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10 Must Reads for the CRE Industry Today (March 9, 2018)

Toys ‘R’ Us might end up closing all of its U.S. stores if it doesn’t find a way to deal with its debt, reports Fortune. House flipping is at a 10-year high, according CNBC. These are among today’s must reads from around the commercial real estate industry.

  1. Toys ‘R’ Us Is Considering Closing All of its U.S. Stores Amid Bankruptcy “Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to people familiar with the matter. While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days, said the people, who asked not to be identified because the information is private. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, the people said” (Fortune)
  2. House Flipping Hits Decade High, But Returns Are Shrinking “Just more than 207,000 homes were flipped in 2017, according to a new report from Attom Data Solutions, which defines a flip as a property bought and sold in the same 12-month period. That is the highest number of flips in a decade. The number of people or companies flipping homes, 138,410, also jumped to a decade high. Today's flippers, however, are nothing like those of a decade ago, who used cheap and easy money to finance their trades.” (CNBC)
  3. Where Small Town America Is Thriving “Big city America has long demonstrated a distaste for its smaller cousins. This sentiment has, if anything, intensified with the election of President Donald Trump, whose improbable victory was made possible by strong support in small cities and towns across the country. Once exemplars of de Tocquevillian American exceptionalism, now they’re subject to such jibes as a Silicon Valley executive's infamous assertion last year that ‘no educated person wants to live in a s***hole with stupid people.’” (Forbes)
  4. WeWork Is on an Acquisition Spree—and They Are All Over the Board “ Since raising $4.4 billion from SoftBank — whose CEO has told founder Adam Neumann to grow WeWork "10 times bigger than your original plan" — the company has been acquiring companies at at a rapid pace, averaging one about every two months. Most of its deals have been outside of WeWork's core business of renting out work space, ranging from education tech to apps for construction workers, and have been for undisclosed amounts.” (Recode)
  5. How to Screen Potential Tenants and Save Thousands “When I talk to new and seasoned landlords alike, one of the topics we invariably land on is the importance of tenant screening. In fact, in full disclosure, I now operate a company that provides free tenant screening to landlords because of my passion for screening tenants. Why do I focus so much of my efforts on helping landlords do this? Simply put, landlords cannot afford to do otherwise.” (Forbes)
  6. Why Retailers Are Lining Up to Spend a Fortune to be in Times Square “A vacant storefront in the Times Square neighborhood of New York City is a rare sight. If you do see an ‘available for rent’ sign, there’s a good chance that a company is in the middle of negotiating with the landlord and broker to take over that space.   Times Square is one of the few places in the U.S. that is immune to the brick-and-mortar doldrums. Major retailers are willing to pay top dollar to have a presence in the neighborhood just to get domestic and international exposure.” (Yahoo Finance)
  7. The Fight to Overhaul JFK Airport “A fierce competition between airlines, private equity, developers and terminal operators is nearing its climax as the Port Authority of New York and New Jersey advances a $10 billion plan to overhaul John F. Kennedy International Airport. Several companies, including private equity firm Oaktree Capital Management, developer RXR Realty and Spanish infrastructure group Ferrovial SA, are vying to partner with JetBlue Airways Corp. to expand the airline’s operations beyond its hub at Terminal 5.” (Wall Street Journal, subscription required)
  8. The Ticking Time Bomb of Suburban Retail “Thanks largely to the rise of e-commerce, chains like Macy’s, Toys ‘R’ US, and Best Buy are shuttering faster than analysts predicted even a year ago, with at least 24 major retailers planning store closures in 2018. According to some forecasters, there’s an even larger retail apocalypse on the horizon. As overbuilt malls, corporate mergers, and autonomous vehicles converge, ‘the ingredients are in place for major disruption,’ said Rick Stein, the founder of Urban Decision Group, a Columbus, Ohio-based planning consulting firm.” (CityLab)
  9. Criminal Justice Center, $1B Mixed-Use Coming to Detroit “Wayne County and Rock Ventures announced a tentative agreement to build a $533 million criminal justice center as a solution to the Gratiot jail project, blocked since 2013. Costs will be shared between the two parties: The county will invest $380, while Rock Ventures will be responsible for $153 million plus potential overruns. The project is expected to break ground in October, according to Detroit Free Press, with completion scheduled for 2022.” (Commercial Property Executive)
  10. Nordstrom Acquires 2 Digital Retail Start-Ups “Nordstrom announced Thursday two acquisitions that will help it keep pace with retail rivals online, even as the Nordstrom family continues to work on taking the department store private. Sources have told CNBC that as a private company Nordstrom could bolster its business further, in a way that's difficult in the public eye. This includes costly e-commerce investments and the realignment of its store footprint.” (CNBC)
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