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10 Must Reads for the CRE Industry Today (October 18, 2018)

Minutes from the Federal Reserve meeting indicate continued interest rate increases, reports the Wall Street Journal. Dallas Morning News looks into whether the Dallas-Fort Worth market can support all the new apartment construction planned for this year. These are among today’s must reads from around the commercial real estate industry.

  1. Fed Minutes Point to Continued, Gradual Interest-Rate Increases “Federal Reserve officials signaled they see a strong economy justifying continued interest-rate increases—and said they will watch for evidence their moves are keeping economic growth on an even keel, minutes of their September policy meeting showed. The minutes, released Wednesday after a three-week lag, follow several weeks of Fed officials trying to emphasize uncertainty about the precise level of interest rates that will neither spur nor slow growth, a destination favored right now by most officials.” (Wall Street Journal, subscription required)
  2. Pump and Trump “Since Donald Trump’s fortunes came surging back with the success of “The Apprentice” 14 years ago, his deals have often been scrutinized for the large number of his partners who have ventured to the very edges of the law, and sometimes beyond. Those associates have included accused money launderers, alleged funders of Iran’s Revolutionary Guard and a felon who slashed someone in the face with a broken margarita glass. Trump and his company have typically countered by saying they were merely licensing his name on these real estate projects in exchange for a fee. They weren’t the developers or in any way responsible. But an eight-month investigation by ProPublica and WNYC reveals that the post-millennium Trump business model is different from what has been previously reported.” (ProPublica)
  3. With 25,000 New Apartments in D-FW This Year, Will There Be Enough Renters? “More than 25,000 apartments will open their doors in Dallas-Fort Worth this year - more than in any other metro area in the country. Developers and market analysts are betting that there will be enough tenants to fill all the new rental units. With more than 100,000 new jobs in North Texas this year, they have reason to be optimistic. ‘Employment growth has been the tailwind this entire economic cycle and that has continued to push forward,’ said John Sebree, national director with Marcus & Millichap, one of the country's top apartment brokers.” (Dallas Morning News)
  4. Amazon Store Count Tops 600 “Amazon runs some 629 physical retail locations, including its bookstores, Amazon Go convenience stores, Whole Foods grocery stores and traveling Treasure Trucks, according to a count by Amazon tracking site TJI Research. To compile his unofficial map of Amazon's footprint, TJI Research founder Justin Smith included pop-ups that seem permanent, mostly at malls, but not more temporary installations, according to his blog post.” (Retail Dive)
  5. Trump’s Focus on a Washington Building Project Draws Scrutiny “Nearly two years before he would begin his presidential campaign, Donald J. Trump arrived in Washington to show off his plans for a luxury hotel on Pennsylvania Avenue under a deal he had reached to lease the site from the General Services Administration. But on that day in September 2013, he also had another property on his mind, only a block away in a prime location midway between the White House and the Capitol. ‘What he wanted to talk to me about was the F.B.I. project,’ Dorothy Robyn, who at the time was the commissioner of the General Services Administration’s Public Buildings Service, said in an interview.” (The New York Times)
  6. Housing Stocks Are Having Their Worst Year Since 2008, and Some See Even More Distress “Housing stocks are getting crushed. Two major homebuilder stock-tracking ETFs, the ITB and the XHB, are on track to post their worst years since 2008 — and some strategists see further downside. Lennar and KB Home fell more than 2 percent Wednesday after Credit Suisse downgrades, along with Home Depot and Lowe’s. The firm was particularly bearish on the group given weak housing starts data and rising interest rates.” (CNBC)
  7. Manhattan Retail Rents Continue to Dip in 2018 “According to CBRE's Q3 2018 Manhattan retail market report, New York City retail rents continued to drop during the third quarter, but forecasters are optimistic for the impending holiday shopping season. The average asking rent across Manhattan's 16 main retail corridors dropped 8.4% year-over-year, falling to $802 per sq. ft. Leasing velocity softened during the third quarter, closing out with 484,000 sq. ft. of velocity across 75 transactions. Of those transactions, 25 were signed by tenants in the food and beverage industry and 18 were signed by tenants in the apparel industry. Jewelry retailers also accounted for close to 17% of total square footage leased in the quarter, with just over 80,000 sq. ft.” (World Property Journal)
  8. The Crypto Conundrum “At Consensus 2018 — a conference where cryptocurrency die-hards convened to plot the future of blockchain — two pioneers in the budding industry battled over whether the encrypted database technology had a future at all. Bitcoin enthusiast and entrepreneur Jimmy Song faced off onstage against Joe Lubin, the soft-spoken co-founder of Ethereum, one of the more popular platforms for creating blockchain services.” (The Real Deal)
  9. Cannabis Company MadMen to Sell ‘Significant Portion’ of Real Estate Assets to Treehouse “MedMen Enterprises Inc. announced Thursday a deal to sell a "significant portion" of its real estate assets to Treehouse Real Estate Investment Trust, with the initial deal expected to generate about $12.5 million in proceeds after the repayment of debt. Additional properties are expected to be sold to Treehouse over the next 12 months. The properties sold to Treehouse will be leased back to MedMen, a U.S.-based cannabis company. Treehouse is a newly formed investment vehicle which looks to capitalize on the cannabis industry's growth.” (MarketWatch)
  10. What Do Midterm Elections Mean for the Single-Tenant Sector? “With our apologies to the city of Oakland, Calif., novelist Gertrude Stein once famously observed that ‘There is no there there.’ She could also have been talking about the coming midterm elections and their possible impact on commercial real estate and the net-lease sector. Historically, when the industry has been faced with major sea changes in the greater marketplace, a wait-and-see period descends on the investment side. We saw it in the run-up to the 2016 presidential elections and earlier that same year when the global marketplace watched with anticipation the outcome of the UK’s parliamentary vote on leaving the European Union.” (Commercial Property Executive)
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