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10 Must Reads for the CRE Industry Today (November 7, 2018)

San Francisco voters approved a tax increase on local businesses to fund homeless services, reports The New York Times. A European real estate firm enters the U.S. debt markets, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Crystal City Properties Were a Bust. Then Amazon Called “When JBG Smith Properties went public in July last year, the real-estate company was burdened with a collection of aging office buildings in Northern Virginia that even the federal government rejected. Now those buildings could be among the most valuable properties in the U.S. JBG has been in negotiations with Amazon.com Inc., which has expressed interest in putting thousands of employees in these Crystal City office buildings, according to people familiar with the matter. The online retail giant is in advanced talks with Crystal City officials to award a slot as one of Amazon’s new headquarters, these people said.” (Wall Street Journal, subscription required)
  2. Amazon’s Real Estate Team Did Its Homework “More than one year after Amazon announced its intention to establish a new headquarters outside of Seattle, the company appears poised to open two major offices in the New York and Washington, D.C. metro areas. The choice of metro areas likely reflects strong human, financial, and political capital in the New York and Washington, D.C. metro areas. The selection of neighborhoods within those metros—Long Island City in Queens, N.Y. and Crystal City in Arlington, Va.—shows considerable judgment by Amazon’s real estate team.” (Brookings Institution)
  3. San Francisco Approves Business Tax to Fund Homeless Services “Voters in San Francisco approved a tax increase on the city’s largest businesses that would nearly double its budget for homeless services, a measure seen as an effort to hold wealthy technology companies accountable for exacerbating the local housing crisis. Tech executives have poured money into the campaigns for and against the measure. Jack Dorsey, the chief executive of Twitter and the payments company Square, spent $125,000 to oppose it, while Marc Benioff, the chief executive of Salesforce, spent $2 million to support it.” (The New York Times)
  4. More Warehouse Space on the Way at DFW Airport “A 3-building industrial park is in the works at DFW International Airport. The DFW Mustang Park project is planned on Mustang Drive near State Highway 121. The more than 60-acre industrial project will have three buildings, according to filings with DFW Airport. An affiliate of industrial developer and investor Prologis Inc. is building the largest share of the project. Prologis plans to develop a 401,280-square-foot warehouse and a 429,720 square-foot building on land leased from the airport.” (Dallas Morning News)
  5. Giant European Property Firm Joins U.S. Real Estate Lending Frenzy “AXA Investment Managers is joining the rush to lend money for U.S. commercial real-estate deals with its purchase of a business with a $9.4 billion debt portfolio, the latest sign that the property lending market is heating up. The firm, a unit of the French insurer AXA and one of Europe’s largest real-estate investors, is acquiring the U.S. debt fund business of Quadrant Real Estate Advisors for an undisclosed amount. The business, based in Atlanta, holds loans backed by office buildings, shopping centers, apartment buildings and other commercial property throughout the U.S.” (Wall Street Journal, subscription required)
  6. Why SoftBank’s Huge Real Estate Investments Just Make Sense “Even for a company whose corporate brand seems to be built on a strategy of shoveling huge piles of money into start-ups, SoftBank’s real estate investments are eye-popping. In the past year, there’s been $400 million in house-flipping company Opendoor and $450 million in real estate brokerage Compass, followed by part of another $400 million round, leading a $865 million investment in construction company Katerra.” (Barron’s)
  7. Beyond the Cycle: Why Has the Growth Spurt Persisted—and What Could Bring It Down? “Have a series of whiffed swings left the current business cycle mired in the ninth inning, in danger of stranding the winning run in scoring position? Would it be more apt to relate the economy to a fourth-quarter red-zone nail-biter with rising wages threatening to blitz on third down? Or is it best said that the expansion has entered its third trimester, careening towards an inevitable deliverance that, with luck, will be neither premature nor stillborn?” (Commercial Observer)
  8. L.A. Backs Off on Allowing Airbnb Rentals in Rent-Controlled Apartments “A Los Angeles City Council committee recommended Tuesday that the city prohibit rent-controlled apartments from being offered for short stays on Airbnb and similar platforms. If such apartments can be rented out for a few days at a time, ‘there are so many opportunities for fraud and a loss of housing,’ Councilman Bob Blumenfield said. The decision, which still must be approved by the full council, would reverse plans set forward in September by the Planning Commission, whose members are appointed by Mayor Eric Garcetti, and revert to an earlier proposal championed by City Councilman Mike Bonin.” (Los Angeles Times)
  9. Increased Commercial Sales Help Drive U.S. Debt Markets in 2018 “According to data from CBRE, demand for commercial real estate debt in the U.S. remains strong, supported by an increase in commercial sales transactions in Q3 2018. Banks, alternative lenders and agencies all contributed to the increase in commercial lending volume. The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings in the U.S, ended Q3 2018 on a strong note at a value of 252--up nearly 25% from 202 in June. Compared with a year ago, the index is up by 13.1%.” (World Property Journal)
  10. What a Divided Government Means for CRE “It was a long night but the results of the midterm elections are clear: the Democrats have retaken the House of Representatives while the Republicans have expanded their hold on the Senate. We have, in short, a divided government in Washington, DC, with all its benefits and drawbacks.” (GlobeSt.com, subscription required)
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