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10 Must Reads for the CRE Industry Today (October 4, 2018)

The yield on the benchmark 10-year U.S. Treasury surpassed the previous peak set in July 2011, according to the Wall Street Journal. Barnes & Noble’s board of directors is exploring sale alternatives, reports MarketWatch. These are among today’s must reads from around the commercial real estate industry.

  1. Treasury Yields Rise to Multiyear Highs After Strong Data “U.S. government bond yields soared to multiyear highs Wednesday after data showed the U.S. economy remained robust in September, triggering the latest retreat from safe debt. The yield on the benchmark 10-year U.S. Treasury note, used as a reference for everything from mortgages to student debt, jumped to 3.146%, according to Tradeweb, surpassing a high-water mark dating back to July 2011 and passing the 3.056% it settled at Tuesday. Longer-dated debt came under pressure too, as bond prices fall as yields rise.” (Wall Street Journal, subscription required)
  2. Federal Reserve Prepares for Next Crisis, Bets It Will Begin Like the Last “On the tenth anniversary of the 2008 financial crisis, which started with an unexpected panic in an under-appreciated corner of the financial sector, the emphasis in recent Fed speeches and research on avoiding excess leverage and financial market imbalances is understandable, but risks ignoring the possibility that the next recession may result from runaway inflation. ‘There clearly has been a shift at the Fed toward more attention’ to leverage ratios, financial buffers and other measures of financial market resilience, said Robert Gordon, economist and social sciences professor at Northwestern University and an expert on productivity and economic growth.” (Reuters)
  3. Barnes & Noble Stock Rallies 22% as Company’s Board Explores Sale “Shares of Barnes & Noble Inc. rallied 22% in the extended session Wednesday after the bookstore chain said its board of directors has decided to enter a formal review process to evaluate "strategic alternatives" for the company, it said in a statement. That follows multiple ‘expressions of interest’ from parties in making an offer to buy the company, including from Barnes & Noble's chairman Leonard Riggio, it said. The board has appointed a special committee to lead the review, and there's no assurance a deal will be reached, Barnes & Noble said.” (MarketWatch)
  4. 100 Days In, Atlantic City’s Reopened Casinos Looking Good “One has Elvis Presley’s Rolls Royce, the costumes the Beatles wore onstage, and the management know-how and money of one of the world’s largest and most successful hospitality companies — even as it replaces its boss. The other has a successful sports betting facility, a redesigned casino floor and family owners determined not to make the same mistakes that sank its predecessor. Two of the five Atlantic City casinos that shut down since 2014 will mark their 100th day of operations Thursday, a milestone that comes after the seaside gambling city recovered some of the money and jobs it had lost in the closures.” (Associated Press)
  5. Shopping-Mall Vacancies Are Highest in Seven Years After Big-Box Closings “Rising shopping-mall vacancies across the U.S. are driving down rents, signaling that many retail centers continue to struggle despite the country’s strong economic growth and buoyant consumer confidence. The average rent for malls in the third quarter fell 0.3% to $43.25 a square foot in the third quarter, down from $43.36 in the second quarter, according to data from real-estate research firm Reis Inc. The last time rents slid on a quarter-over-quarter basis was in 2011.” (Wall Street Journal, subscription required)
  6. It's Expensive to be a Tenant in California. Will Proposition 10’s Rent Control Expansion Help? “In less than five weeks, California voters will decide on Proposition 10, a ballot initiative that would allow cities and counties across the state to expand rent control. Supporters of the measure say it will offer relief for tenants during a time of unprecedented housing affordability problems in California. Opponents contend it will stymie housing construction — the levels are already low — and further increase costs. Here’s a rundown of some of the difficulties renters face and how Proposition 10 would affect them and broader affordability issues.” (Los Angeles Times)
  7. Bayonne, N.J.: Grit Gives Way to Luxury, and Skee-Ball “From the lofty perch atop the Bayonne Bridge, which spans the Kill Van Kull to Staten Island, the postindustrial waterfront city of Bayonne, N.J., resembles a miniature model. Down on the ground, Bayonne, which has about six square miles and 67,000 people, has more conventional proportions. Yet there is still a pleasant sense of proximity, residents say. Short blocks, shopkeepers who know their customers, and families that stick around for generations foster intimacy.” (The New York Times)
  8. Amazon’s New Mall of America Installation Is Absolutely Fabulous “Last night I had the chance to get a sneak peak of Good Housekeeping magazine's new pop-up store at the Mall of America, dubbed GH Lab, that it designed in partnership with Amazon. The experience took my breath away. I felt like the late, great Bill Paxton in Aliens. I wanted to shout “Game over, man!” from the top of Legoland for all the mall to hear.” (Forbes)
  9. Office Tenant Demand for More Parking Strong in U.S. “Based on a new report by global real estate consultant CBRE, office parking ratios in both downtown and suburban office markets across the U.S. and Canada are unlikely to see significant change in the next five years, despite increases in ride sharing and the anticipation of autonomous vehicles. CBRE surveyed a mix of office leasing professionals and office investors, 75 percent of whom said that tenant demand for office parking will stay the same, or even increase, by 2023, as most workers--86 percent in the U.S.--still commute by car.” (World Property Journal)
  10. Extell Looking to Sell Hudson Yards Rental Tower for $775M “With the city’s multifamily market showing new signs of life, Gary Barnett is looking to sell his recently completed luxury rental tower in Hudson Yards. Barnett’s Extell Development put the 600-unit building at 555 10th Avenue on the market with an asking price of $775 million, sources told The Real Deal. A team at Newmark Knight Frank led by Jimmy Kuhn is marketing the property.” (The Real Deal)
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