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10 Must Reads for the CRE Industry Today (March 14, 2019)

The New York Times looks at Hudson Yards, the biggest private real-estate development in U.S. history. Manhattan’s luxury apartment rental market continues to heat up, according to Mansion Global. These are among today’s must reads for the commercial real estate industry.

  1. Hudson Yards Is Manhattan’s Biggest, Newest, Slickest Gated Community “The first massive tower emerged at the apex of the High Line, looming over it, a shingled, spiky, reflective blue-glass behemoth, shaped by eccentric cuts and angles, as if sheared by a giant Ginsu knife. Since then, at jaw-dropping magnitudes you can’t begin to grasp until you are actually standing there, Hudson Yards has sprouted a seven-story, 720,000-square-foot shopping mall. There are also four more supertall skyscrapers as well as a $500 million city-sponsored arts center called the Shed, featuring a giant sliding roof, eye-catchingly swathed in a tufted Teflon-based sheeting that can bring to mind inflated dry-cleaning bags.” (The New York Times)
  2. Manhattan’s Luxury Rental Market Heats Up  “Manhattan’s rental market, particularly the luxury segment, continues to strengthen as potential buyers rent while waiting for the housing market to stabilize before making a purchase. In February, the median rental price in Manhattan increased 3% year-over-year to $3,400 a month. The number of new leases signed, however, during the month dropped 11.3% to 3,443, according to a Douglas Elliman report released Thursday.” (Mansion Global)
  3. Steve Wynn Met with Treasury Officials about Opportunity Zones After Stock Sale “Former casino executive Steve Wynn generated $2.1 billion and a big potential tax bill last March when he was forced to sell his stake in Wynn Resorts Ltd. after sexual-misconduct allegations. Less than three months later, he held a meeting with Treasury Department officials as they were writing regulations for a new tax incentive that had the potential to help him defer and reduce those taxes. Mr. Wynn met with senior Treasury officials on June 4 to discuss ‘opportunity zones,’ a break that was part of the 2017 Republican tax overhaul. The opportunity-zone program gives individuals a chance to defer and reduce capital-gains taxes if they make investments into low-income areas.” (Wall Street Journal, subscription required)
  4. New Home Sales Drop 7% in January as Housing Market Gets Off to Slow Start in 2019 “Sales of new U.S. homes in the U.S. dropped almost 7% in January, indicating the housing market got off to a slow start in early 2019 amid a partial government shutdown and patches of unusually harsh weather. New-home sales declined to a 607,000 annual rate in January, according to government report delayed by the partial 35-day federal shutdown earlier this year. That’s how many new homes would be sold for the full year if sales were the same each month.” (MarketWatch)
  5. Weekly Mortgage Applications Hit a Record, But Not a Healthy One for Housing “Mortgage interest rates are now decidedly lower than a year ago, and home shoppers are buying in, but most are wealthier consumers purchasing more expensive homes. Total mortgage application volume rose 2.3 percent last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was essentially flat compared with the same week one year ago.” (CNBC)
  6. NYC Has the Biggest Share of Senior Renters in the Country “Out of the 30 largest US cities, New York has the largest share of renter households age 60 and up, according to a study released by apartment-search website Rent Cafe last week. As of 2017, there were a total of 572,132 60-plus renters, making up 27 percent of all renters in the city. That’s a 20 percent increase over the number of renters over 60 in the city in 2007.” (New York Post)
  7. Boston, L.A. Offer Best Property Returns as U.S. Economy Slows “Investors in U.S. commercial real estate should look at cities where business is booming rather than take riskier bets as the economy slows. That’s the view of Ann Cole, a co-portfolio manager on JPMorgan Asset Management’s real estate team, which manages about $60 billion globally. She says investors should focus on high-growth cities with a diversified business base, such as Los Angeles and Boston. While secondary cities like Austin, Texas, offer higher yields, they can be more reliant on one industry or one company, making them more susceptible in a downturn.” (Bloomberg)
  8. Why CRE Companies Are Finally Adopting Technology “This month, Common Areas launched a new configurable operations platform for commercial real estate companies. The idea of a configurable technology isn’t new—but it is a new concept in the commercial real estate industry. In general, there is a limited field of technology options for the industry, but that is changing. Technology options are growing, but they are also becoming more configurable, and in this industry, which is nuanced and data-centric, tailoring technology is imperative.” (GlobeSt.com)
  9. Top U.S. Markets for Buying Single Family Rentals in 2019 Revealed “According to ATTOM Data Solutions Q1 2019 Single Family Rental Market Report, the average annual gross rental yield in the U.S. (annualized gross rent income divided by median purchase price of single-family homes) among the 432 counties was 8.8 percent for 2019, up from an average of 8.7 percent in 2018. ‘Buying single-family homes to rent them out is a better deal for investors so far this year, than it was at the same time in 2018, as profit margins are rising in a majority of counties across the United States,’ said Todd Teta, chief product officer at ATTOM Data Solutions.” (World Property Journal)
  10. Real Estate ETFs: Where to Start? “Real estate is an important component of any diversified portfolio. As a way to enhance a fixed-income portfolio, investors can consider real estate ETFs for an alternative yield-generating option to hedge against inflationary pressures and potentially generate attractive returns and growth in the environment ahead.” (ETF Trends)
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