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10 Must Reads for the CRE Industry Today (October 31, 2016)


  1. Real estate managers park assets in new investments “Real estate money managers are looking beyond the four food groups of retail, multifamily, office and industrial to provide investors with returns in a challenging investment environment. The managers are nibbling on everything from parking lots to memory-care facilities. Investors are not only investing in these areas through specialized funds, but also are finding that slices of diversified real estate funds are being invested in these niche investments. While institutional real estate allocations have been climbing steadily over the past four years, investors are increasingly nervous, said Doug Weill, managing partner of Hodes Weill & Associates, a New York firm that advises real estate managers. ‘We are seven years into the (economic) cycle,’ Mr. Weill said. ‘There is geopolitical unrest, risk is rising around the world and investors worry about a possible increase in interest rates.’Institutional investors' real estate allocations are expected to reach 10.3% in 2017, up from 9.9% this year and 9.5% in 2015, according to the annual real estate survey from Cornell University's Baker Program in Real Estate and Hodes Weill.” (Pensions & Investments Online)
  2. Economy Watch: Third Quarter Enjoys GDP Surge “Real gross domestic product increased at an annualized rate of 2.9 percent during the third quarter of 2016, according to the first (or advance) estimate released Friday by the Bureau of Economic Analysis. Economists expected an increase, but that much was more than expected. During the second quarter, real GDP increased 1.4 percent. Most kinds of economic activity gave third-quarter real GDP a boost, including positive contributions from personal consumption expenditures (people spending their money), exports, private inventory investment, federal government spending, and nonresidential fixed investment (largely commercial real estate). Those were partly offset by negative contributions from residential fixed investment and state and local government spending. Disposable personal income increased $125.3 billion, or 3.6 percent, in the third quarter, compared with an increase of $140.6 billion ( or 4.1 percent) in the second, the BEA said. Real disposable personal income, however, increased 2.2 percent, compared with an increase of 2.1 percent.” (Commercial Property Executive)
  3. The truth about the gender divide in real estate “When it comes to male-dominated industries, one that regularly tops the list is commercial real estate. The numbers bear that designation out. White men represent more than 58 percent of all professional positions in commercial real estate and more than 77 percent of senior executive positions, according to the 2013 Commercial Real Estate Diversity Report. Women comprise just 35 percent. On the other hand, residential real estate appears to attract far more women. About 62 percent of all certified Realtors are women, according to the National Association of Realtors. We took a closer look at the dynamics of the real estate industry and its pronounced gender divide to understand why one segment draws women in droves and the other struggles to diversify. One potential reason: the difference between fighting for a seat at the table and being at a distinct advantage with clients.” (Triad Business Journal)
  4. Global Commercial Property Investment Hits $200 Billion in Q3 “Global real estate consultant CBRE Group, Inc. is reporting this week that the worldwide value of commercial real estate investment transactions stayed above $200 billion in Q3 2016, suggesting that the market has stabilized after a drop in transactions at the start of the year. Globally, risk aversion among investors lowered transaction levels across all asset classes in the first half of the year. Bond and equity markets settled down in H1 2016, and this is also showing through in the real estate sector. Quarter on quarter, transaction value1 was down by 1% in Q3 2016; versus Q3 2015, it was down 9%...Investment transactions have been slowing since mid-2015, but that trend accelerated in H1 2016 and continued after the referendum result at the end of June. Excluding UK transactions, EMEA showed a year-over-year decline of 14%.” (World Property Journal)
  5. Aston Martin's First Real Estate Project Is Coming to Miami “Planned to house 390 high-end condominiums, the building will boast Aston Martin-designed interiors, including two private lobbies with custom reception desks, a two-story fitness center, and a full-service spa. Other amenities include a micro-cinema, a children’s room, an art gallery, an infinity pool on the 55th floor, and an exclusive yacht marina. Luxury carmaker Aston Martin has announced its first-ever real estate project: a 66-story residential tower in Miami. Overlooking Biscayne Bay, Aston Martin Residences was conceived by the British brand in partnership with G and G Business Developments, owned by Argentina’s prominent Coto family. The real estate company purchased the 1.25-acre site—located on the Miami River at 300 Biscayne Boulevard Way—for a record-breaking $125 million in 2014.” (Forbes)
