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 for the day will be.
On Wednesday, the Dow Jones industrial average rose 288 points, or 1.7%, to close at 17,356.87. The Standard & Poor’s 500 index rose 40.15 points, or 2%, to 2,012.89. The NASDAQ composite climbed 96.48 points, or 2.1%, to 4,644.31.
Benchmark U.S. crude rose 54 cents to close at $56.47 a barrel. Brent crude for February delivery, a benchmark for international oils used by many U.S. refineries, rose $1.17 to close at $61.18 a barrel. Wholesale gasoline rose 2.5 cents to close at $1.566 a gallon. Heating oil rose 4.9 cents to close at $2.009 a gallon. Natural gas rose 8.3 cents to close at $3.702 per 1,000 cubic feet.
FED DECIDE TO BE ‘PATIENT’ ABOUT RATE HIKE; STOCKS SOAR
WASHINGTON (AP) — The Federal Reserve is edging closer to raising interest rates from record lows given a strengthening U.S. economy. But it will be “patient” in deciding when to do so. That was the message sent Wednesday as the Fed ended a meeting amid heightened expectation about a forthcoming rate increase. At a news conference afterward, Chair Janet Yellen said she foresaw no rate hike in the first quarter of 2015. Yellen said the strength of U.S. economic data and the level of inflation, not a calendar date, will dictate when it raises rates. At a time of global economic turmoil and collapsing oil prices, she stressed that the Fed was making no policy changes.
OUTLET MALLS MAINTAIN EDGE OVER E-COMMERCE
Mall development in the U.S. is a virtually dead business because of oversupply and online competition. There’s a whopping 1.25-billion-square-feet of mall space and it only increased 0.32% this year, according to the International Council of Shopping Centers. But the same can’t be said about the outlet center business, which has much less space. Supply has increased just over 5% this year, to 82 million square feet, the Council says. Outlet centers typically carry luxury brands as malls do, but often at discount prices. “The beautiful thing about the outlet center space is that it’s much more immune to the e-commerce challenge,” says DJ Busch, an analyst at Green Street Advisors. “It’s harder to implement an off-price model online.” Simon Property Group, the largest retail landlord in the US, broke ground earlier this month on Tampa Premium Outlets, a 441,000-square- foot complex of 110 retailers in Wesley Chapel, Fla. That center along with developments in the Vancouver, Tucson and Philadelphia areas are expected to open in 2015. See Complete story on Tucson Premium Outlets click here. Also next year, Simon is planning to begin construction of new projects in the Columbus, Norfolk, Tulsa, Denver and Clarksburg, MD areas. The company also is expanding outlet development efforts overseas. Green Street says that luxury retailers who are new or expanding their presence at outlet centers include Gucci, Prada, Dolce & Gabbana, Salvatore Ferragamo and Helmut Lang.
COMMERCIAL MORTGAGE DEBT HITS ALL TIME HIGH
WASHINGTON, DC—Commercial and multifamily mortgage debt reached a record high in the third quarter, the Mortgage Bankers Association said Tuesday. The 1.1% increase in outstanding debt brought the total to $2.59 trillion, with multifamily mortgages accounting for more than half the quarterly increase. “The quarter-over-quarter increase was the highest since 2008, and the rise in multifamily mortgage debt was the highest since 2007,” says Jamie Woodwell, MBA’s VP of CRE research. “Strong originations are more than outpacing the low volume of loans maturing this year.” With 37% of the total, or $944 billion, commercial banks continue to hold the largest share of commercial/multifamily mortgages, MBA says. They also led the way in terms of uptick in dollar volume during Q3, with the $13.7 billion in Q3 originations representing 1.5% of banks’ total. It also represented nearly half the $28.6 billion in new debt during the quarter across the four major investor groups. Banks also recorded the largest dollar increase in multifamily debt during Q3: $7.8 billion. However, the biggest percentage increase during Q3 came via state and local government pension funds, which grew their tally by 19%. These funds also registered the biggest quarterly decline in multifamily mortgage debt holdings at 2%. Agency and GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $7.8 billion, or 2%, while life insurance companies increased their holdings by $5.5 billion, or 1.6%. REITs saw the largest overall decrease at $2.1 billion, or a decrease of 5.4%, although the sector’s quarterly percentage increase in multifamily debt was far and away the largest at 58.4%. After commercial banks, CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $535 billion, 21% of the total. Agency and GSE portfolios and MBS hold $400 billion, or 15% of the total, while life insurance companies hold $351 billion, or 14%.
