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10 Must Reads for the CRE Industry Today (March 5, 2020)

CNN Money argues the Federal Reserve might have to cut rates again. New lawsuits accuse major hotel chains of allowing sex trafficking on their premises, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. The Fed Might Have to Cut Interest Rates All the Way to Zero “The Federal Reserve's quest to avoid a coronavirus-fueled recession may just be getting started. The US central bank fired a weapon Tuesday it has in the past saved for such catastrophes as the September 11 terror attacks, the collapse of Lehman Brothers and the bursting of the dotcom bubble. The emergency rate cut, the Fed's first since 2008, is designed to insulate the American economy from the coronavirus and revive confidence in jittery financial markets. Yet red flags only flew higher on Wall Street in the hours after that announcement.” (CNN Money)
  2. Lawsuits Accuse Big Hotels Chains of Allowing Sex Trafficking “During the three months that S.Y. was forced into prostitution, she said blood and used condoms littered the hotel rooms where she had sex in Naples, Fla. Skinny, underdressed women loitered in hotel lobbies while men wearing gold chains waited their turns, she said. Once, a woman was left unconscious in a hotel bathtub, causing a minor flood. S.Y. said she called the front-desk manager. ‘He didn’t come to help the girl in the bathtub,’ said S.Y., who spoke on condition that she be identified only by her initials, as she is in her lawsuit. ‘He came to clean up the water.’” (Wall Street Journal, subscription required)
  3. The Great Wall Street Housing Grab “It was clear from the beginning that there was something a little unusual about his new landlords. Instead of mailing his rent checks to a management company, men would swing by to pick them up. Within a few months, Ellingwood noticed that one of the checks he had written for $2,000 wasn’t accounted for on his rental ledger, though it had been cashed. He called and emailed and texted to resolve the problem, and finally emailed to say that he wouldn’t pay more rent until the company could explain where his $2,000 went.” (The New York Times)
  4. They Wanted the Apartment. Then the Broker Asked for a $2,850 Fee “State lawmakers in New York sent shock waves through the real estate industry last year, passing sweeping rent laws to protect tenants. But the laundry list of changes, covering everything from application fees to security deposits, also created significant confusion. Then came more upheaval: The state unexpectedly announced last month that the laws also barred tenants from having to pay a broker fee on rentals, only to have a judge, days later, temporarily block the ruling.” (The New York Times)
  5. What’s Next? Vacancy Taxes on Rental Property “Based largely on anecdote and against information showing it doesn’t work, the City of Los Angeles is toying with the idea of taxing rental property that is vacant. And where would the money generated from this tax? To non-profit housing agencies leveraging other funding like tax credits of course. Oakland and Washington DC have implemented this policy while Vancouver, British Columbia did too without any benefit to housing prices.” (Forbes)
  6. The Planet Is in Chaos, But It’s Not Too Chaotic for Global CRE Investment “Last week’s Democratic presidential debate was a mess. The way it unfolded was symbolic of the confusing, hectic and dramatic state of the world and the global economy today, with the U.S. at the forefront. Not only is there a fraught, high-volume election in nine months, but there’s also the growing coronavirus epidemic. And a plunging stock market. And the foggy outlook of life after Brexit. Each of those on its own would bring even the most optimistic investor to a pause.” (Commercial Observer)
  7. Why Brookfield Property Partners Units Fell 12% in February “Units of master limited partnership Brookfield Property Partners (NASDAQ:BPY) dropped about 12% in February according to data from S&P Global Market Intelligence. That fall tracked roughly along with the S&P 500 Index's decline, which ended up being around 8%. Wall Street's concerns about COVID-19 were clearly the driving force of the drop. But it pays to look under the covers a bit more here, because the concern is much deeper than it may at first appear.” (Motley Fool)
  8. Lincoln Property to Manage $500M Georgia Industrial Park “A new assignment in metropolitan Savannah, Ga., has increased Lincoln Property Co. Southeast’s management portfolio by nearly 1,200 acres. The real estate company has landed a contract with Stonemont Financial Group to manage Georgia International Trade Center, a new $500 million, rail-served logistics park that will encompass 7.2 million square feet of Class A light industrial and manufacturing warehouse space at full build-out.” (Commercial Property Executive)
  9. A Divided Suburbia: Race, Class and the Endless Struggle for Affordable Housing “Last November, a 40-year fight over an affordable housing development in Long Island — a legal battle that had gone all the way to the Supreme Court — finally came to a vote. Despite locals arguing for decades that it would cause traffic and crowd schools, Suffolk County legislators allocated $2.4 million to the 146-unit project in East Northport, a hamlet in the town of Huntington.” (The Real Deal)
  10. Nordstrom Closing Trunk Club Stores, Folding Service into Nearby Department Stores “Nordstrom is closing all six of its Trunk Club stores, including the one in Chicago, and folding the fashion styling service into nearby department stores.” (Chicago Tribune)
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