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.
Tuesday, the Standard & Poor’s 500 index slipped 0.90 points, or 0.04 percent, to 2,474.02. The Dow Jones industrial average slid 36.64 points, or 0.2 percent, to 22,048.70. Earlier, the average had been down more than 88 points. The Nasdaq composite lost 18.13 points, or 0.3 percent, to 6,352.33.
Benchmark U.S. crude added 39 cents to settle at $49.56 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 56 cents to $52.70 in London. Wholesale gasoline was little changed at $1.62 a gallon, heating oil rose 2 cents to $1.65 a gallon and natural gas rose 6 cents to $2.88 per 1,000 cubic feet.
US productivity rose a modest 0.9 pct. rate in spring — The productivity of American workers rose just modestly in the spring, extending a worrisome issue that has persisted throughout this expansion. The Labor Department says productivity grew at an annual rate of 0.9 percent in the April-June quarter, slightly better than a scant 0.1 percent rate of increase in the first quarter.
Fed official supports September start for bond reductions — A member of the Federal Reserve’s interest-setting committee said Wednesday it would be appropriate for the central bank to announce next month that it was starting to trim its $4.5 trillion balance sheet, but wait until December before raising a key interest rate again. Charles Evans, the president of the Fed’s regional bank in Chicago, said he does not expect the balance sheet reduction to make much of a market impact because the move has been “well-choreographed.”
Pentagon: British firm billed US over $50M for iffy expenses — A Pentagon audit has found a British company hired to train Afghan intelligence officers billed the U.S. government for high-end cars and paid the “significant others” of the firm’s top executives six-figure salaries even though there’s no proof they did any work. Missouri Sen. Clarie McCaskill said in a statement that overall, New Century Consulting “left taxpayers on the hook for over $50 million in questionable costs.” New Century’s CEO says his company is being portrayed unfairly.
Walmart tests app that lets shoppers skip checkout lines — Walmart is bringing back an app that lets shoppers skip the checkout line and pay for items themselves on their smartphones. It first tested a version of the app, called Scan & Go, in 2013. But it discontinued it after customers said it was confusing to use. The retailer said Wednesday that it learned from the initial test and redesigned the app to make it easier to use.
Utah’s $1.9 billion claim from mine spill reveals no details — Utah’s $1.9 billion claim against the Environmental Protection Agency for a multi-state mine waste spill says Utah’s water, soil and wildlife were damaged, but offers no specifics. State officials provided a copy of the claim to The Associated Press on Wednesday. The claim stems from the August 2015 release of 3 million gallons of wastewater from an inactive gold mine in southwestern Colorado. An EPA-led contractor crew inadvertently triggered the spill.
Construction Worker Shortage Worsens in June “A shortage of construction labor that has squeezed property developers across the U.S. got worse in June after showing signs of improvement a month earlier. The number of open construction jobs increased to a seasonally adjusted 225,000 in June from 163,000 in May, according to the Labor Department.” (Wall Street Journal, subscription required)
Should You Invest in Rental Real Estate? “Are you considering investing directly in rental real estate? With many people increasingly concerned about both stock and bond market valuations, you’re not alone. First, let’s take a look at some of the benefits of becoming a landlord: Income: With stocks and bonds both yielding about 2%, one of the main benefits of real estate is the ability to generate significant income without having to sell your investment. It’s possible to generate high single to low double digit returns on your cash even with a mortgage.” (Forbes)
China Has Suddenly Stopped Buying Foreign Property “The Chinese pulled 84% of their overseas property investments globally in the first half of 2017 after the government began officially frowning on a ‘negative list’ of foreign investments that were attracting Chinese cash, according to Morgan Stanley. The Chinese were 25% of buyers of central London commercial property in 2016, a recent note to clients from Morgan Stanley’s research team said.” (Business Insider)
Shortage of Industrial Space on Long Island Squeezes Tenants “Long Island’s shrinking industrial space has placed expanding tenants in a tough spot, forcing them to look east to Suffolk County and off the island entirely, according to real-estate services firm JLL. Prime industrial areas in Nassau County “are nearly tapped out,” according to a second-quarter review of Long Island’s industrial market. Availability in western Nassau County is expected to remain below 1%.” (Wall Street Journal, subscription required)
America’s Tiny Home Craze: Colorado’s WeeCasa is a Force in Real Estate’s Latest Trend “In 2015, Lyons residents Kenyon Waugh, Stephen Beck and Jason Malito, along with three other partners, invested $500,000 to create WeeCasa, an overnight resort originally comprised of 10 tiny homes. Today, the property has 22 homes available for rent and, for the first time, the partners are finally seeing a profit — an overall revenue of about four times what they initially invested, or $2 million, says Waugh, the company’s ‘WeeEO.’” (Forbes)
Toyota, Mazda Alliance to Yield $1.6B North America Plant “Toyota Motor Corp. and Mazda Motor Corp. have agreed to establish a business and capital alliance that is turning heads. It’s a partnership that will accomplish a few goals, including the $1.6 billion development of a joint assembly plant by the North American divisions of the Japanese car companies. Admittedly, Toyota and Mazda are competitors, but they’re friendly competitors.” (Commercial Property Executive)
Is Pacific Park in Trouble Again? “The 22-acre mixed-use mega-development, which borders five neighborhoods in Brooklyn, has been battered by a slew of internal and external troubles since its inception. When Ratner unveiled his plans for the arena-anchored project in December 2003, he claimed his firm, recently renamed Forest City New York, could complete it within a decade of winning government approval. In the years following, the development became embroiled in land seizure lawsuits, and in 2008 the market tanked. By mid-2014, Forest City had only completed the Barclays Center and had yet to complete a single apartment of its intended 6,430 rental and condominium units.” (The Real Deal)
Starbucks Saturation Fears: Each Store Now Has Almost 4 Other Starbucks within One Mile “Starbucks cafes are facing mounting competition from other Starbucks locations and that’s going to hurt the stock, one Wall Street firm said Wednesday. BMO Capital Markets downgraded Starbucks shares to market perform from outperform after its researched indicated that store overlap has grown to such an extreme point that they are hurting each other’s sales. ‘Cannibalization likely has increased,’ wrote BMO analyst Andrew Strelzik in the note. ‘Strong new store performance appears to be coming – at least in part – at the expense of existing store traffic.’” (CNBC)
Firms Moving to One Vanderbilt Worry About Observation Deck “Some of the financial firms eyeing a move to the $3.1 billion One Vanderbilt may be having mixed emotions over the impact of the observation deck planned for floors close to the twisty top of the 1,301-foot-high skyscraper. While tourists and New Yorkers alike love to gawk at killer views made available to the masses from such decks, the C-suite occupants of the building seem to be worried the extra visitors could interfere with their own employees.” (New York Post)
Expanded Panama Canal Proves Beneficial to U.S. Industrial “As the $5 billion expansion of the Panama Canal passed its one-year anniversary in late June, the industrial real estate market surrounding ports in the U.S. heated up with East Coast and Gulf Coast ports seeing the biggest boost, according to a new report from JLL. The 2017 North American Seaport Outlook takes a closer look at the impact the Panama Canal expansion and other shipping industry issues have had on U.S. ports along with five trends impacting the ports and their surrounding real estate.” (Commercial Property Executive)