Real Estate Daily News Buzz August 1, 2016
Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.
Friday, the Dow Jones industrial average closed down 24.11 points, or 0.1 per cent, to 18,432.24. The Standard & Poor’s 500 index rose 3.54 points, or 0.2 per cent, to 2,173.60 and the NASDAQ composite increased 7.15 points, or 0.1 per cent, to 5,162.13.
Benchmark U.S. crude reversed earlier losses and was up 46 cents to close at $41.60 on the New York Mercantile Exchange. Brent crude, used to price international oils, fell 24 cents to $42.46 a barrel in London.
Heating oil rose less than 1 cent to $1.28 a gallon, wholesale gasoline futures rose 1 cent to $1.32 a gallon and natural gas fell was little changed at $2.88 per thousand cubic feet.
US GDP grows a weak 1.2 per cent in second quarter — Growth in the U.S. economy was sluggish again in the spring, dashing expectations for a robust rebound after a tough winter. The Commerce Department said Friday that the gross domestic product — the broadest measure of the economy — grew at a 1.2 per cent annual rate in the April-June quarter. That was far below the 2.6 per cent GDP growth rate that economists had been forecasting. Stronger consumer spending was offset by weakness in housing construction and a big slowdown in the pace that businesses restocked store shelves.
US wages, benefits see steady rise in second quarter — The wages and benefits paid to U.S. civilian workers rose at a steady pace in the second quarter compared to the first three months of the year, as income growth showed signs of slight acceleration. The Labor Department says total compensation increased 0.6 per cent from April to June, matching the pace of the prior three months. Over the past 12 months, employment costs have risen 2.3 per cent, up from the annual pace of 2 per cent a year ago. (AP)
Apartment market ‘increasingly jittery’ for investors “Rents are soaring and demand for apartments is historically high, but some developers and landlords are overestimating the strength of the U.S. apartment market — and paying for it in quarterly earnings. Others are warning that the second half of this year will be even tougher. Construction of new multifamily units has been robust over the past five years, far outpacing that of single-family homes, but most of the product is in pricey markets and pricier neighborhoods, not in areas where demand is highest. That is because the costs of land and construction rose. ‘Anytime the numbers will work, developers will build. That’s what happened in San Francisco and New York. Land prices and construction costs went up so much, the only thing you could build was high-end apartments,’ said Alexander Goldfarb, senior REIT analyst with Sandler O’Neill, which currently has a hold rating on all the apartment REITs it covers.” (CNBC)
Groups ask appeals court to reconsider net neutrality ruling — Cable and telecom industry groups want a federal appeals court to reconsider its ruling on “net neutrality” that preserved regulations forcing internet providers to treat all online traffic equally. The Wireless Association, an industry trade group also known as CTIA, and other groups on Friday filed petitions for the case to be reheard by all of the court’s judges. Last month, a three-judge panel from the court upheld the government’s net neutrality rules that treat the internet like a public utility and prohibit blocking, slowing and creating paid fast lanes for online traffic. (AP)
Economy Watch: The Best and Worst Cities for Renters “Only about 10 years ago, the multifamily industry fretted that an ever-increasing number of Americans would abandon the apartment market, spurred to buy residential properties by easy credit and official policy that encouraged homeownership—a lot can happen in a decade. Now the rental market still drives the housing recovery, with more than 36 percent of U.S. households renting in 2015. That’s the largest share since the late 1960s, when there was a shortage of for-sale housing. Increasing demand for apartments in the 2010s, without as much of an increase in supply, has put many U.S. renters in a bind. According to a 2016 study by Harvard, ‘the number of renters dedicating at least half of their income toward housing hit a record high of 11 million people’ as of 2014, ‘while another 21.3 million spent at least 30 percent, also a new ceiling.’ That kind of aggregate number masks a lot of variation among local apartment markets, however. Where are the best and worst markets to be a renter, in terms of price as well as quality of life and other factors? According to a report released this week by WalletHub, an oddly large number of the best places to be a renter are in Arizona: Scottsdale (No. 1), as well as Chandler, Tempe, Gilbert, Peoria, Phoenix and Glendale. The only places in the top 10 not in Arizona are Plano, Texas; Las Vegas; and Tampa, Fla.” (Commercial Property Executive)
Commercial real estate: Should you lease or buy? “One of the most common questions I get in representing a small business is whether they should buy or lease their new building. As you can guess, with most difficult business questions — it depends…I have always felt the most important question is how long you will be in the building. If you are not in the building at least 10 years, it probably does not make sense. Why 10 years? Unlike buying a stock or a bond, there are significant transactional costs to buying commercial real estate. There are closing costs, transfer taxes, loan fees, and selling commissions. The cost to buy and subsequently sell a commercial property can run from 7 to 10 percent of the original purchase price. Assuming normal appreciation, it could take you up to five years just to get your original investment back.” (Reno-Gazette Journal)
