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10 Must Reads for the CRE Industry Today (March 20, 2017)

10 Must Reads for the CRE Industry Today (March 20, 2017)

The chance of two more interest rate increases this year is increasing, Reuters reports. Eric Trump says the Trump Organization will limit its real estate activities to the U.S., according to the New York Post. These are among today’s must reads from around the commercial real estate industry.



  1. Fed on track to raise U.S. rates twice more this year: Evans “The Federal Reserve is on track to raise interest rates twice more this year after a policy tightening last week, and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration, a Fed rate-setter said on Monday. The public comments from Chicago Fed President Charles Evans were among the first since the U.S. central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017 in a nod to low unemployment and some inflation pressures. ‘Three is entirely possible,’ Evans, speaking on Fox Business Network TV, said of hikes in 2017. ‘As I gain more confidence in the outlook I could support three total this year. If inflation began to pick up, that would certainly solidify (that expectation). It could be three, it could be two, it could be four if things really pick up.’ Asked about U.S. President Donald Trump's promise to boost the economy to a 4 percent growth rate, from about 2 percent in the last few years, Evans said: ‘Four percent would be really an outsized number.’ While that level of growth could be reached "in any given year," he said it was hard to imagine given the economy is already doing well, the labor market is "very strong," and sectors like automobile sales are at all-time highs.” (Reuters)
  2. Affordable Housing Heats Up in New Jersey “A joint venture of landlords and investors obtained a $144 million loan from Fannie Mae to finance its purchase of more than 1,000 affordable apartments mostly for seniors across several buildings in central and northern New Jersey, according to the company that structured the loan deal.” (The Wall Street Journal, subscription required)
  3. Eric Trump insists he doesn’t talk business with his dad anymore “Since becoming the leader of the free world, billionaire dad left the Trump Organization in the hands of his two oldest sons – Don Jr. and Eric — while daughter Ivanka moved to Washington where her husband, Jared Kushner, works for the president. Critics wanted Trump to completely sell off his investments to avoid any conflicts of interests but he instead opted to keep out of business decisions and pledged the company would not make new international deals. ‘I speak to my father and I speak to him a decent amount,’ Eric Trump said. ‘We do keep perfect separation of church and state. It was something that was incredibly important to him. It’s something that’s incredibly important to me.’ Now the two son’s split management of the Trump hotels, wineries, golf courses, and commercial and residential real estate holdings. ‘We’re a great company but quite frankly he’s got much bigger fish to fry,’ Eric said. Limiting new deals to the US has been a “big” shift in the Trump brand. Eric praised states that have low taxes, a high quality life and are pro-infrastructure. He points to Florida, North Carolina, South Carolina and Texas for creating business-friendly climates.” (New York Post)
  4. Mack-Cali Snaps Up $368M Office Portfolio “HFF recently played a role in making history in the New Jersey commercial real estate market, arranging the disposition of a 1.1 million-square-foot office portfolio. Acting on behalf of RXR Realty, the commercial real estate and capital markets services provider sold the group of six assets to Mack-Cali Realty Corp. for $368 million, marking one of the largest office portfolio trades ever in the Garden State. The collection of Northern New Jersey office properties, all sited in the Route 25 Corridor, includes 51, 101 and 103 JFK Parkway, which account for an aggregate 564,000 square feet of space in Short Hills. The three buildings were constructed between 1980 and 1985. The remaining three properties, 1, 3 and 7 Giralda Farms, are located in Madison. Built between 1983 and 2000, they encompass a total of 504,200 square feet. ‘These are the best suburban office assets in the New Jersey market and they had not traded in well over a decade,’ Jose Cruz, senior managing director with HFF, said in a prepared statement. In addition to boasting a certain prominence, the portfolio is also 91 percent leased, counting among its tenants the likes of KPMG, Merrill Lynch, Dun & Bradstreet, and Pfizer.” (Commercial Property Executive)
