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10 Must Reads for the CRE Industry Today (March 13, 2019)

U.S. construction spending surged to an eight-year high in January, reports Reuters. The New York Times looks at who will benefit from marijuana legalization in New York and New Jersey. These are among today’s must reads from around the commercial real estate industry.

  1. Hudson Yards Designed to Fend Off Natural and Man-Made Disasters “New York developer Related Cos. is set on Friday to open what will be the largest private development in the U.S. The $25 billion project on Manhattan’s west side features office towers, thousands of apartments, a giant mall and green spaces designed to attract people with light and airy architecture. But behind the scenes, this city-within-a-city is designed like a fortress. The developers incorporated lessons from recent storms, terrorist attacks and freakish occurrences in New York and around the globe. Hudson Yards’ gatekeepers have devised a plan to keep out the bad elements, whether criminals or acts of nature.” (Wall Street Journal, subscription required)
  2. U.S. Construction Spending Posts Biggest Increase in 9 Months “U.S. construction spending surged in January, with investment in public projects rising to a more than eight-year high, which could boost economic growth estimates for the first quarter. The Commerce Department said on Wednesday that construction spending jumped 1.3 percent, the largest increase since last April, after a revised 0.8 percent drop in December. Economists polled by Reuters had forecast construction spending rising 0.4 percent in January after a previously reported 0.6 percent drop in December.” (Reuters)
  3. HUD Secretary Counters Criticism That Only Rich Benefit from Public-Private Partnerships “Public-private partnerships are not just benefiting the wealthy but helping low-income areas, Housing and Urban Development Secretary Ben Carson told a crowded ballroom on Tuesday at the annual National League of Cities conference. ‘Some people have complained that, you know, it’s a mechanism for the rich to increase their wealth,’ Carson said. ‘Well, what they don’t understand is rich people are going to take their money, and they’re going to invest it somewhere, so why not incentivize them to invest it into areas that have been economically neglected and deprived.’” (MarketWatch)
  4. How a $238 Million Penthouse Turned a Long-Shot Tax on the Rich into Reality “The road to the nation’s first tax on super-luxury second homes may well have begun at 220 Central Park South, where a four-story, 24,000 square-foot penthouse, unfinished and unfurnished, recently sold for $238 million. That deal — the most expensive residential sale in United States history — seemingly set the stage for New York’s sudden embrace of a so-called pied-à-terre tax, a potential windfall for the city’s subway system and a small, subtle victory for those who believe Manhattan has become an unfettered playground for the rich.” (The New York Times)
  5. Student Real Estate Competition Builds Next Generation of Developers “In real-estate obsessed New York City, it should be no surprise that there’s a program designed to turn disadvantaged students into high-powered developers. Yes, one of the education scene’s more curious ventures has executives from Brookfield Properties, the $160 billion real-estate operating company, giving Bronx students a free crash course in site design, deal analysis, construction financing and property marketing. On a recent Saturday afternoon, a team of students worked on a presentation for their final project—mock plans for a $50 million, 10-story apartment building in the South Bronx with a barbershop and juice bar.” (Wall Street Journal, subscription required)
  6. What’s the Deal with Marijuana Legalization in N.Y. and N.J.? “Who will profit? New York: Legalization could yield $772 million in tax revenue for the city and state annually, according to the New York City comptroller, Scott Stringer. A top aide to Mr. Cuomo said details about who would get access to licenses, and how the state would spend revenue from the industry, should be written into regulations after legalization takes place. New Jersey: The state estimated that it could bring in $210 million in state taxes annually.” (The New York Times)
  7. Why Did Three Successful Dallas-Area Hotel Investors Just Buy American Bank? “American Bank, which has existed for nearly four decades, has one location in Dallas-Fort Worth, but Patel says that could change. The group plans to focus on loans for small businesses and individualized support that he says is hard to find with larger lenders. ‘Loans are looked at as loans, but at the end of the day there's a warm body — a person — behind them. We plan to bring that personal touch to the lending space,’ Patel said.” (Dallas Morning News)
  8. With Foreclosure Behind It, Landmark Loop Office Building Hits the Market “Almost a year after foreclosing on a landmark eight-story office building in the Loop, a Chicago investor group is getting ready to cash out. A venture led by Chicago attorney Steven DeGraff has hired CBRE to sell the historic building at 36 W. Randolph St., also known as the Delaware Building. Completed in 1874, the Italianate structure is one of the oldest office buildings in the city—it’s both an official Chicago landmark and listed on the National Register of Historic Place—and badly needs a facelift.” (Crain’s Chicago Business)
  9. Miami and Los Angeles Developers Indicted in Major College Admissions Fraud Scheme “Three real estate developers and investors were among the 33 parents indicted in the Justice department’s largest-ever college admissions scheme, which federal prosecutors revealed Tuesday. Miami developer Robert Zangrillo and Los Angeles developers Bruce Isackson of WP Investments and Robert Flaxman of Crown Realty were charged in the scandal, which involved parents allegedly paying bribes to secure their children acceptance into elite schools including Stanford, Georgetown and Yale.” (The Real Deal)
  10. TPG Real Estate Partners Closes $4B Fund “TPG Real Estate Partners, the real estate equity investment platform of global alternative asset firm TPG, announced the closing of its latest opportunity fund, TPG Real Estate Partners III. The fund secured more than $3.7 billion in capital commitments and was oversubscribed. TREP invests in commercial and residential assets across the U.S. and Europe through a strategy focusing on acquiring and building property-rich platforms and companies.” (Commercial Property Executive)
  11. How These 33-Year-Olds Are Taking Sweetgreens from a Dorm-Room Start-up to the ‘Starbucks of Salad’ “Sweetgreen is the first-ever unicorn salad start-up, luring lunchtime lines across the country with its millenial- and Gen Z-friendly $12 salads. Now ,the brand that brought the farm-to-table trend to fast-casual dining wants to be ‘the Starbucks of salads.’ ‘If I had told you 25 years ago, when Starbucks only had a few locations, that someday it would be a global phenomenon … nobody would have believed that. ... But, that's what happened,’ Sweetgreen investor and billionaire Steve Case told CNBC.” (CNBC)
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