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10 Must Reads for the CRE Industry Today (May 14, 2019)

San Francisco’s limit on office space is creating a challenge for expanding tech companies, reports the Wall Street Journal. Forbes looks at the best-performing Opportunity Zones. These are among today’s must reads from around the commercial real estate industry.

  1. Higher Chinese Tariffs Just Made Your Home Renovation Much More Expensive “he latest increase in Chinese tariffs is hitting home remodelers where they live, and they are passing those higher costs on to clients. From tile to counter tops, laminates to lighting, all the fancy finishings — about 450 of them, worth approximately $10 billion a year in expenditures nationwide — are on the list that just went from 10% tariffs to 25%. The additional costs therefore rose from $1 billion to $2.5 billion, according to an analysis by the National Association of Home Builders.” (CNBC)
  2. The Best Performing Opportunity Zones for Real Estate Investors “Out of the country's 8,700 Opportunity Zones created as part of the 2017 Tax Cuts and Jobs Act, 22 of them have seen the number of households with an income over $200,000 grow by at least ten percentage points, according to a study released last week by analytics firm Webster Pacific. The study, ‘Wind at Your Back: Finding the Top 50 Opportunity Zones for Real Estate Investment,’ looked at the increased presence of high-income households between the years 2000 and 2017 to determine where economic appreciation was already taking place before the tax cuts were implemented.” (Forbes)
  3. San Francisco Limits Office Space. That’s a Problem for Tech Firms “Rapid growth of big technology companies is pushing demand for San Francisco office space to new heights, leading firms to go to unusual extremes to grab workspace. Some tech companies are leasing major portions of new buildings months before developers break ground, or before they even get the necessary government permits. Online image board Pinterest Inc. leased about 490,000 square feet of office space in a planned 1 million-square-foot project earlier this year, at about the same time it launched its initial public offering.” (Wall Street Journal, subscription required)
  4. Why Women Should Lead Change in Commercial Real Estate “As a commercial real estate entrepreneur, my job involves a lot of traveling and networking. I often find myself at receptions, cocktail in hand, introducing myself and explaining what I do. And when I explain that my startup is disrupting the commercial real estate lending industry, it’s not uncommon for me to get a few raised eyebrows to what many perceive to be a male-dominated field.” (Forbes)
  5. Dallas Developer Finds Niche with Old Downtown Buildings “Dallas developer Todd Interests is taking a leap with its plans to revive one of downtown's biggest skyscrapers. It took over redevelopment of the 52-story First National Bank building this week — a landmark tower that has been vacant for a decade. Todd Interests is the fifth owner to tackle redevelopment of the 1960s office tower, which is the largest empty building downtown.” (Dallas Morning News)
  6. California Might Triple Number of Marijuana Shops Across State “Escalating a feud with cities over marijuana, state lawmakers are pushing to require municipalities to lift bans on cannabis stores if voters there supported Proposition 64, the 2016 initiative that legalized sale of the drug for recreational use in California. A bill moving through the Legislature would require those cities to permit at least one cannabis retailer for every four liquor stores or one for every 10,000 residents, whichever is fewer.” (Los Angeles Times)
  7. Industrial Vacancy Falls to Lowest in 18 Years “The super-strong market for local warehouse space continues to gain momentum, with the Chicago-area industrial vacancy rate dropping for the sixth straight quarter. The local vacancy rate fell to 6.30 percent in the first quarter, down from 6.34 percent at the end of 2018 and 6.67 percent a year earlier, according to a report from Colliers International. The rate now sits at its lowest level in 18 years, with the strong economy fueling demand for space where companies make, store and distribute their goods.” (Crain’s Chicago Business)
  8. TWA Hotel at Kennedy Airport Targets 200% Occupancy “The developer of the TWA Hotel opening on Wednesday at New York’s Kennedy Airport is shooting for an occupancy rate better than 100%. In fact, he’s hoping to do twice that. ‘My objective is to sell every room every day twice a day,’ said Tyler Morse, chief executive of MCR and Morse Development. ‘Our plan is to run 200% occupancy.’ Mr. Morse expects the hotel will appeal to travelers with crack-of-dawn flights who want proximity to the airport.” (Wall Street Journal, subscription required)
  9. Florida Legislature Passes Bill That Could Boost Foreign Investment in Real Estate “The Florida Legislature recently passed a bill that would make remote online notarizations legal, a move that could speed up foreign and out-of-state real estate investment in the Sunshine State. Florida’s House of Representatives and Senate approved House Bill 409, which now heads to Gov. Ron DeSantis’ desk. If DeSantis signs it into law, Florida would become one of only a few states that accepts remote electronic notarizations, joining Virginia, Indiana, Minnesota, Nevada, Texas, Vermont and others.” (The Real Deal)
  10. Hines Continues Arizona Storage Expansion “Hines has started the construction of an 83,110-square-foot self storage facility in Tempe, Ariz. and is set to break ground on a 96,000-square-foot asset in Litchfield Park. The facilities are slated for completion by early fall and the end of 2019. CubeSmart will manage both properties. Double AA Builders is the contractor and RKKA is the architect working on the projects. The Tempe facility will be located at 8575 S. Priest Drive, just off Interstate 10, around 7 miles from the city’s downtown and 12 miles from Phoenix Sky Harbor International Airport.” (Commercial Property Executive)
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