10 Must Reads for the CRE Industry Today (September 12, 2016)

10 Must Reads for the CRE Industry Today (September 12, 2016)


  1. 5 Reasons to Invest in U.S. Real Estate Post-Brexit “With continued, significant volatility in the U.S. and global financial markets, driven primarily by a post-Brexit fallout, lower oil prices, and an economically weaker China, investors looking for a "safe harbor" are turning to real estate, either through direct investing or via real estate investment trusts (REITs). While Brexit has driven those safe harbor investors into the commercial U.S. real estate market, there's little doubt that real estate is a reasonable, profitable and diversified play for any investment portfolio. That will be the case well after the Brexit-vote fallout subsides, and investor attention turns to other volatile global bourses.” (The Street)
  2. Why Commercial Real Estate Is Starved For Diversity “When I began covering commercial real estate in Dallas in 2000, I remember attending an industry event and being struck by how few women and minorities were in the crowd. Not much has changed since. In the who-you-know world of commercial real estate, it’s still very much a white man’s game. The situation seems to be more pronounced in Dallas, compared to northern markets like Chicago and New York. But it’s certainly not unique to Dallas. Commercial real estate has lagged other professions in becoming more diversified. For years, information on the topic was anecdotal. Hard data wasn’t revealed until August 2013, when the Commercial Real Estate Diversity Report was released. The study looked at the hiring pool—college-educated individuals between the ages of 25 and 64—and discerned that the industry was made up of 39.5 percent white women, 36.7 percent white men, and 23.8 percent black, Asian, or Hispanic men and women. It then analyzed employment information on five job categories in commercial real estate—senior executives, mid-level managers, professionals, technicians, and clerical workers—and found that white men hold the majority of jobs in all categories except clerical workers.” (D Magazine)
  3. Economy Watch: Nonresidential Construction Still Strong “There’s still promise of growth ahead for U.S. nonresidential construction: The Dodge Momentum Index grew to 134.9 in August (2000 = 100) from its July reading of 133.2. The index, which is published by construction industry data specialist Dodge Data & Analytics, is a measure of the first (or initial) report for nonresidential building projects in planning, which anticipates construction spending for nonresidential buildings by a year. A 1.7 percent month-over-month increase from July for institutional planning, along with a 1 percent gain for commercial planning, drove the overall gain in August. It’s the fifth month in a row that the Momentum Index has increased, which is the longest such streak since late 2012 and early 2013. Compared with this time last year, the Momentum Index is also 16 percent higher, reflecting a rise in institutional planning of 22 percent, and commercial planning by 11 percent. That both sectors are showing such improvement suggests developers are shrugging off sluggish economic data and the uncertainty surrounding the November elections, and moving ahead with plans for new projects, Dodge posited.” (Commercial Property Executive)
  4. Report: Amazon poised to launch 100 pop-ups in US malls “Amazon plans to open dozens of new pop-up stores in U.S. shopping malls over the next year to showcase its range of connected devices, a source has told Business Insider. Job listings in markets including Miami and West Hartford, CT seek to fill a number of positions for 'Amazon device pop-up stores,' noting the concept has 'emerged from the test phase with a goal to expand and grow.' Amazon has run temporary pop-ups and kiosks in California malls since 2014, aimed at featuring devices include the hands-free Echo speaker as well as the Fire TV, Fire tablets, Kindles and the now-defunct Fire phone.  The pop-ups are separate from the full brick-and-mortar stores that Amazon opened in Seattle last year and is planning for San Diego, CA and Portland, OR.” (Retail Dive)
  5. Bankruptcy again for Kmart? “Kmart, the Detroit-born retail chain that helped define the big box discount store trend in the 20th Century, is now struggling to make it through even one more year. Battered by competitors such as Walmart, Meijer and Amazon.com, Kmart's parent company, Sears Holdings, is facing plunging sales, deteriorating finances and according to some retail industry experts, the possibility of bankruptcy as early as 2017. The suburban Chicago-based corporation has closed hundreds of unprofitable stores in the past decade in an effort to stop the losses, which have exceeded $8 billion since 2011. Once known for blue light specials, Kmart is now infamous for its red ink. There were 51 Kmarts left in Michigan early this year, down from 86 in 2006, according to Sears Holdings' annual reports. Nationwide, the company started the year with 941 Kmart and 731 Sears locations. A decade earlier, there were 1,416 Kmarts and 2,427 Sears, including specialty Sears stores.” (Detroit Free Press)
