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12 Must Reads for the CRE Industry Today (May 27, 2020)

McDonald’s Corp. is facing a class-action lawsuit seeking compliance with health guidelines, reports Reuters. Construction work on a nine-story wooden mixed-use building continues in Cleveland, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Landlords Were Never Meant to Get Bailout Funds. Many Got It Anyway. “Real-estate companies are cashing in on the government’s emergency-spending program, despite rules meant to bar landlords and other property owners from the funds. Congress created the Paycheck Protection Program to help smaller companies keep workers on payroll during the coronavirus pandemic, but not so-called passive businesses that collect rent and businesses that profit primarily off of price speculation. The Small Business Administration specifically excluded companies that primarily develop or lease real estate.” (Wall Street Journal, subscription required)
  2. COVID-19 Lawsuit Takes on McDonald’s Like It Was a Rowdy Bar “As U.S. businesses reopen, worried workers and their advocates are borrowing a legal strategy commonly used to shut down rowdy topless bars to try and force employers to strengthen protection against further spread of the coronavirus. Workers and their families at McDonald’s Corp’s Chicago restaurants have filed a class-action lawsuit against the fast-food chain that does not seek money for sick staff, but compliance with health guidance such as providing clean face masks.” (Reuters)
  3. Macy’s Announces $1 Billion Bond Offering to Repay Credit Facility “Macy’s Inc said on Tuesday it planned to raise $1.1 billion in a bond offering, backed by a first mortgage on some of its properties, to repay funds borrowed under a revolving credit facility. The department store chain drew down a $1.5 billion credit facility in March as it had to temporarily close stores and limit its business to its app and website due to the COVID-19 pandemic.” (Reuters)
  4. Country’s Tallest Wooden Building Rising in Cleveland “In Cleveland, a developer is moving ahead with an ambitious project despite the pandemic: the country’s tallest wooden building. The nine-story development, dubbed Intro, will include 298 apartments, retail space and an event venue. It is being built primarily with mass timber, a type of pressed wood that is gaining popularity as a climate-friendly alternative to steel and concrete. The developer, Harbor Bay Real Estate Advisors LLC, hopes that the new Cleveland building will become a blueprint for others to follow.” (Wall Street Journal, subscription required)
  5. Reopened Restaurants Find There’s No One Size Fits All Way to Bring Back Employees “As coronavirus restrictions lift in a growing number of states, restaurant operators ready to re-open their dining rooms are having to reinvent the hospitality playbook in order to safely and effectively put employees back to work. ‘It’s a relief, but still a little stressful,’ said restaurateur Austin Smith of re-opening Party Fowl, a full-service hot chicken concept in Nashville, Tenn. ‘It’s a totally different model of service.’” (Restaurant Hospitality)
  6. The Price of a Virus Lockdown: Economic ‘Free Fall’ in California “California has a hugely diversified economy, and many of the industries that have made it so strong are also the ones getting hit the hardest. By many measures California, which has the nation’s largest tourism industry, public university system, entertainment industry and port system and produces far more food than any other state, stands to lose more in the coronavirus-induced recession than anywhere else.” (The New York Times)
  7. Self-Storage Rents Not Immune to COVID-19 “The global health crisis and deteriorating U.S. economy have taken a toll on self storage rents in April. Over the past 12 months, street-rate rents dropped 2.6 percent for the average 10×10 non-climate-controlled and 6 percent for climate-controlled units of similar size. On a year-over-year basis, street rate performance for standard non-climate-controlled units was negative in roughly 97 percent of the top markets tracked by Yardi Matrix. All top markets saw negative street rate performance for standard climate-controlled units.” (Commercial Property Executive)
  8. Why Experts Expect Challenges Pricing Student Housing “Student housing operates on its own field. Unlike traditional apartments, student housing has a leasing schedule set by the academic calendar and is priced per bed, not per unit. These details will make pricing student housing assets more challenging through the economic dislocation caused by the coronavirus pandemic, compared to traditional apartments.” (GlobeSt.com)
  9. Insider Q&A Airbnb Co-Founder and CEO Brian Chesky “Three months ago, Airbnb co-founder and CEO Brian Chesky was working on the financial filings for the company’s hotly anticipated initial public offering. He had just returned from Palm Springs, California, and was planning a spring vacation with college pals. But the coronavirus upended global travel — and all his plans.” (MyMotherLode.com)
  10. In COVID-19 Economy, Development in Downtown Kansas City Faces Uncertain Future “Companies that might otherwise bring jobs to Kansas City are passing us up because we don’t have enough high-end office space ready on demand. That was the pitch from developers and supporters of the 25-story $133 million Strata office tower expected to be built at 13th and Main streets in the heart of downtown. It’s the first office tower of its type in nearly 30 years — one built speculatively for multiple tenants rather than one company’s headquarters. Developers expected to start construction this year.” (Kansas City Star)
  11. A Socially Distanced Las Vegas? What Are the Odds? “For decades, the El Cortez Hotel & Casino in downtown Las Vegas has been known for single-deck blackjack. But when the casinos and resorts open up — tentatively early June — after weeks of being shut down, players will no longer be able to touch the cards. About 100 slot machines at the casino have been removed and the remaining 750 are now farther apart. Tape on the floor at the craps tables shows players where to stand to meet social-distancing requirements.” (The New York Times)
  12. Apple Will Open About 100 More Stores in the U.S. This Week, with Focus on Curbside Service “Apple plans to open approximately 100 stores in the United States this week, a company representative told CNBC. In total, about 130 out of 271 Apple Stores in the United States will be open by the end of the week. Apple operates 510 stores around the world. Apple’s retail openings are being closely watched as both a key demand driver for Apple as well as a leading indicator for the health of the retail industry, where Apple’s locations often anchor important malls or shopping districts.” (CNBC)
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