10 Must Reads for the CRE Industry Today (March 7, 2018)

Forbes looks at how investors can prepare for a decline in commercial real estate values. Chicago is the best city for corporate relocations, according to MarketWatch. These are among today’s must reads from around the commercial real estate industry.

  1. Senate Votes 67-32 to Begin Debate on Bank Bill “The U.S. Senate on Tuesday voted 67-32 in favor of beginning to debate a bipartisan bill that would ease rules for mid-sized and small lenders introduced following the 2007-2009 financial crisis. The vote paves the way for the chamber to potentially pass the proposed legislation by the end of the week.” (Reuters)
  2. Will Commercial Real Estate Values Fall? How Investors Can Prepare “Will the commercial real estate market always go up? Of course not. But investors have been spoiled by two decades of double-digit returns that were too good to last. In 2016, returns on institutional-grade property fell below a 20-year 10.1% average for only the first time since the Great Recession, and the latest Urban Land Institute’s Real Estate Economic Forecast puts estimated 2018 and 2019 returns around 6%.” (Forbes)
  3. Chicago—with a Lift from O’Hare’s Planned Revamp—Again Named Best Corporate Relocation Target “Skilled labor, a central location, accessible housing and a soon-to-be-expanded O’Hare airport, if Mayor Rahm Emanuel gets his way, landed Chicago as the top metro area in the nation for corporate relocation and investment for a fifth consecutive year. The recognition, announced Monday, hits as Chicago pursues Amazon’s second headquarters along with 19 other finalists. Chicago’s bid for the e-commerce giant’s $5 billion Seattle satellite has included 10 possible locations in the city and suburbs.” (MarketWatch)
  4. Why WeWork Acquired a Content Marketing Company “WeWork just announced that it’s acquiring Conductor, a content marketing platform. Financial terms weren’t disclosed, but Conductor had raised approximately $60.6 million in venture funding from investors such as Catalyst Investors, Matrix Partners, FirstMark, and Blue Cloud Ventures. Conductor will continue to operate independently, with its CEO Seth Besmertnik reporting to WeWork president and CFO Artie Minson. Here’s one of the biggest takeaways: This acquisition gives WeWork access to some large clients as Conductor has relationships with Citibank,, CVS, and Salesforce.” (Fortune)
  5. Once Wary of Facebook and Apple, a Mill Town Tells Them to Keep Expanding “A decade ago, when five shuttered sawmills and 20 percent unemployment defined Crook County, Ore., nobody envisioned that the path to recovery would be tied to Facebook and Apple. But on the rimrock summit overlooking this city, the county seat and home to 10,000 residents, Facebook is sinking the footings for the first of two 450,000-square-foot data centers that together will cost $1 billion when completed in 2021. The immense buildings will join the four existing data centers, totaling 1.27 million square feet, that Facebook has built here since 2010 at a cost of $1.1 billion.” (The New York Times)
  6. The Macy’s-Brookfield Real Estate Partnership Shows its Potential “In late 2016, Macy's announced that it would form an alliance with Brookfield Asset Management to help maximize the value of the retailer's enormous trove of high-quality real estate. For most of 2017, this partnership produced various concepts for redeveloping Macy's real estate, but no firm decisions in that regard. However, Macy's and Brookfield Asset Management now have tentative agreements for development projects on nine Macy's real estate assets. (The projects still require building permits, environmental approvals, etc.) This is allowing investors to get a better sense of how much potential this real estate alliance has for Macy's.” (The Motley Fool)
  7. With Supreme Court Challenge, Tech Billionaire Could Dismantle Beach Access Rights—and a Landmark Coastal Law “The California Coastal Act for decades has scaled back mega-hotels, protected wetlands and, above all, declared that access to the beach was a fundamental right guaranteed to everyone. But that very principle could be dismantled in the latest chapter of an all-out legal battle that began as a local dispute over a locked gate. On one side, property owner and Silicon Valley billionaire Vinod Khosla wants Martins Beach, a secluded crescent-shaped stretch of sand and bluffs, to himself. On the other, generations of beachgoers demand continued access to a path long used by the public.” (Los Angeles Times)
  8. HNA’s Fast Fall from Grace “The guest list for the China General Chamber of Commerce USA’s annual gala is a who’s who of Chinese and American business royalty. In mid-January, Blackstone’s Steve Schwarzman, Brookfield’s Ric Clark, Bank of China’s Xu Chen and Chinese Ambassador Cui Tiankai — to name a few — rubbed shoulders at the Ziegfeld Ballroom in Midtown. But the real star of the show was a man rarely seen on Manhattan’s black-tie party circuit: HNA Group’s chairman and co-founder, Chen Feng.” (The Real Deal)
  9. CVS Plan to Issue $40 Billion in Debt to Fund Aetna Takeover Puts Credit Rating in Peril “CVS Health Corp.’s outstanding bonds fell Tuesday, as the company geared up for an offering of $40 billion in new debt to be used to finance the company’s proposed acquisition of Aetna Corp. The drugstore chain and pharmacy-benefit manager CVS said in December that it had reached an agreement to acquire health insurer Aetna AET for about $69 billion, in a deal expected to mark a shift away from pharmacy-benefit managers, or PBMs, which negotiate drug prices and have long been a feature of America’s health-care system.” (MarketWatch)
  10. Riding the Tech Boom in Seattle “Seattle has it all—healthy fundamentals, skilled workforce and booming economy. The metro is a hotbed for startup businesses, while local tech powerhouses Amazon and Google preserve their hometown glory by boosting construction and leasing activity. The growth is fueled by the University of Washington’s expanding computer science program and the increase in minimum wage, a clear signal that the metro’s traditional economic drivers have reached a new level of maturity.” (Commercial Property Executive)
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