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10 Must Reads for the CRE Industry Today (September 17, 2019)

The trade wars and a slowing economy are threatening the warehouse sector, according to the Wall Street Journal. New York’s Metropolitan Transportation Authority is looking to upgrade its retail offerings, reports The New York Times. These are among today’s must reads from around the commercial real estate industry.

  1. E-Commerce Made Warehouses Hot. Trade War Could Cool Them Down “The rise of e-commerce has pushed up warehouse rents and made industrial buildings one of the hottest sectors in real estate. Now, a slowing economy and trade dispute between the U.S. and China threaten that boom. In a new report, trade group NAIOP forecasts that less new industrial space will be occupied over the next two years, compared to the past two years. The group says the difference between new space being occupied and old space being vacated will drop to 37 million square feet per quarter over the next two years, down from 60 million over the past two years.” (Wall Street Journal, subscription required)
  2. 8 Years of Trump Tax Returns Are Subpoenaed by Manhattan D.A. “State prosecutors in Manhattan have subpoenaed President Trump’s accounting firm to demand eight years of his personal and corporate tax returns, according to several people with knowledge of the matter. The subpoena opens a new front in a wide-ranging effort to obtain copies of the president’s tax returns, which Mr. Trump initially said he would make public during the 2016 campaign but has since refused to disclose.” (The New York Times)
  3. New Life Coming to West Chelsea’s Terminal Stores Building “Joint-venture partners L&L Holding Co., Normandy Real Estate Partners and an unidentified institutional investor plan to replace the 1.2 million-square-foot property’s half-million square feet of storage space with new offices as well as block-long interior passageway for vibrant public use. The team paid $880 million last year for the 19th century relic, which takes up the whole block bounded by Eleventh and Twelfth avenues and West 27th and West 28th streets. It stands across 27th Street from the even more monumental Starrett-Lehigh Building.” (New York Post)
  4. WeWork Wants To Be More Than Office Space. It Hasn’t Had Much Success “We Co. Chief Executive Adam Neumann likes to say that office space is for WeWork what books were for Inc. —just the beginning. His vision spans schools, gyms and retail. He even boasted that his rental-apartment venture WeLive would become bigger than WeWork. That vision remains far off. After investing hundreds of millions of dollars in more than half a dozen side businesses like education, wellness and short-term apartment rentals, We has struggled to demonstrate that any of them are the fast-growth profit centers the company had envisioned.” (Wall Street Journal, subscription required)
  5. Singaporean Investors Ink $1.4B Deal with Digital Realty “Digital Realty and affiliates have entered into an agreement with Mapletree Investments Pte. Ltd. and Mapletree Industrial Trust, of Singapore, to sell a portfolio of 10 data centers and to establish a joint venture for a further three hyper-scale data centers. Total consideration for both transactions will amount to nearly $1.4 billion.” (Commercial Property Executive)
  6. Gap, J.Crew, Hudson’s Bay and the Unrelenting Collapse of the Middle in Retail “It finally seems that most people have caught up to the fact that reports of retail’s death are greatly exaggerated. There is no retail apocalypse. Software is not eating retail. Brick-and-mortar stores are not going away. Traditional retailers are not all doomed. And Mexico is never paying for that wall. In the United States it’s a virtual certainty that this year will end with physical stores sales not only being up year over year (again) but also, according to eMarketer, contributing more incremental sales growth than e-commerce.” (Forbes)
  7. Best Place to Invest in Real Estate “All too often in real estate, there is a notion that to be a good investor you must find what are considered ‘the most lucrative markets’ or investments with ‘the highest returns.’ While it’s essential to find a market that supports the property and produces a good return, none of that matters if you don’t have the time, knowledge, or capital to pursue it. Rather than chasing the ‘best,’ instead concentrate on finding what is best for you based on your investment goals, financial means, risk tolerance, and time availability. Let’s dive into the things that matter when determining the best place to invest.” (Motley Fool)
  8. Train Delayed? Relax with a Bolivian Pastry and Bubble Tea “Crowded, loud and gritty are qualities frequently associated with New York’s subway system. A place to relax with an ethnic dish and a cocktail, and perhaps browse a boutique shop? Not so much. But if a retail overhaul by the Metropolitan Transportation Authority succeeds, those kinds of leisure activities will become more common. In an effort to raise extra revenue needed to help improve service, the authority is seeking to replace the discount-clothing stores and doughnut chains that line its underground passageways with trendy food halls and upscale shops.” (The New York Times)
  9. Frisco Shopping Center Goes for $71 Million “An Illinois investor has snapped up a Frisco shopping center for $71 million. InvenTrust Properties Corp. purchased Eldorado Marketplace, an 186,068-square-foot retail center at Eldorado Parkway and the Dallas North Tollway. The center's tenants include Market Street, PetsMart, AT&T, Jersey Mike's, Re/Max and UPS. InvenTrust bought the Frisco property from an affiliate of Houston-based Fidelis Realty, which had owned it since 2014.” (Dallas Morning News)
  10. Why 5G Is Meaningful for This High-Flying Real Estate ETF “The fifth generation of wireless connectivity, or 5G, is getting plenty of attention this year although it doesn't roll in earnest until 2020. While there are some exchange traded funds explicitly dedicated to the 5G theme, one of the best ways of playing 5G this year has been with the Pacer Benchmark Data & Infrastructure Real Estate SRVR. All SRVR has done this year is gain nearly 36%, outpacing the largest real estate ETF by about 1,200 basis points. SRVR is proof positive that there are instances where a refined focus is rewarding with real estate ETFs.” (MarketWatch)
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