10 Must Reads for the CRE Industry Today (May 6, 2016)

10 Must Reads for the CRE Industry Today (May 6, 2016)

  1. Fannie Mae CEO says it’s not sustainable to operate without capital “‘Operating with essentially zero capital is not sustainable,’ the CEO said Thursday morning, just after his company reported a $1.14 billion profit in the first three months of the year, the 17th consecutive quarter of profitability. Welcome to the upside-down world of Fannie Mae, the company in question, and its little brother, Freddie Mac. The two mortgage companies have always straddled the worlds of government and business, but ever since the financial crisis of 2008, that in-between area has been increasingly uneasy. ‘Conservatorship,’ into which Fannie and Freddie were placed at the height of the crisis, was supposed to be a temporary fix of an emergency situation. But with Congress unable to agree on a permanent way forward, it’s become the way the enterprises must operate.” (MarketWatch)

  2. What's Behind China's Worldwide Real Estate Shopping Spree? “In the recent wave of Chinese investors going global, it is remarkable how much goes into real estate and other businesses that have a large element of fixed assets. These investments reveal a lot about the forces driving the spread of Chinese capital. Take London for example, which claims to attract more Chinese investors than any other city worldwide. A closer look reveals a string of major acquisition deals that are not takeovers of companies but takeovers of commercial property.” (Forbes)

  3. How City Hall Exacerbates the Entry-Level Housing Squeeze “The housing market has recovered, but sluggish entry-level construction is putting a squeeze on families that would like to buy their first home. A new report pins the blame on City Hall. The culprit: Impact fees that builders have to pay municipalities when they get permits for new construction, says the report from Zelman & Associates, a housing research firm. These fees fund the local infrastructure needed to support a growing population—schools, transportation, environmental mitigation and utilities. Cities boosted these impact fees after the downturn—even though builders were cutting prices—to make up for lost revenue. During and before the housing boom, these fees had supported municipal budgets, together with rising property taxes, which also stopped rising when prices fell.” (The Wall Street Journal

  4. Opinion: How runaway inflation is pinching the one group that can least afford it “A study from Harvard University’s Joint Center for Housing Studies confirms that more people are renting in the aftermath of the housing bust. As a result, there are more “cost burdened” renters (those paying more than 30% of their incomes on housing) than ever before. The Harvard study counted about 21 million cost-burdened renters in 2014, up from 15 million in 2001. Studying the two largest publicly traded multifamily REITs, AvalonBay Communities and Equity Residential, confirms that rents have been rising at a prodigious clip since 2011.” (MarketWatch)

  5. Surprise — The Limited debuts new store brand in hot niche “Moving under the radar, The Limited has quietly debuted a new store concept, called Backroom at the Limited, in six malls across the nation. The format offers a mix of work-to-weekend apparel, jewelry and accessories, with the merchandise made exclusively for the Backroom as well as the Limited’s outlet stores. The first six Backroom at The Limited stores opened throughout February, with locations at Great Northern Mall, Ohio; Cottonwood Mall, New Mexico; Augusta Town Center, Georgia; Staten Island Mall, New York; Sunland Park Mall, Texas and Livingston Mall, New Jersey. Additional stores will launch throughout 2016.” (Chain Store Age)

  6. Aeropostale to leave Times Square flagship after bankruptcy “Clothing retailer Aeropostale will close its Times Square flagship store after filing for bankruptcy this week, giving back around 19,000 square feet of prime Broadway retail space to landlord SL Green Realty. The store at the base of 1515 Broadway, a 54-story office tower between West 44th and West 45th streets, is one of 154 locations in the U.S. and Canada that Aeropostale will shutter after filing for Chapter 11 bankruptcy protection Wednesday. It is not yet clear when the retailer will vacate the Times Square space and whether it will pay SL Green a penalty or termination fee to do so, according to Crain’s. But Aeropostale’s departure will give the real estate investment trust a sizable vacancy in the high-traffic Times Square shopping corridor, where retail rents have escalated as high as $2,000 per square foot for prime space.” (The Real Deal)

  7. Winn Secures Contract for 4,420 Units in California “Boston-based WinnCompanies announced this week that WinnResidential has won a contract to manage 48 California properties totaling 4,420 apartments. The units are owned by Gardena, Calif.–based Highridge Costa Investors (HCI). Winn, which manages a national portfolio of more than 98,000 units at 570 properties, manages six properties for HCI in Arizona. The management takeover of the California properties was completed in three phases over a period of six months. The assets are located in and around Los Angeles, Bakersfield, Fresno, Merced, San Jose, San Francisco, and Sacramento.” (Multifamily Executive

  8. Chicago Skyline Changer to Get Underway “Chicago’s Magellan Development Group and Beijing-based Dalian Wanda Group have announced their summer plans. The partners will break ground on Vista Tower, a 95-story mixed-use skyscraper that will hold the distinction of being the third-tallest building in Chicago and carry a development price tag of $1 billion. Magellan and Dalian Wanda’s closing on the purchase of land for the 1.8 million-square-foot project in the Lakeshore East neighborhood cleared the path for development to commence. Vista Tower will sprout up at the intersection of E. Wacker Drive and N. Field Blvd., and will house the 406-unit Vista Residences condominiums and the five-star Wanda Vista Hotel.” (Commercial Property Executive)

  9. College Grads Face Rude Rent Awakening “There’s one big discrepancy between student housing and conventional apartment pricing systems: Student housing rents are by the bed, so residents are sharing kitchens and common living areas with up to three or more suitemates. Conventional apartment rents are by the unit. But what happens if you price apartments by the bedroom? Axiometrics took the average rent for a bed at privately owned student housing properties near nine major public universities located in what could be termed “college towns,” and compared them to the average rent per bedroom in the closest major markets to those campuses. The average number of bedrooms per unit was 1.5-1.7 in the markets studied, while student housing properties averaged three or more beds per unit. So while an apartment may be pricier than student housing, the grads will likely have fewer roommates.” (Forbes)

  10. Apple Seeking 'Large Expanses of Real Estate' for AutonomousApple is looking to purchase "large expanses of real estate" in the San Francisco Bay Area for its much-rumored car project, codenamed Project Titan, according to The Wall Street Journal. Google parent company Alphabet and several car manufacturers, such as Tesla and Mercedes Benz, are also on the hunt for more space, according to Hudson Pacific, one of the Bay Area's largest landlords.” (Mac Rumors)
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