. U.S. retail sales unexpectedly rose in January, climbing 0.2 percent, according to the Commerce Department. However, data for December was revised down to show retail sales tumbling 1.6 percent instead of the 1.2 percent previously reported.” (CNBC)
  7. Trader Joe’s Looks to Surprise Whole Foods with Massive Midtown Lease “Food markets are a rare bright spot in the struggling retail-leasing scene. We’ve learned that Trader Joe’s is negotiating to open a giant (make that gigantic) store in the Park Imperial condo building at Broadway and West 55th Street. But there’s some cloak-and-dagger going on. Our source said, ‘They’re keeping it secret because they want to take [competitor] Whole Foods by surprise.’ Whole Foods has its own mega-store at Time Warner Center a few blocks north.” (The New York Post)
  8. London’s Real Estate Market Stutters as Brexit Kills Dealmaking “London’s commerical property market has become the latest casualty of Brexit. Spending on U.K. offices, malls and warehouses plunged more than 40 percent in the first two months of the year to 4.3 billion pounds ($5.6 billion), according to research firm Property Data. With less than three weeks left before the U.K.’s scheduled withdrawal from the European Union, buyers are watching to see if the attempts to prevent a chaotic no-deal withdrawal will succeed.” (Bloomberg)
  9. WeWork Lands Biggest Manhattan Real Estate Loan in February “The top 10 Manhattan loans recorded in February totaled just over $1.2 billion, less than half recorded in January and the lowest total since March 2018. The top loan in February went towards WeWork’s $850 million purchase of its new headquarters at 424 Fifth Avenue.” (The Real Deal)
  10. Why Smart Investors Are Bullish On Manhattan Real Estate “In my line of work, I take a lot of meetings. At those meetings, I often speak with the people who run some of the biggest, most successful New York City-based real estate investment firms. It’s a privilege and a luxury to sit with them, so I rarely betray confidence by revealing what happens behind those closed doors. But, this time I feel compelled to share.” (Forbes)
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