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10 Must Reads for the CRE Industry Today (November 8, 2016) Photo by Joe Raedle/Getty Images

10 Must Reads for the CRE Industry Today (November 8, 2016)


  1. Banks continue to make commercial real estate loans tougher to get: Fed survey “Banks continued to tighten lending standards to commercial real estate loans in the third quarter, according to a Federal Reserve survey released Monday. The Fed survey of senior loan officers of 69 domestic banks and 21 foreign banks found standards were tightened on all types of commercial real estate loans. A large fraction of banks reported tightening standards for construction and land development and for loans secured by multifamily residential properties. A smaller fraction also tightened standards for loans secured by nonfarm nonresidential properties. Some Fed officials, like Boston Fed President Eric Rosengren, are worried that a bubble may have formed in the sector as interest rates have stayed close to zero since late 2008.” (MarketWatch)
  2. The 10 Hottest Real Estate Markets for Investors in 2016 “You’ve heard the old real estate adage before: Success is all aboutlocation, location, location.” While there are obviously other factors that come into play for someone trying to build wealth through real estate, location definitely plays a vital role in determining one’s overall return on their investment. If you buy a property in an area where prices are dropping or where cash flow is impossible, good returns will likely be nonexistent. But if you buy in areas where prices are increasing and monthly cash flow can be made, returns far greater than the stock market can be made.” (Forbes)
  3. A Construction Recession May Be On The Horizon “October construction spending recorded its first year-over-year decline since 2012. The mini-boom in construction between 2013-2015 appears to have fully moderated. The effects of rising construction wages and heightened regulatory costs associated with Basel III appear to be slowing an already sluggish recovery. That said, construction activity remains elevated in specific asset classes, especially Class A multifamily, which is already showing signs of oversupply. Outside of Class A multifamily, single family housing and commercial real estate markets continue to record low vacancy and elevated effective rent growth.” (Seeking Alpha)
  4. How has the U.S. commercial real estate market changed during the Obama years? “Despite the discord in Washington during the past eight years, the U.S. has seen significant economic improvement. GDP is at its highest rate in real terms ($18.5 trillion), while investment in numerous sectors, from advanced engineering to research and development, has reached record highs and is projected to grow rapidly ahead. Even indicators that haven’t fully rebounded, such as housing starts and wage appreciation, are improving. It’s not been without its big challenges: Obama’s time in power has been filled with economic ups and downs. But in recent years, success has trounced challenges, says John Sikaitis, Managing Director – Research, Americas. And the U.S. real estate industry has changed significantly as a result. He gives Real Views a rundown of eight years of Obama and explains priority areas for the incoming President.” (JLL Real Views)
  5. Property Managers Must Meet the Payment Needs of Millennials “Demand for rental properties is at unprecedented levels, thanks in part to the millennial generation.  Born between 1980 and 2000, this generation is leasing instead of buying thanks to a combination of preferences and economic factors. Millennials represent the largest generational cohort, topping even the baby boomer generation in sheer numbers. But their plans for marrying and home buying are significantly different than the generations that preceded them. Pew Research Center found that, while almost 60 percent of adults 18-31 were married and living in their own homes in 1968, that number was closer to 25 percent for the same age group in 2012. Instead, research by the Organization for Economic Co-operation and Development shows 60 percent of 25-34 year olds were renting in 2013.” (MultiHousing News)
  6. Hotel development plans will finish the year ahead of 2015 “The number of hotel units planned so far in New York City this year is up 46 percent from the same period in 2015, according to an analysis of Department of Buildings permit applications for known hotel projects by The Real Deal. Through October, developers planned 4,961 units in 34 known hotel projects of at least 10 units, up from 3,395 in 31 projects during the first 10 months of 2015. Hotel development plans peaked in 2014, when developers applied to build more than 9,000 hotel rooms. Last year, plans were cut nearly in half, signaling an end to what had been four consecutive years of year-over-year increases in planned projects, as TRD previously reported. But the slide has stabilized and the data show that hotel development has even picked up pace. The hotel units planned so far this year (4,961) is already more than 2015 by year’s end (4,630).” (The Real Deal)
  7. Election Is Blamed for New York Real-Estate Brokers’ BlahsConfidence among New York’s typically cheery real-estate brokers has slipped in the face of softening property markets and uncertainty about the presidential election. An index that tracked confidence of both commercial and residential brokers fell sharply in 2016 and to its lowest-ever level during the third quarter, according to report compiled by the Real Estate Board of New York, an industry group. The index was created in 2013. The decline corresponded with weakening residential and commercial sales, especially in Manhattan. At the same time retail vacancies have risen, and rents fell in many shopping corridors. But many blamed some of the contraction on the election, rather than fundamentals. John H. Banks III, the board’s president, said the political uncertainty slowed down ‘the pace of decision-making on a local and national scale.’” (The Wall Street Journal)
  8. Macerich expands ‘Santa HQ’ to five more malls “Macerich’s tech-driven, HGTV-sponsored Santa Claus experience will be expanded to five properties in California, Chicago, and metro New York this Christmas season. Kids can download an Elf-Ray Vision app to their smartphones—or used a provided tablet — to explore “Santa HQ” in 3D, take an Elfie Selfie to insert themselves in a customized holiday video, or test their gift-worthiness on the Naughty or Nice O’Meter. A 10,000-bulb synchronized light show at the attraction plays the Carol of the Bells. ‘With the addition of five new locations this year, thousands more HGTV fans will be given the opportunity to be wowed by this one-of-a-kind Santa experience,’ said Shannon Driver, Macerich senior VP of marketing and creative services.” (Chain Store Age)
  9. Beatty Development Debuts New Exelon Building in Baltimore “Beatty Development Group has completed the Exelon Building, a new mixed-use tower anchored by energy company Exelon Corp.’s Constellation subsidiary at the 27-acre Harbor Point project in Baltimore. The 900,000-square-foot high-rise was constructed at a cost of approximately $183 million, according to a third quarter supplemental report of the project’s general contractor, Armada Hoffler Construction. The Exelon Building is more than just a new commercial structure; it’s the flame that ignited the kick-off of the 3 million-square-foot Harbor Point development, a project that is expected to prove vital to the city’s renewal.” (Commercial Property Executive)
  10. Miami Condo Sales Plummet 19 Percent Annually in Q3, Yet Prices Increased “According to the Miami Association of Realtors latest housing market data for the third quarter of 2016, overall single-family sales decreased 6.8 percent year-over-year, from 3,685 to 3,433. Existing condo sales -- which are competing with a robust new construction market -- decreased 19.1 percent year-over-year, from 4,101 transactions to 3,318. Yet, mid-market Miami single-family homes posted increased sales in the third quarter as 17 Miami neighborhoods registered year-over-year home sales gains and median prices rose for the 19th consecutive quarter.” (World Property Journal)
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