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10 Must Reads for the CRE Industry Today (October 28, 2016)


  1. Economy Watch: Industrial Emerges as Strongest Asset Class “A near-term U.S. recession isn’t being widely predicted, but institutions appear to be preparing for eventual cyclical weakness, according to Emerging Trends in Real Estate 2017, a report recently released by PricewaterhouseCoopers and ULI. The current business cycle is already the fourth-longest in U.S. history (87 months as of October), far longer than the average 58-month upturns since World War II, the report noted, though averages are of little help in understanding business cycle duration. Cycles have been lengthening over the past half-century, and both the 1980s and 1990s saw growth phases of 92 and 120 months, respectively. The report also examined trends in various commercial real estate sectors. Industrial, it said, rates well now, since it typically performs well during economic slowdowns. PWC and ULI rated industrial the best opportunity for investment and development going into 2017. The advantages of industrial include continued strong demand drivers, restrained construction and lower perceived risk. Strong locations in growing metro areas are typically supply constrained.” (Commercial Property Executive)
  2. Stocks close lower after global bonds sell-off; real estate slides 2% “U.S. equities closed lower on Thursday as investors parsed through a fresh batch of corporate earnings results and economic data, while sovereign bonds around the world fell. ‘There's a lot of activity taking place, but the middle of the rope is not moving’ in the stock market, said Mike Bailey, director of research at FBB Capital Partners. ‘Bond investors that were worried the UK and Europe were going off a cliff got a bit more relaxed.’ The Dow Jones industrial average gyrated between gains and losses before closing about 30 points lower, with IBM contributing the most gains, offsetting losses in Boeing. The S&P 500 also held near the flatline for a large part of the session, before closing 0.3 percent lower, with telecoms advancing 1.6 percent to lead advancers and real estate falling 2.4 percent to lead decliners. The Nasdaq composite lagged, dropping 0.65 percent." (CNBC)
  3. Foreign buyers are snapping up Dallas office towers “Three of the biggest real estate deals this year in Dallas have something in common. All three office buildings - two in Uptown and one in downtown Dallas - were bought by foreign buyers who paid top price. The high-profile Dallas property purchases were fueled by a wave of billions of dollars of foreign money pouring into U.S. real estate. Traditionally, most of that money has landed in major coastal "gateway" markets like New York, Chicago and cities in California.” (Dallas Morning News)
  4. How Miami’s real estate market is coping with Treasury’s shell company crackdown: panel “For those in Miami’s real estate market waiting for the Treasury Department to stop tracking shell companies that buy luxury homes, don’t hold your breath. A panel of industry experts, gathered Wednesday morning at the downtown Miami Hilton hotel, said the Financial Crimes Enforcement Network was only getting started with its efforts to crack down on money laundering in residential real estate. In January, FinCEN launched its first so-called 'Geographic Targeting Order,' or GTO, which required title insurers in Miami-Dade County and Manhattan to disclose the true owners of limited liability companies that paid all cash for homes priced above $1 million. The order was greatly expanded in July, encompassing all of South Florida, chunks of California and Texas, and all five of New York City’s boroughs. 'This is very much a pilot program,' said Leonard Prescott, regional counsel for the First American Title Insurance Co. and one of the panelists. 'They’re either going to extend the [geographic targeting orders] or start rulemaking.'" (The Real Deal Miami)
  5. Columbia Dedicates $6B Harlem Campus “Columbia University turns the spotlight on its greatest expansion endeavor in more than 100 years with a dedication ceremony for its new $6.3 billion Manhattanville campus in New York City’s West Harlem area, just north of its main campus. The event was an opportunity for the school to show off the development, which will come together in phases and ultimately span 6.8 million square feet. It’s a day that’s been a long time coming. Columbia began the legwork for the Manhattanville campus in 2003, and five years later, commenced pre-construction work on the 17-acre site located between 25th and 133rd streets in what was once an industrial zone. The first stage of the gargantuan undertaking has yielded the Jerome L. Greene Science Center, which, at 450,000 square feet, marks the largest building Columbia has ever developed. The facility will house the Mortimer B. Zuckerman Mind Brain Behavior Institute, providing meeting rooms, more than 50 laboratories and interactive workspace.” (Commercial Property Executive)
