10 Must Reads for the CRE Industry Today (May 23, 2016)

10 Must Reads for the CRE Industry Today (May 23, 2016)


  1. This Fed Reserve Head Says Conditions Are Almost Right for June Rate Hike “Conditions for a rate increase by the Federal Reserve are “on the verge of broadly being met,” Eric Rosengren, president of the Federal Reserve Bank of Boston, told the Financial Times. According to an article on Sunday, Rosengren told the FT he was getting ready to back tighter monetary policy as economic and financial indicators had become more positive. “I want to be sensitive to how the data comes in, but I would say that most of the conditions that were laid out in the minutes, as of right now, seem to be … on the verge of broadly being met,” said Rosengren, a voter this year on the Fed’s policy-making Federal Open Market Committee.” (Fortune)
  2. The Retail Apocalypse Hits Wall Street “The retail apocalypse finally moved from Main Street to Wall Street over the past week. Brick and mortar retail stocks were devastated, after investors got a look at some of the latest earnings reports from some of the biggest names in the sector. It was Macy's first-quarter earnings report that triggered the big sell-off of retailers and it is easy to see why. The grand old name in department stores turned in financial numbers reminiscent of those at Sears Holdings. Macy's reported that its revenues dropped by $460 million during the first quarter of 2016. The company reported revenues of $27.08 billion in January that fell to $26.62 at the end of April. This followed a dismal fourth quarter, in which revenues actually dropped during the holiday season. Macy's reported revenues of $27.57 billion in October 2015 that fell to $27.08 billion in December.” (Seeking Alpha)
  3. Why retailers should NOT give up on bricks and mortar: Former JC Penney CEO “The narrative that "everybody shops online so who needs physical stores" is dangerous to the future of retailing, former department store executive Allen Questrom warned on CNBC on Friday, following a recent a run of largely dismal retail earnings. ‘Every time you do $1 in digital [sales], it's probably one less reason for the customer to come into your store,’ said Questrom, formerly CEO of a number of retailers, including J.C. Penney, Neiman Marcus, Barneys New York, and Federated Department Stores (now Macy's). Online sales still make up a relatively small contribution to the bottom lines of many of the nation's major retailers, Questrom told "Squawk Box." The numbers back up his assertion.” (CNBC)
  4. Since no one is buying clothes, here’s what stores are selling instead “With apparel struggling to generate sales, a number of retailers are putting greater emphasis on home goods and furnishings. Urban Outfitters Inc. ,which reported first-quarter earnings on Wednesday that beat estimates, said its home merchandise was part of the reason. Urban Outfitters brands include its namesake chain plus Anthropologie, Free People, the bridal brand BHLDN, the home brand Terrain and the restaurant group Vetri Family, acquired late last year. “Strong, double-digit growth in the expanded categories like home, beauty, intimates, Terrain and BHLDN helped to drive these results and were partially offset by declines in certain apparel categories,” said David McCreight, president of Urban Outfitters, in his remarks during the company conference call, according to a FactSet transcript.” (MarketWatch)
  5. 40 Percent of the Buildings in Manhattan Could Not Be Built TodayNew York City’s zoning code turns 100 this year. That may not sound like cause for celebration — except maybe for land-use lawyers and Robert Moses aficionados. Yet for almost every New Yorker, the zoning code plays an outsize role in daily life, shaping virtually every inch of the city. The bays and cliffs of the Empire State Building come from zoning, as do the arcades and plazas of Park Avenue. The code gave us Zuccotti Park and Billionaire’s Row, the quietude of Greenwich Village and the bustle of the High Line, the glass towers now lining the formerly industrial waterfront and the portion of subsidized apartments that fill them. New York’s zoning code was the first in the country, meant to promote a healthier city, which was then filling with filthy tenements and office towers. Since it was approved in 1916, the ever-evolving, byzantine code has changed many times to suit the needs of a swollen metropolis. Just in March, the administration of Mayor Bill de Blasio won approval for a vast citywide plan that would encourage sleeker, more affordable developments.” (The New York Times)
  6. RXR Realty completes one of the largest office-building acquisitions of the year “RXR Realty closed on its nearly $2 billion purchase of 1285 Sixth Ave. Friday—one of the biggest office-building transactions in the city so far this year. In conjunction with the acquisition, RXR signed a deal with UBS for about 900,000 square feet at the 1.8 million-square-foot skyscraper. The Swiss bank agreed to remain as the 42-story tower’s anchor tenant through 2032. UBS occupies floors eight to 20, 37, 38 and 39. UBS’s lease was set to expire in 2020. The building, which RXR bought from a partnership between AXA Financial and JPMorgan Asset Management, is nearly full with tenants. AIG and Morgan Stanley provided RXR with financing for the purchase. Adam Spies and Doug Harmon, sales brokers with Eastdil Secured, handled the transaction for the sellers.” (Crain’s New York)
  7. Fannie, Freddie and the Secrets of a Bailout With No ExitWhen Washington took over the beleaguered mortgage giants Fannie Mae and Freddie Mac during the collapse of the housing market and the financial crisis of 2008, it was with the implicit promise that they would be returned to shareholders after being nursed back to health. But now, with the unsealing of documents this week that were produced as part of a lawsuit filed against the government, new evidence is coming to light on how intimately the White House was involved in the Treasury’s decision in August 2012 to keep all the companies’ profits for the government. That move effectively maintained Fannie’s and Freddie’s status as wards of the state. The newly released documents go beyond previous disclosures in the case and make clear that the Obama administration never had any intention of restoring Fannie and Freddie, which enjoyed implicit backing from the government before the takeover, to their status as stand-alone entities.” (The New York Times)  
  8. Bids due on J.C. Penney Co.'s campus, which has over 80 prospective buyers (Video) “Retail giant J.C. Penney Company Inc. (NYSE: JCP) is expected to sell its Plano headquarters campus with a partial leaseback of its three-story, 1.8 million-square-foot build-to-suit building, which is expected to help the retailer reduce outstanding debt and help manage its expense. The initial bids are due by the end of the day, with real estate sources saying this will be the first round of a number of bids before the campus hopefully sells by the end of the year.” (Dallas Business Journal)
  9. Here’s where the most retirees are moving — and why “Perhaps the best way to find out which states are winners for retirees: Forget surveys and expert opinions, and find out where the most retirees are actually moving. There are plenty of lists about where retirees should move — often locations with good affordability, low taxes, great weather, and plentiful cultural and recreational opportunities. But SmartAsset, a website that offers free online personal finance tools, crunched U.S. Census Bureau migration statistics and discovered the most popular places for retirees. (In case you were wondering, the state where the most retirees are leaving is New York, followed by Illinois, California, Pennsylvania and New Jersey.)” (MarketWatch)
  10. Massive Development Near Dulles Airport to Include 1,200-Plus Multifamily Units “A joint venture between Chicago-based Origami Capital Partners and an affiliate of Westport, CT-based Greenfield Partners has kicked off development of an 85-acre site on Metrorail’s Silver Line less than a mile from Washington Dulles International Airport. Now called The Hub, and formerly known as Dulles World Center, it will be a mixed-use property, including multifamily development. The property is approved for as many as 1,265 multifamily residential units. They will be part a site that also includes up to 400,000 square feet of retail space, 3.5 million square feet of office space, and 350 hotel rooms. The Hub is the largest approved contiguous development site on Metro’s Silver Line. The Hub’s focal point will be a central promenade including outdoor recreation, retail, and entertainment space.” (MultiHousing News)
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