  6. Airbnb may not be the cheaper alternative: report “A new report, funded in part by big hotel chains wary of the lodging upstart, claims that Airbnb’s average daily room rate in its top 20 markets was on par with that of the hotel industry in 2015. In 10 cities, including Orlando, Chicago and New Orleans, Airbnb’s room rate was higher, according to the analysis from Share Better, a group that includes hotels, politicians and affordable housing advocates. ‘Airbnb aggressively markets themselves as a cheaper alternative to hotels,’ said Share Better’s Neal Kwatra. ‘In fact, their rates are just as high and in many cases higher than hotels in major cities across the country.’ Airbnb users often rent out entire homes. The report attempts to account for this by only considering listings that are comparable to a hotel room, such as condos and apartments of three bedrooms or less. On that basis, Airbnb’s average daily room rate in its top 20 US markets in 2015 was $160.47, or just 2 percent less than that of hotels in those cities, the report said.” (New York Post)
  7. RealtyShares Receives $30 Million Line of Credit to Prefund Real Estate Offers “Real estate crowdfunding platform RealtyShares has received a $30 million line of credit to pre-fund real estate offers listed on their marketplace. The line was described as the first ever to be used for both debt and equity offers listed on a real estate marketplace. There are other platforms pre-funding but they have, so far, focused only on debt offerings. The name of the firm providing the line was not disclosed by the company. Javier Benson, RealtyShares Head of Capital Markets, who was key in getting the line successfully executed, told Crowdfund Insider the line of credit would significantly cut the time in settling transactions on the platform.” (CrowdFund Insider)
  8. There’s a new normal in high-end Manhattan real estate: discounts “Over at One57—once the ultimate symbol of New York City’s seemingly insatiable thirst for ultraluxury condominiums—another apartment is selling at a significant loss. Unit 62A was bought by an LLC named Escape from New York for $31.67 million in April 2014, the same year the 90-story skyscraper designed by Pritzker Prize–winning architect Christian de Portzamparc was completed, according to public records. Six months later, the buyer tried to make a profit by putting the three-bedroom apartment back on the market at $38.9 million. A year went by without a sale. After a change of brokers, it was relisted in November of 2015 for almost $10 million less, at $29.9 million, according to StreetEasy. After two more price cuts in May and September of this year, the residence was last asking $25 million….Price reductions are not only happening at One57 but at other prime properties as well. Prices for luxury residential real estate in Manhattan declined for the 10th consecutive month in July, marking 'a point of oversaturation,' said Krishna Rao, an economist at StreetEasy.” (MarketWatch)
  9. Dense, Walkable Urbanism Drawing Corporate Offices to Plano, Texas “In the global competition for corporate headquarters, a 255-acre (103 ha) project anchored by an open-air urban village in Plano, Texas, is landing some big names. Toyota, FedEx, JPMorgan Chase, and Liberty Mutual are among the companies building offices in the project, which includes a 15-story hotel, a 55,000-square-foot (5,100 sq m) food hall, and more than 1,000 residential units. One of the largest eat/work/play/live developments in Texas, the $3 billion project is attracting companies by focusing on the interests of their generation X and millennial employees, says Fehmi Karahan, chief executive of the Karahan Companies, the master developer. ‘Human resource departments are involved in the decision-making process,’ Karahan says. ‘They were emphasizing being in the right location for their employees.’ Legacy West is located at the intersection of two highways, Dallas North Tollway and State Highway 121, about 20 minutes from Dallas/Fort Worth International Airport (DFW). The land is part of a 400-acre (162 ha) parcel purchased in 1987 by retailer JCPenney. The company built a corporate headquarters on 120 acres (49 ha), but left the rest of the land as greenfield for agriculture and grazing cows. In 2014, JCPenney put the land up for bid, attracting interest from several national developers. Rather than buying the land outright, Karahan’s offer made JCPenney a partner in the project, creating a new entity to develop the land—along with developer KDC and apartment specialist Columbus Realty, which was cofounded by former Dallas Cowboys quarterback Roger Staubach.” (Urban Land Institute)
  10. A Glorified Sidewalk, and the Path to Transform Atlanta “Even though just a small fraction of the loop trail has been completed, Atlantans, in one of the purer expressions of America’s newly rekindled romance with city life, have already passionately embraced the project. And like any budding romance, it is full of high hopes — for an Atlanta that is more racially integrated, less congested and, in a change refreshing to many here, more focused on improving the lives of residents rather than just projecting a glittering New South image to the rest of the world. It’s not just Atlantans who see something that is potentially transformative. ‘It’s the most important rail-transit project that’s been proposed in the country, possibly in the world,’ said Christopher B. Leinberger of the George Washington University School of Business, who follows urban redesign projects and has for years called Atlanta ‘the poster child of sprawl.’ More than 30,000 people have taken a three-hour bus tour of the proposed loop; the answer to 'Have you taken the tour?' has become a kind of litmus test of Atlanta civic pride.” (The New York Times)
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