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10 Must Reads for the CRE Industry Today (November 19, 2018)

Goldman Sachs predicts U.S. GDP growth will slow to 1.75 percent by the end of 2019, according to CNBC. Forbes looks at the traits of successful real estate investors. These are among today’s must reads from around the commercial real estate industry.

  1. Goldman Sachs Believes the U.S. Economy Will Slow to a Crawl Next Year “Goldman Sachs believes the U.S. economy will slow significantly in the second half of next year as the Federal Reserve continues to raise interest rates and the effects of the tax cut fade. ‘Growth is likely to slow significantly next year, from a recent pace of 3.5 percent-plus to roughly our 1.75 percent estimate of potential by end-2019,’ wrote Jan Hatzius, chief economist for the investment bank, in a note to clients on Sunday.” (CNBC)
  2. U.S. Home-Builder Sentiment Fell in November “A gauge of U.S. home-builder confidence fell sharply in November, dragged down by heightened affordability concerns in the housing market. The National Association of Home Builders on Monday said its housing-market index dropped by eight points to a reading of 60 in November. Economists surveyed by The Wall Street Journal had expected an index reading of 67 this month. The index measures builder confidence in the market for new single-family homes.” (Wall Street Journal, subscription required)
  3. David’s Bridal Files for Bankruptcy Protection “Wedding dress retailer David's Bridal filed for Chapter 11 bankruptcy protection Monday, as expected, grappling with a heavy debt load amid changing consumer tastes in the wedding industry. The bankruptcy is part of a deal the retailer has reached with its lenders that will reduce its debt by more than $400 million. David's Bridal said in a statement the company will continue to operate throughout bankruptcy. Customers can continue to shop in its more than 300 stores, and its orders and appointments will not be impacted.” (CNBC)
  4. Amazon HQ2 Could Push 800 People into Homelessness, Economist Says “Amazon’s new headquarters are expected to lead to 0.1-0.2% in additional annual rent growth in the D.C. metro area and a less than a 0.1% increase in rent growth in New York City, according to an analysis from rental firm ApartmentList. That works out renter households paying an additional $1,391 - $2,182 over 10 years in New York City and $3,750 - $5,757 over 10 years in Washington, D.C., a January analysis by ApartmentList found. Homelessness increases at a rate of 15% for every $100 per month median rent goes up, a 2014 study published by the Journal of Urban Affairs found.” (MarketWatch)
  5. Lenders Reliant on CRE Face Tough Road “These are trying times for banks that rely heavily on commercial real estate lending. Investors Bancorp in Short Hills, N.J., is reportedly looking to sell itself, while Oritani Financial in Washington Township, N.J., reported a $39 million decrease in its loan portfolio during the third quarter after a wave of prepayments. Bank OZK in Little Rock, Ark., has seen its stock punished this year, largely on concerns about its CRE exposure.” (American Banker)
  6. The Top Seven Traits of a Successful Real Estate Investor “Real estate is said to have made more millionaires than anything else. For those who have successfully made money in it, it’s not hard to see why. With so many different ways to grow wealth investing in real estate, there are tons of opportunities for many different people with different skill sets and talents to be successful, make money, and improve their financial position in meaningful ways. I am a real estate investor, and I've become a student of creating wealth through it.” (Forbes)
  7. FAO Schwarz Returns to NYC, New Store Opens at Rockefeller Center “Just in time for the holiday shopping season – a legendary toy store is reopening in New York. Three years after it closed its beloved toy store on Fifth Avenue, FAO Schwarz has opened a new flagship store in Rockefeller Center with a ribbon cutting ceremony Friday. For more than 150 years, FAO Schwarz was known in New York City for its classy and sometimes extravagantly expensive toys. The fantasyland store it opened on Fifth Avenue in 1986 was a tourist attraction, replete with its own theme song, doormen who looked like palace guards and a musical clock tower. Financial problems at the parent company and rising rents closed that store in 2015, but FAO is now pulling back from the worst financial precipice since it was founded in 1862.” (CBS New York)
  8. Investment in 2018: Stronger Than Initially Anticipated “After warning the industry about the potential impact of trade tariffs, geopolitics and tightening monetary policies, the latest Global Commercial Property Monitor issued by the Royal Institution of Chartered Surveyors shows a decline in negative sentiment for both investors and occupiers in the third quarter of 2018. The solid job growth and economic expansion have fueled investment globally. ‘Year-to-date, investment is up 7 percent,’ Tarrant Parsons, economist with RICS, noted in a discussion with Senior Writer Alexandra Pacurar.” (Commercial Property Executive)
  9. Why Multifamily Buildings Don’t Trade Very Often in Queens “Queens has been at the forefront of New York City’s development boom, with major new megaprojects rising from Astoria to Flushing. And with Amazon’s official selection of Long Island City for half of its so-called HQ2, the appetite for large scale developments in Queens is likely to accelerate even further. But one segment of the local market that has remained consistently slow is deals for multifamily buildings, where activity almost always lags behind the other boroughs. During the third quarter of the year, Queens saw just 11 deals across 14 buildings for $93.33 million, according to data from Ariel Property Advisors.” (The Real Deal)
  10. A Premiere Dallas Mall Is Bucking the Thanksgiving Day Shopping Trend by Staying Closed “One of Dallas' premier malls is giving up on the retail industry's experiment to carve out shopping time along with turkey feasting on Thanksgiving Day. Stores inside Galleria Dallas, under new management this year, will not open Thursday. The exception will be the mall's major national anchors, which will be accessible only through store external entrances. ‘The bulk of our retailers feel that their core shoppers would prefer to spend Thanksgiving with family and prefer to do their holiday shopping beginning on Black Friday,’ said Angie Freed, general manager at Galleria Dallas.” (Dallas Morning News)
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