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10 Must Reads for the CRE Industry Today (November 30, 2016)

10 Must Reads for the CRE Industry Today (November 30, 2016)


  1. Economy Watch: Real GDP Surges in 3Q “According to the BEA, the acceleration in real GDP in the third quarter primarily reflected an upturn in private inventory investment, or business spending. There was also an acceleration in exports, an upturn in federal government spending, and smaller decreases in state and local government spending and residential fixed investment. These factors were partly offset by a drop in personal consumption expenditures (PCE, or people out spending), an acceleration in imports, and a deceleration in nonresidential fixed investment (which is partly commercial real estate).” (Commercial Property Executive)
  2. Trump announces he will leave business ‘in total’ — leaving open how he will avoid conflicts of interest “President-elect Donald J. Trump tweeted Wednesday morning that he would soon leave his “great business in total” to focus on the presidency, a response to growing worries over the businessman-in-chief’s conflicts of interest around the globe. The announcement marks a turn from Trump’s months-long refusal to distance himself from his private business while holding the highest public office. But it remained unclear whether the new arrangement would include a full sale of Trump’s stake or, as he has offered before, a ceding of company management to his children, which ethics advisers have said would not resolve worries that the business could still influence his decisions in the Oval Office. ‘I will be holding a major news conference in New York City with my children on December 15 to discuss the fact that I will be leaving my great business in total in order to fully focus on running the country in order to MAKE AMERICA GREAT AGAIN!’ Trump tweeted.” (The Washington Post)
  3. Kushner plans to lend $200M annually to developers “Jared Kushner’s Kushner Companies plans to lend $200 million annually to developers over the next five years, according to its president Laurent Morali.We like the opportunity to deploy our capital in a different place in the capital stack,’ Morali said, according to the New York Post. The Real Deal first reported in May that Kushner Companies had quietly launched a lending arm, and bought the mezzanine debt on JDS Development and the Chetrit Group’s 9 DeKalb Avenue. According to an offering email reviewed by TRD at the time, the firm plans to issue preferred equity, mezzanine debt and senior debt ranging from $20 million to $500 million. On Monday, TRD reported that Kushner Credit Opportunity Fund is backing Toby Moskovits’ Bushwick mixed-use project 215 Moore Street with a $33 million loan.” (The Real Deal)
  4. Real Estate Tech Companies VTS and Hightower to Merge in $300 Million Deal "Two technology startups that help commercial-real-estate owners and brokers manage their businesses are merging in a deal that will create one of the largest technology companies in the industry, valued at about $300 million. VTS and Hightower Inc., both based in New York, are merging in an all-stock transaction, executives at both firms said. The deal was expected to be announced to employees Tuesday. The merged firm, which will keep the name VTS and be led by VTS Chief Executive Nick Romito, will provide customer-management tools for owners of more than 5.5 billion square feet of commercial space in the U.S. and U.K. Investors in VTS include Blackstone Group LP and Boston-based venture-capital firm OpenView. Among Hightower’s major backers are Bessemer Venture Partners, Menlo Park, Calif., and Thrive Capital, a venture firm led by Joshua Kushner, whose brother, Jared Kushner, is married to Ivanka Trump, the president-elect’s daughter." (The Wall Street Journal)
  5. Weed Votes Are Already Boosting Warehouse Rents “It took Chris Abbott six stressful months to find a new space for his growing company. The 10,000-square-foot warehouse on the outskirts of Portland, Ore., was once used to store industrial-strength compressors. Now the gritty space, its cinder walls repainted white, resembles a cross between a high-end laboratory and an industrial bakery. It's the home of Botanica, Abbott's edible marijuana company.  The new lease, which will let Botanica expand its business from nearby Washington into the Beaver state, didn’t come cheap. In the Portland area, most companies can rent industrial space for about $5 a square foot annually. Cannabis companies, however, pay a premium ranging from $12 to $18 a square foot.  ‘We were willing to pay above market value to have a space there,’ Abbott said. ‘I see the biggest barrier to entry in Oregon as getting real estate.’ The short history of legalized marijuana in the U.S. is rife with tales of tight supply and above-market leases. Local rules on where cannabis businesses can operate, combined with restrictions that prevent them from using bank financing, have limited the property available to entrepreneurs such as Abbott. Warehouse owners, on the other hand, are cashing in.” (Bloomberg)