French lifestyle brand to raise U.S. profile with renovated stores, new locations “The brand known the world over for its iconic crocodile logo has a new retail strategy. In a move to enhance its brand in the United States, Lacoste is renovating high-profile locations and opening more impactful, larger-format retail stores in the its key U.S. markets, which include New York, south Florida and southern California. In line with its strategy, Lacoste has updated its store on Manhattan’s Madison Avenue, and will open a new, 3,400-sq.-ft. store in the city, at Westfield World Trade Center, on Aug. 16. ‘Lacoste’s retail expansion in New York City demonstrates our new approach to maintain and strengthen our premium position in the U.S.,’ said Joëlle Grünberg, president and CEO of Lacoste North America, which operates some 100 U.S. stores. ‘New York is one of Lacoste’s most important markets and our new Westfield World Trade Center location and upgraded Madison Avenue store both make a strong statement of our brand identity.’” (Chain Store Age)
By buying Yahoo, Verizon scoops up a rare prize: Silicon Valley real estate “With its $4.8-billion acquisition of Yahoo, Verizon has snatched up an Internet pioneer with a massive audience. But it has also secured something equally coveted in Silicon Valley: real estate. When the deal closes, the New York telecom giant will become one of the largest office landlords in the nation’s technology hub thanks to the roughly 1 million-square-foot campus Yahoo owns in Sunnyvale, Calif. — a desirable position amid the current tech boom. ‘We have seen a big upswing in rents,’ said Jennifer Vaux, a Silicon Valley researcher for brokerage Colliers International. Indeed, the office market has been on a multiyear upswing as tech giants and start-ups have expanded.” (Los Angeles Times)
Expanding shipping infrastructure is lifting commercial real estate “Virginia’s business climate consistently delivers for Amazon. ‘Generally, in Virginia, everywhere we’ve gone, we’ve found an abundance of talent and we’ve been successful, and I would fully expect we’d find the same level of talent in Hampton Roads in this area, that we’ve found in other parts of Virginia,’ said Mike Grella, the online retail giant’s first director of economic development. Grella was among a half dozen featured speakers at the Re:Port Conference in Virginia Beach on Thursday. Presented by Inside Business with the support of two dozen sponsors, the event highlighted the links between larger cargo ships, expanding infrastructure and opportunities in commercial real estate.” (The Hampton Roads Business Journal)
Amazon to Add Massive Florida Fulfillment Hub “Amazon.com will open an 855,000-square-foot, $200 million fulfillment center in Jacksonville, Fla., where employees will pick, pack and ship small items to customers such as books, electronics and consumer goods. ‘Becoming a member of the Jacksonville community is very exciting for us as we grow our presence in Florida,’ Akash Chauhan, vice president of Amazon’s North America Operations, said in a prepared release. ‘We’re proud to be creating more than 1,500 full-time jobs to join the thousands we currently employ across the state. We look forward to continue building relationships in the community to make Jacksonville home.’ The center will boast enough height to boost capacity to almost 2.4 million square feet of space. Associates at the center will work alongside innovative technologies to fulfill customer orders.” (Commercial Property Executive)
DC Community Scores $140M “New York Life Real Estate Investors has provided $140 million in financing for the leasehold interest in The Apartments at CityCenterDC, a 458-unit, Class A apartment community located in Washington, D.C., on behalf of institutional investors. The fixed rate loan has a term of 10 years. ‘CityCenterDC creates a unique, pedestrian-friendly mixed-used urban neighborhood located in the heart of downtown Washington, D.C.,’ David Li, New York Life Real Estate Investors’ senior director, said. ‘We are pleased to add such an excellent quality property to our commercial mortgage portfolio.’ The property is part of a mixed-use development by Hines and Qatari Diar on the site of the former Washington Convention Center.” (MultiHousing News)
Retail, Office, and 314 Apartments Slated to Replace Bridgford Foods’ Fulton Facility “Just one night after holding a public meeting regarding the proposed redevelopment of the former H2O+ headquarters, Alderman Walter Burnett, Jr. and West Loop neighbors returned to the Merit School of Music yesterday to host the unveiling of Bridgford Food’s plan to develop its Fulton Market location into new residential, retail, and office space… Penned by Chicago’s Hartshorne Plunkard Architecture (HPA), the proposal spans two separate sites straddling Green Street. The first, at 170 N. Green, is envisioned as a 13-story, mixed-use development that would consist of ground floor commercial space topped by two levels of parking and 314 rental units. Meanwhile, across the street at 171 N. Green, Bridgford plans a five-story boutique office building with ground floor retail. While the project qualifies as a Transit-Oriented Development (TOD), the plan calls for 265 parking spaces. The amount of parking was increased from a previously lower level based on recommendations expressed during private meetings with local neighborhood organizations. The development also reconfigured its unit mix to include more “family friendly” dwellings with two or more bedrooms at the bequest of the neighbors. Ten percent of the development’s 314 units will be offered at an affordable rate and will be located on site.” (Chicago Curbed)
These neighborhoods are Manhattan’s construction meccas “Zip codes belonging to the Hudson Yards and Midtown West neighborhoods have witnessed the most construction activity and approved permits since 2006. The 10001 zip code, which stretches from the Hudson River all the way to Fifth Avenue, alone has more than 18 million feet in approved construction. Many of the projects there are part of the Hudson Yards redevelopment project, which will include more than 17 million square feet of commercial, residential and retail space when all its buildings are complete. Other construction-dense zip codes are found in the Lower East Side (10002), East Harlem (10035) and at the World Trade Center (10007), according to initially approved construction applications. One of the areas most shielded from building construction is zip code 10004 on the southernmost tip of Manhattan, much of which is covered by Battery Park (though the waterfront grounds and Pier A have seen quite a lot of reworking over the last couple of years, as tourist and residents alike can attest).” (The Real Deal)