  6. USF unveils new $134M student housing project “The University of South Florida has begun construction on the first phase of what it's calling a ‘transformational new housing village’ on its Tampa campus. The project is a $134 million public-private partnership with Capstone-Harrison Street LLC, which is a partnership of Capstone Development Partners LLC and Harrison Street Real Estate Capital, the university said in an announcement. It is the largest public-private partnership in the history of the state university system and the largest approved by the Florida Board of Governors, according to USF. Named ‘The Village,’ the community features the following buildings: Beacon, Summit, Endeavor, Pinnacle and Horizon. The dining hall will be named ‘The Hub,’ and a wellness facility will be called "The Fit." (See renderings in the photo gallery.) It is being built on the north portion of campus and will replace the Andros housing complex, built in the 1960s.” (Tampa Bay Business Journal)
  7. Starboard Gets Impatient With Macy’s After Investing ‘Too Early’ “Macy’s Inc. activist holder Starboard Value LP invested in the retailer 'too early' and may grow impatient for bolder changes at the company, where it still sees value to be unlocked, Chief Executive Officer Jeff Smith said Thursday. Macy’s is still largely “exploring the things we want them to do,” including looking at options for its real estate, Smith said in a Bloomberg TV interview. ‘We are not big fans of wait and see,’ Smith said. ‘There is value there. How and when it gets unlocked is still open.’ Starboard disclosed its activist stake in the department-store chain in July 2015, saying the stock would be worth $125 if it better capitalized on its real estate by separating properties from operations. Macy’s shares have tumbled 47 percent since that conference presentation, trading at about $35. A representative for Macy’s didn’t immediately respond to requests for comment.” (Bloomberg)
  8. Big changes, including 35-story tower, planned for around Koreatown's Wilshire Galleria “Late last year we heard that new owners of Koreatown’s Wilshire Galleria were planning to redevelop the historic department store-turned-shopping-mall as either a multifamily project or a mixed use hotel with residential units. Now, an environmental study of the project shows that the Harridge Development Group is going with the latter option, converting the Galleria into a hotel and adding a 35-story tower and seven-story condo structure on the same site. The high-rise building will also contain condo units—355 to be exact—along with 2,832 square feet of retail space. Another 2,270 square feet of retail space will be located on the ground floor of the seven-story building. Both structures will rise from what’s now a parking lot behind the Galleria. Meanwhile, the developers are planning to an additional floor to the five-story Galleria in order to accommodate 14 additional rooms and a rooftop pool and barbecue area. The proposed hotel would include 160 rooms total, along with a ground floor restaurant, dining area, two lounges, and a gift shop. The high-rise tower will include eight stories of above-ground parking, along with two subterranean levels. The 720 spaces in the building will serve the entire complex, including the hotel.” (Los Angeles Curbed)
  9. Zoning blues: City requires Sam Chang to demolish Midtown church to make way for hotelDespite the developer’s willingness to preserve a significant part of a landmarked church in Midtown, the city is requiring that most of the building be demolished to make way for a new hotel. The city’s Department of Buildings is forcing hotel mogul Sam Chang to raze most of Christ Church at 338-344 West 36th Street due to zoning rules in the area, the New York Post reported. The second-floor of the church is setback six feet from the first, but the city’s zoning law requires that the facades of new buildings in area rise at least 80 feet above the sidewalk with no setbacks. Chang, head of the McSam Hotel Group, bought the church in 2014 for $50.75 million. He initially planned to demolish the structure to make way for a 500-key Marriott-branded hotel. After hearing the pleas of neighborhood groups and officials, however, Chang agreed to keep the building’s brick facade, including five tall chapel windows on the second floor.” (The Real Deal)
  10. Report: Amazon to open 20 grocery stores over the next two years “The nation’s largest online retailer has big plans for brick-and-mortar expansion. Amazon is planning to operate a 20-location pilot for its grocery store concept by the end of 2018, in such locations as Seattle, Las Vegas, New York, Miami, and the Bay Area, reported Business Insider. What’s more, the retailer believes the market has room for as many as 2,000 of its Amazon Fresh-branded stores over the next decade. According to the report, Amazon will experiment with different versions of stores during the pilot program. Ten of the locations will be ‘click-and-collect’ drive-up spots for Amazon customers to pick up their online orders. The other 10 will be more traditional stores, where shoppers can stroll the aisles with carts.” (Chain Store Age)
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