  6. 10 exciting developments fusing food and real estate “There’s no question that attitudes towards food and healthy living have evolved over the last few decades. Cuisine and food culture have undergone dramatic shifts, from the proliferation of celebrity chefs to ever-more sophisticated palettes; since 1994, the number of farmers markets in the country have increased fivefold. It only makes sense that developers, always on the lookout for the next standout residential and commercial development, would start factoring these trends into their new projects. In a new report, Cultivating Development, the Urban Land Institute examines how the real estate industry has begun to embrace culinary sophistication and foodie culture, positioning shared gardens and upscale food halls as must-have amenities and retail anchors. These additions not only fuel commerce and community, but can lead to more sustainable, equitable development that legitimately improves the health of residents. Here are 10 of the projects highlighted in the report, from healthy residential developments to indoor farming centers, that both help the bottom line and add value to the community.” (Curbed)
  7. Home furnishings giant continues U.S. expansion “Ikea is hoping to build its fifth store in the state of Texas. The retailer is submitting plans to the City of Live Oak, Texas, for a San Antonio-area store. Pending approvals, construction could begin in spring 2018, with an opening in summer 2019. Located approximately 15 miles northeast of downtown San Antonio, the 289,000-sq.-ft. proposed Ikea would be built on 31 acres. Ikea said it would evaluate potential on-site power generation to complement its current U.S. renewable energy presence at nearly 90% of its U.S. locations.” (Chain Store Age)
  8. What It Takes to Open a Bookstore “For more than 20 years, small bookstores have been vanishing, their business models under pressure from large competitors and internet retailers. In the last several years, though, there are signs that independent bookstores are making a comeback in New York and other cities, in part through innovative financing that gives neighborhoods a stake in the businesses. A case in point: Jessica Stockton Bagnulo and Rebecca Fitting, the owners of Greenlight Bookstore in Fort Greene, have just opened a new location in a second Brooklyn neighborhood, Prospect Lefferts Garden. I’m surely not the only bookworm who has fantasized about working in a bookstore: The quiet, convivial atmosphere; the rows of spines with titles you have always meant to read; the enthusiastic conversations about books.” (The New York Times)
  9. City of Hawthorne OKs demolition of long-abandoned mall “Since it closed in 1999, the Hawthorne Plaza Mall has been a derelict wasteland, popular with vagrants, urban explorers, and film crews (most recently, it’s appeared in HBO’s Westworld). Now, after numerous false starts, the Hawthorne City Council has unanimously approved a plan paving the way for the mall to be demolished and replaced with an enormous mixed use outdoor shopping complex. As the Daily Breeze reports, mall owner Charles Company previously proposed three other designs for the mall, but each proposal was eventually rejected by the city. This time, officials liked the design for the project and even agreed to throw in some financial support for construction. The $500 million development will replace the old-fashioned indoor mall into a Grove-like open-air retail space with offices and residences. When complete, the massive project will include 500,000 square-feet of commercial space, 800,000 square-feet of offices, 600 residential units, and enough parking for nearly 6,000 vehicles.” (Los Angeles Curbed)
  10. Magic City, a tech innovation district, coming to Little Haiti “The Magic City will get a namesake innovation district with art, entertainment, technology and sustainability at its core, if the vision of a group of real estate developers, investors and entrepreneurs comes to fruition. In Brickell? Downtown? Wynwood? Nope. Little Haiti. Bob Zangrillo, a Silicon Valley investor and CEO of Dragon Global, and Tony Cho, a Miami real estate developer and CEO of Metro 1, will announce plans Wednesday for Magic City, a 15-acre mixed-use development focused on creating an innovation district in the historic Miami neighborhood once known as Lemon City…The first phase of Magic City will bring art and entertainment to the emerging district and will include a sculpture garden, the 30,000-square foot-Magic City Studios and the 15,000-square-foot Factory, both of which will initially be used for events, an innovation center and an amphitheater, with the aim of creating a walkable campus-like neighborhood.” (Miami Herald)


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