Must Reads for the CRE Industry Today (December 27, 2016)

Must Reads for the CRE Industry Today (December 27, 2016)


  1. 7 big things that could happen to NYC real estate in 2017 “Hope springs eternal in frigid January, as developers and brokers get back on the job after long holidays away. Here are some of our own hopes for the new year at locations the real estate industry will also be watching closely. East Midtown Rezoning: The least sexy-sounding, but most important wish-list item for 2017 is the long-awaited rezoning of the vast “Grand Central District” (the blocks between Third and Fifth avenues and from East 40th to 57th streets). Several times delayed, it appears at last ready to start the public-review process early in the new year. Time is of the essence as more companies abandon the once-premier district where old zoning makes developing large new buildings nearly impossible.” (New York Post)
  2. Fifth Avenue dominates 2016’s most valuable retail leases “For all the chatter about the doom and gloom Manhattan’s retail market would face in 2016, the year was chock full of headline-grabbing deals. Fifth Avenue in particular had a busy year, accounting for six of the top 10 most valuable retail leases, according to a review of data by The Real Deal. TRD ranked the most valuable leases signed in 2016, measured by the first year’s rent payment. Many of these deals come with a degree of financial engineering, trading off items like cash paid to tenants to help build out their spaces or a slice of sales that go to the landlord, which in turn affect the face value of the deal. (And there are certainly property owners who have a vested interest in pushing up that face value as high as they can.) The total value of Manhattan’s top deals this year was, however, down from last year’s ranking.” (The Real Deal)
  3. Chinese money moving to US commercial property “Interest in U.S. commercial real estate is perking up, particularly from China, as expectations of pro-growth policies from President-elect Donald Trump spark demand for dollar-denominated assets. ‘(Investors) are seeing the U.S.commercial real estate marketplace as really standing out on a global basis,’ said Hessam Nadji, president and chief executive at commercial real estate firm Marcus and Millichap. ‘It's not being overbuilt; it's been very well balanced in this particular cycle in terms of loans that are not going up, the leverage that was very well balanced. They're at much lower risk at this stage of recovery than we've seen in the past,’ he told CNBC's The Rundown. “ (CNBC)
  4. Dalfen America Lands 450KSF Industrial Properties “Dalfen America Corp. announced the acquisition of two industrial properties located in Cincinnati and Rogers, Minn., totaling approximately 450,000 square feet. Located adjacent to the Cincinnati/Northern Kentucky International Airport, the Turfway Road Distribution Center is a 165,515-square-foot warehouse and distribution facility built in 1990. The 24-foot clear facility is currently 45 percent occupied and was purchased via an off market transaction directly with the seller. Built in 1999, the I-94 Distribution Center is a 297,756-square-foot multi-tenant industrial property located in Minneapolis’ Northwest submarket of Rogers. The property fronts I-94 and is located near the new FedEx Ground facility. Currently, the building is 94 percent leased and includes tenants such as Guardian Building Products. Pete Rand, executive director of Cushman & Wakefield/NorthMarq arranged the transaction on behalf of the seller.” (Commercial Property Executive)
  5. Unusual retail concept puts new spin on tech retailing “A very tech-savvy retailer retail is expanding its fledgling physical footprint with an eye toward national expansion. b8ta, which lets people test out products from a variety of tech companies, including any small start-up, has opened a store at University Village, Seattle, along with one at Santa Monica Place, Santa Monica, Calif. Both locations were designed by Gensler, and feature a sleek, modern design.   b8ta’s flagship store opened in downtown Palo Alto, California in December 2015. The format allows consumers to experience the latest tech products up close and personal — out of the box and hands-on. Trained employees, known as “b8ta testers,” are on hand to educate shoppers on the store’s range of cutting-edge products. And in a big change from traditional retail, instead of earning revenue from sales of products, b8ta is paid a monthly subscription fee from the makers of the products in its stores.” (Chain Store Age)
  6. New York is still playing catch up with the rest of country when it comes to design-build “State and city officials have been beating the design-build drum for some time — but with $100 billion planned in infrastructure projects, the call to expand the procurement process has intensified. New York lags behind the rest of the country in terms of who can implement the project delivery system: Only a few state agencies can actually employ design-build, while in 25 other states, all agencies can use it, the New York Times reported. Earlier this year, the state expanded design-build authority to the Empire State Development Corporation, paving the way for the system to be used on the $1 billion expansion of the Jacob K. Javits Center. Still, a bill seeking to expand the practice to all state agencies and to some New York City agencies died in committee last year despite vocal support from public officials and prominent trade groups. The issue is expected to surface again in next year’s legislative session.” (The Real Deal)
  7. Miami Worldcenter developers land $89 million loan to build apartment tower “Despite a slowing real estate market, the developers of a massive, mixed-use project in downtown Miami’s Park West district secured an $89 million construction loan for a rental apartment tower. The loan from Fifth Third Bank and Santander Bank is a sign of confidence in Miami Worldcenter, a $1.7 billion project that will include condos, retail, hotels, apartments and a convention center spread over 27 acres. The project, first proposed in 2008 but derailed by the financial crisis, is now moving in a positive direction: vertically. Construction has now begun on the 43-story, 444-unit apartment tower, called Seventh Street Apartments. The rental tower’s developers are CIM Group and Falcone Group. It is expected to be completed in the fall of 2018, along with an under-construction 60-story luxury condo tower and open-air shopping center.” (Miami Herald)
  8. The (Very Luxe) Real Estate Holdings of Trump’s Cabinet Picks “Donald Trump’s pick for education secretary lives in a home with a convention center and tennis club. His choice for army secretary once listed his Manhattan mansion for nine figures, and the adviser chosen to oversee affordable housing policy soaks in a bathtub flanked by corinthian columns. The incoming U.S. president and his children own a well-publicized network of multimillion-dollar personal residences across New York City—holdings befitting a family fortune built on real estate and development. But Mr. Trump’s cabinet picks, shaping up to be the wealthiest administration in modern American history, have massive mansions, vacation properties and extravagant in-house amenities that make even the president-elect’s Fifth Avenue penthouse look ordinary.” (Mansion Global)
  9. U.S. Mortgage Rates at Two Year High in Late December “According to Freddie Mac's latest Primary Mortgage Market Survey, the average U.S. fixed mortgage rate moved higher for the eighth consecutive week in late December 2016. Sean Becketti, Freddie Mac's chief economist said, "A week after the only rate hike of 2016, the mortgage industry digested the Fed's decision and this week's survey reflects that response. Following Yellen's speech last Wednesday, the 10-year Treasury yield rose approximately 10 basis points. The 30-year mortgage rate rose 14 basis points to 4.30 percent, reaching highs we have not seen since April 2014." (World Property Journal)
  10. European property investors look beyond London The European commercial real-estate market is shifting, with the hottest cities cooling off as investors’ interest in other locations grows. Real-estate markets throughout Europe saw investors pile in following the 2008 financial crisis. With the European Central Bank and the Bank of England pushing interest rates to historic lows, real estate returns have become increasingly attractive to investors frustrated by tiny yields in the bond market. The cheap money the central banks were pumping into their economies also fueled the demand for property. London was a favorite of investors, along with Paris and Germany’s biggest cities. But after years of strong demand pushing up property values in these hot spots, returns are shrinking and investors are pulling back. “Most prime markets in Europe are pretty fully priced. There’s no easy money around” in them, says Walter Boettcher,director of research at property broker Colliers International.” (MarketWatch)
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