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10 Must Reads for the CRE Industry Today (November 17, 2016)

10 Must Reads for the CRE Industry Today (November 17, 2016)


  1. Goldman Sachs Sees Trump Leading to More Aggressive Fed, ‘Ambiguous” Growth Outlook “Goldman Sachs economists expect Donald Trump's economic agenda to lift inflation and interest rates. They expect to see a more aggressive Fed. They also initially expect higher growth thanks to a Trump plan to spend on infrastructure — bumping their forecast for U.S. GDP growth in the second half of 2017 by a quarter point. But they also described the effect of Trump's economic plans as ‘ambiguous.’” (CNBC)
  2. Yellen Says Fed Could Raise Rates ‘Relatively Soon’ “The Federal Reserve could raise U.S. interest rates ‘relatively soon’ if economic data keeps pointing to an improving labor market and rising inflation, Fed Chair Janet Yellen said on Thursday in a clear hint the U.S. central bank could hike next month. Yellen said Fed policymakers at their meeting earlier in November judged that the case for a rate hike had strengthened. Yellen, who was to deliver the remarks to lawmakers at 10 a.m. (1500 GMT) on Thursday, said the economy appeared on track to grow moderately.” (Fortune)
  3. Trump Files Suit Against D.C. Over Hotel Taxes “President-elect Donald Trump refiled his lawsuit seeking a refund of taxes paid for his new luxury hotel project in Washington, D.C. (Trump Old Post Office LLC v. District of Columbia , D.C. Super. Ct., No. 2016-CVT-000010, second amended petition filed 11/14/16 ). Trump, through a company he owns called Trump Old Post Office LLC, first filed suit against the city in the Superior Court of the District of Columbia in June, contesting the assessment against several downtown lots along Pennsylvania Avenue. That lawsuit was dismissed Oct. 27, but the court allowed Trump to refile separate petitions for each of the lots involved in the Trump International Hotel.” (Bloomberg BNA)
  4. Commercial Real Estate Faces Strong Headwinds “According to Moody’s Investors Service, as reported by the Wall Street Journal, the current 60-day delinquency rate on the approximately $390 billion worth of commercial real estate mortgages that have been packaged into securities sits at 5.6%, which is already up one full percentage point from earlier this year. The future is not looking much brighter. The delinquency rate is likely to get worse rather than better in the coming years as the wave of lending that took place in 2006 and 2007, just prior to the financial crisis, is about to see the day of reckoning.” (Investopedia)
  5. Target Planning ‘Hundreds’ of Small Stores “Target (TGT) CEO Brian Cornell said Wednesday that he's "increasingly confident" the company will open "hundreds" of small-format stores, reshaping the big-box chain's image and real estate footprint. ‘We think we have the opportunity to enter many, many new neighborhoods,’ Cornell said on a conference call. Target is currently operating nearly 30 small-format locations, including a new 45,000-square-foot store in Manhattan's hip Tribeca neighborhood, where the retailer hopes to glean lessons it can apply to future stores.” (USA Today)
  6. Brookfield Place Owner Looking to Sell Stake for $2.45B “Brookfield Property is seeking to sell a 49 percent stake in downtown’s Brookfield Place for around $2.45 billion, or $625 per square foot. Eastdil Secured has been tapped to market the minority interest in the Brookfield Place complex which includes five office towers, the Winter Garden and a revamped retail complex with a Saks Fifth Ave. store and a successful food market and dining area, according to Real Estate Alert. Two years ago, Brookfield Chief Executive Ric Clark told analysts the company wouldn’t consider a sale until after its now-completed $250 million redo ‘for fear of leaving way too much money on the table.’” (New York Post)
  7. The Tallest Modular Apartment Building in the World Just Opened in New York City—Take a Look Inside “461 Dean, a 32-story apartment complex in Brooklyn, is the newest residential tower in New York City to feature modular construction. It's now considered the tallest modular tower in the world. The apartments' pre-fabricated rooms fit and lock together like a puzzle pieces. The modules were placed by cranes to create the building. Its developer, Forest City Ratner Companies, built 90% of 461 Dean in its factory at the Brooklyn Navy Yard. That allowed them to save 20% on construction costs.” (Business Insider)
  8. Rent-the-Runway to Open Neiman Marcus Stores-Within-Stores as Startup Surpasses $100M Annual Sales “Rent the Runway is set to open its first store-within-a-store inside Neiman Marcus’ Union Square, San Francisco location as part of a new partnership between the fashion tech startup and the luxury retailer. The move sees Neiman Marcus allowing an ostensible competitor 3,000 square feet to rent apparel and accessories to a demographic it has struggled with: millennial women. It also allows Rent the Runway, with its median customer age of 30, to get in front of an older, wealthy clientele.” (Forbes)
  9. How Will New Risk Retention Regulations Impact the CMBS Market? “With less than two months to go before CMBS issuers will have to keep a portion of the loans they provide on their own balance sheets, market preparations are in full swing. The new federal rules on risk retention will be in effect starting Dec. 24, and while some issuers are testing strategies to adapt, others fear these rules could be the end of their businesses. Commercial Property Executive discussed the effects of the new regulations with Lauren Cerda, senior director at Fitch Ratings.” (Commercial Property Executive)
  10. Concrete Jungle Where Loans Are Made: NYC Lenders Talk Relationships “Jonathan Mechanic, the chairman of Fried, Frank, Harris, Shriver & Jacobson’s real estate department, didn’t waste any time as moderator, quizzing the industry experts on the presidential election’s impact on the commercial real estate sector. Ralph Herzka, the chairman and chief executive officer at brokerage Meridian Capital Group, said that while the world may believe that banks will come out on top with Trump as president, ‘We’re in the middle of the storm. We just need to let the dust settle and we’ll figure it out.’” (Commercial Observer)
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