  5. JV to Develop $100M Student Housing Project “Armada Hoffler Properties recently announced that the firm teamed with Spandrel Development Partners to develop and build two $100 million student housing apartments in downtown Charleston, S.C. In the new joint venture, Armada Hoffler will serve as both majority partner and general contractor. With two assets featuring a variety of amenities and price points, Armada Hoffler expects to deliver more than 600 new beds within one mile of the College of Charleston in time for the fall 2019 semester. The peninsula is home to roughly 20,000 students and current enrollment at the College of Charleston alone approaches 12,000 students.” (MultiHousing News)
  6. HHGregg deal with anonymous bidder collapses “HHGregg on Thursday said it has terminated its previously announced nonbinding term sheet with an anonymous party to purchase substantially all of its assets through a reorganization under Chapter 11 of the United States Bankruptcy Code, for which it filed March 6. The companies were unable to reach a definitive agreement on terms, according to a press release. The struggling electronics retailer has obtained interim approval of its $80 million debtor-in-possession loan facility to fund operations of the business during the sale process.” (Retail Dive)
  7. Ann Arbor outpaces Detroit with highest real estate values “Even after Detroit's decades of decline, the state's largest city both by size and population still had bragging rights in 2014 as the one with the highest total real estate value: $12.3 billion. No more. In the last two years, Ann Arbor, a fraction of Detroit's size and population but mighty in academic and tech culture, has overtaken the Motor City as the Michigan community with the highest total assessed value. It's a head-turning revelation. It shows, at least on paper, just how far post-bankruptcy Detroit — which has received considerable positive press locally, nationally and internationally for its buoyed business district, though that represents just a few of its 143 square miles — still has to go in its recovery.” (Crain’s Detroit)
  8. Office rents in Chicago rose 20 percent in 2016 — the second highest in the world “The bill for high-end office space in Chicago rose almost 20 percent in 2016, the biggest increase in the U.S. and second-highest in the world. Chicago's one-year jump is especially striking considering the city is typically known for less dramatic fluctuations in property values and rents than those seen in coastal markets such as New York and San Francisco. The numbers help explain why developers continue drawing up plans, even though tenants just began moving into two brand-new towers along the Chicago River. Rents in Chicago's newest and best-located office buildings rose to $38.84 a square foot in 2016, up from an average of $32.40 in 2015, according to a report from commercial real estate brokerage CBRE.” (Chicago Tribune)
  9. Cuomo’s $1.8B infrastructure plan could be boon for South Bronx real estate “The state next year plans to kick off a $1.8 billion redesign of the Robert Moses-built Sheridan Expressway in the South Bronx that will provide waterfront access to neighborhoods long cut off from the shoreline and parks, likely boosting property values and making the prospect of development more attractive. Gov. Andrew Cuomo on Sunday announced the project, which will integrate pedestrian walkways so that residents in the South Bronx can access Starlight Park and the Bronx River, the Wall Street Journal reported. The park has long been separated from neighborhoods by the mile-long expressway, also known as Interstate 895. Construction is slated to kick off next year and wrap up by the spring of 2019. Cuomo said the project will create more than 4,200 jobs, and the first phase will be funded with $700 million in this year’s state budget. ‘While plans have been proposed and languished for decades, we’re taking action to finally right the wrongs of the past by reconnecting South Bronx communities that have dealt with unnecessary barriers to revitalization and growth,’ Cuomo said.” (The Real Deal)
  10. Redevelopment of Panorama City high-rise could include a new shopping mall “A derelict 13-story structure in Panorama City could soon see new life as a mixed use project with an adjacent shopping mall. The Panorama Towers building, which was constructed in 1962, was damaged in the 1994 Northridge earthquake, and has been sitting empty ever since. In 2015, however, prolific developer Izek Shomof purchased the Welton Becket-designed building for $12.5 million and soon announced plans to redevelop the property with a mix of housing and retail. Last week, Shomof filed plans with the city (spotted by The Real Deal) calling for construction of an “open mall building” to supplement the new development. Further details are hazy at this time, but it appears that the tower and the mall would share a new parking structure that Shomof also plans to construct.” (Los Angeles Curbed)



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