  6. Local Multifamily Market Continues To Log Higher Sales, Strong Demand “Multifamily real estate sales have been strong in Memphis for a couple of years, and the 41 transactions posted in the third quarter mark the most recorded in a quarter in two years. ‘The multifamily market continues to be very strong and has been the strongest real estate sector for the past several years,’ said Mark Fogelman, president of Memphis-based Fogelman Management Group, a national multifamily property management company. CBRE Memphis’ multifamily summary for second quarter 2016 shows a 93.2 percent total occupancy rate, with the percentage near 96 percent in properties built since the 1990s and positive absorption of 1,375 units. Market rents are up 4.7 percent overall, with rents up an average of 7.9 percent for properties built since the 2000s.” (Memphis Daily News)
  7. $1B Megacomplex to House Park Hyatt’s First L.A. Location “Park Hyatt has announced that it will locate a new five-star hotel at Oceanwide Plaza, a colossal mixed-use development positioned to reshape the architectural character of downtown Los Angeles. ‘The Los Angeles market has seen unprecedented growth over the last several years, and we know it is a destination where our guests are traveling,’ said David Tarr, Hyatt’s SVP of real estate and development for the Americas. ‘We are thrilled to be bringing the Park Hyatt brand to this critical market and placing it in an ideal location within Oceanwide Plaza.’ The project marks new territory for both the hotelier and the developer. The luxury hotel is Park Hyatt’s first foray into Los Angeles, where downtown development has seen a boom in the last year, as indicated by earlier reports from MHN. Valued at $1 billion, Oceanwide Plaza is the first North American project by Beijing-based conglomerate Oceanwide Holdings, the parent company of Oceanwide Plaza LLC, which owns the property.” (MultiHousing News)
  8. It’s anchors aweigh at PREIT in strategic repositioning “PREIT’s stated strategic shift to pack its portfolio with more relevant anchors is moving ahead at full steam. At its Cumberland Mall in New Jersey this month, Dick’s Sporting Goods opened in a 50,000-sq.-ft. space vacated by J.C. Penney. In December, another former Penney’s space will debut as a Round One Entertainment location, and being readied for 2017 openings at other PREIT malls are Home Goods and Field & Stream stores, a Whole Foods Market, and a Legoland Discovery Center. ‘We are continuing to capitalize on our portfolio of high-quality properties in compelling markets by bringing in exciting retail and entertainment destinations,’ said PREIT CEO Joseph Coradino. ‘At the same time, we are systematically reducing exposure to select department stores thereby creating value and driving traffic and sales momentum.’ A Primark opened at the company’s Willow Grove Park in July, and a Saks OFF 5th opened at its Springfield Town Center in September.” (Chain Store Age)
  9. Retail vacancies down spurring new construction “A tight market for retail real estate is spurring a Central Florida construction boom, according to real estate firm CBRE. Orlando-area retail vacancy rates dropped to 5.7 percent in the third quarter, the lowest since at least 2011, CBRE reported. Overall, lease rates dropped in the region by 4.2 percent to $14.52 a square foot. That was driven in part by lower prices per square foot negotiated by several new big-box stores. ‘There are a lot of corners of the market, and we are finally seeing a lot of construction and growth,’ CBRE Orlando vice president Bobby Palta said. ‘Lease rates are going up across the board.’ The retail real estate growth is coming from an improving economy, decreasing unemployment and more residents moving to Central Florida. Among the biggest new retail projects are a new Academy Sports and Outdoors and a new Hobby Lobby store near the Mall at Millenia.” (Orlando Sentinel)
  10. Sporting goods retailer revs up expansion Modell’s Sporting Goods is opening a flagship on the site of a former rival.“Modell’s will open a two-level, 20,000-sq.-ft. store on the Upper East Side of Manhattan, in a site formerly occupied by Sports Authority. The opening is slated for mid-November.  The store will become Modell’s flagship store in Manhattan, said William Rudin, CEO of property manager Rudin Management Company, in a release. New York-based Modell's is in an expansion mode. In addition to the flagship, it’s scheduled to open a store in Brooklyn, New York and two in New Jersey next month, giving it a total of 159 locations.” (Chain Store Age)
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