10 Must Reads for the CRE Industry Today (March 9, 2016)

10 Must Reads for the CRE Industry Today (March 9, 2016)


  1. Sports Authority Bankruptcy Disrupts Sporting-Goods “Sports Authority Inc.’s bankruptcy rippled through the sporting-goods industry on Tuesday, with companies saying it was creating both hardships and opportunities. Dick’s Sporting Goods Inc. said it would try to pick up market share ceded by its longtime rival, which is closing stores as it makes its way through bankruptcy court. Performance Sports Group Ltd., meanwhile, was dealt a blow by the Chapter 11 filing.” (Bloomberg)
  2. Subleases spike in number as SF startups downsize "Two months later, there are signs the San Francisco may not maintain its dubious position for long. The biggest indicator: There’s suddenly 1.7 million square feet of sublease space available in San Francisco, up more than 50 percent from 1.1 million square feet in November, according to CBRE Group, a commercial real estate services and investment firm. That kind of jump in four months’ time suggests ripple effects from a funding slowdown that stretch beyond a small but growing number of layoffs." (Tech Crunch)
  3. Houston, We Have A Problem: How Dwindling Oil Prices Hurt Houston's Commercial Real Estate Market “The low price of gas at the pump may be making American drivers happy, but the plummeting price of crude ‒ which slid more than 70% since June 2014 ‒ has been bad news for oil industry hotspots like Houston, where the energy industry downturn has had a significant impact on the local economy and commercial real estate, particularly the office sector. The plunge has led office vacancies in the so-called Energy Capital of the World to more than double from the final quarter of 2014 to the end of last year, leaving some 8 million square feet of space available as office-leasing activity declined more than 50%, according to Colliers.” (Forbes)
  4. Millennials Spending Power Has Hilton Weighing a 'Hostel-Like' Brand "Hilton Worldwide Holdings Inc., the world’s biggest hospitality company by number of rooms, may add a new brand that focuses on small, cheap hotels in big cities, Chief Executive Officer Chris Nassetta said. 'There’s potential for something that has more of an urban flair, more of a micro-hotel,' Nassetta said in an interview in Berlin. 'We haven’t made a decision to do anything in that space, but it’s certainly one of the things we’ve been exploring.'” (Bloomberg)
  5. Shopping-Center REITs Are on Many Investors’ Lists "Downtown may be trendy, but landlords are thriving with properties often seen as suburban eyesores: strip malls and shopping centers. The main reason: safety." (The Wall Street Journal)
  6. America's abandoned factories in hot demand "Vacant commercial spaces are in high demand as both startups and multinationals look for facilities to house their U.S. operations. Several factors are driving this trend, according to Stuart Lichter, president of Industrial Reality Group, one of the largest owners of U.S. commercial real estate. Many U.S. companies, which had moved their operations overseas to keep costs down, are coming back home to be closer to their customers. On the flip side, foreign companies are also shifting some production to the U.S. to be more competitive and grow their U.S. market." (CNN) 
  7. The Blowback For REITs If Sears Holdings Goes Belly-Up "Sears Holdings (NASDAQ:SHLD), the parent company of Sears and Kmart, has lost money for five consecutive years. The company's stores look increasingly out of step with a quickly changing retail environment. It's so bad that some industry analysts are suggesting it simply isn't viable. If you own these mall REITs, you'll want to watch this issue closely." (Seeking Alpha)
  8. Mag Mile's Southward Expansion Helps Slash Loop Retail Vacancy to 14-year Low "Though Michigan Avenue and State Street have been traditional shopping hubs, the latest data shows a southward migration of energy. Michigan Avenue’s Magnificent Mile north of the Loop actually saw vacancies rise from 9.9 to 11.3 percent last year. Chicago’s most famous shopping district is in the midst of a realignment towards the Loop proper as the year-round draw of Millennium Park will soon pair with new developments like the apartment tower at 200 S. Michigan, the London House hotel conversion, and Apple’s upcoming move to a Norman Foster-designed flagship store at Pioneer Court. State Street, meanwhile, has virtually no store front vacancies and current retailers are enjoying strong returns, according to Stone." (Curbed)
  9. John Cushman III on returning to his roots as a broker, IPO rumors and Donald Trump "Now, after selling his stake in Cushman & Wakefield as part of its acquisition by DTZ, Cushman is preparing for a return to dealmaking. He’ll be a broker in his role at the merged company, and he could not be more excited about the comeback. In fact, he’s champing at the bit." (The Real Deal)
  10. Real Estate Investment Products: Another 'Big Short'? "Relentless QE from central banks pushed borrowing rates (and thus investment yields) to all time lows over the past 5 years, and two mounting costs appeared. One was that the world piled on trillions more in debt at every level from households to corporations and governments, leaving the economy today more levered and fragile than it was heading into the 2008 credit crisis. The second, is that the people who have savings to lose and/or manage for other people, have become increasingly more inclined to reach for higher risk securities. As this buying pushed prices skyward, capital risks surged." (Seeking Alpha)


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