MAYOR AND COUNCIL MOVES TO NEXT PHASE OF PROPOSED RONSTADT CENTER REDEVELOPMENT
TUCSON - The Mayor and Council Tuesday approved a 13-member selection committee’s recommendation that two firms be invited to continue to the Phase II portion of the Ronstadt Transit Center Joint Development Project. Beginning in February, Peach Watermark and The Alexander Company each must prepare a detailed design concept for a mixed-use development with transit to be located on the 4.7-acre site. Many other requirements also must be met. A final development agreement is expected to go to Mayor and Council in early 2016. From the Office of Integrated Planning: https://1.usa.gov/1zw9T9H
SCHOOL RESOURCE OFFICERS HEADING TO TUSD
TUCSON - The Mayor and Tucson City Council Tuesday voted unanimously to amend its contract with the Tucson Unified School District (TUSD) to prohibit School Resource Officers (SROs) from questioning minors about their immigration status under any circumstance. That means eight officers from the Tucson Police Department (TPD) will be stationed at selected TUSD schools. The program will be funded through a state grant. Mayor and Council agenda item from last night's meeting: https://1.usa.gov/16tpAVG
DEADLINE EXTENDED TO APPLY AS A COMMISSION MEMBER TO REVIEW AND RECOMMEND SALARIES FOR MAYOR AND COUNCIL
TUCSON - The City of Tucson is accepting applications for the Citizens' Commission on Public Service and Compensation, a panel that reviews and recommends appropriate salaries for the Mayor and Tucson City Council. The new deadline to apply is Dec. 31. Commission members serve a two-month appointment and must be registered voters living within Tucson city limits. They cannot be employees of the City of Tucson, nor a parent, sibling, spouse, child, or dependent relative of an officer or employee of the City. The Commission’s salary adjustment recommendations may be placed on the Nov. 3, 2015 election ballot. To nominate a person, or for more information, please contact Monica Perez in the City Manager's Office, 791-4204. Read the news release: https://1.usa.gov/12J1e8X
COMMENTS SOUGHT ON PROPOSED ELIMINATION OF DOWNTOWN LOOP
TUCSON - The City of Tucson and Sun Tran are seeking the public’s feedback on a proposal to eliminate the Downtown Loop, a free transit service in the downtown area that provides access to community services, government offices, courts, educational facilities and area businesses. With the opening of the Sun Link Tucson Streetcar, the Downtown Loop has become a duplicate service. Many of the Downtown Loop’s major stops are within walking distance of Sun Link or existing Sun Tran service. Representatives from Sun Tran will be available at two final public open houses to answer questions and concerns regarding the proposed service change. The open houses will be held tomorrow, noon-1:30 p.m., at the Joel D. Valdez Main Library, 101 N. Stone Ave., and 5:30-7 p.m. at the Ward 2 Council Office, 7575 E. Speedway Blvd. A public hearing will be held on Jan. 6 and Mayor and Council Chambers, 255 W. Alameda St. Read the news release: https://bit.ly/16gwfT9; Sun Link Tucson Streetcar: https://bit.ly/1mebZ7k
'ZOO LIGHTS' CONTINUES AT REID PARK ZOO
TUCSON - While we may see some more rain tonight and tomorrow, the weather forecast for the weekend looks mostly clear and wintry for Zoo Lights at Reid Park Zoo. The annual holiday event features jingle bells, twinkling lights, falling snow, and Santa. Light displays, animal-themed light sculptures, and thousands of sparkling bulbs are part of the annual holiday tradition. Free cookies are provided each night, and hot cocoa is available for $1. Zoo officials say animals will have access to heated night houses for this event, and will likely choose to be off exhibit. Zoo Lights is open from 6-8 p.m. every night, through Dec. 23, with an encore Dec. 26-28. Admission is $6 for adults and $4 for children under the age of 14. Zoo members receive a $1 discount on each admission. Not sure about the weather? Check the Zoo's home page. A yellow banner will be displayed prominently if Zoo Lights needs to be canceled. From Reid Park Zoo: https://bit.ly/12vRqPx
US-CUBA THAW COULD BENEFIT FARMERS, ENERGY AND TRAVEL FIRMS
WASHINGTON (AP) — Freighters once carried Cuban nickel and limestone to the port of New Orleans and North Dakota beans to Havana. Cuban families ate bowls of American rice, while U.S. tourists flocked to casinos and nightclubs in Havana. The United States’ commercial ties with Cuba were broken 54 years ago after Fidel Castro took power on the Caribbean island. Now U.S.-Cuba trade is poised to resume at last: President Barack Obama on Wednesday announced plans to re-establish diplomat relations with Havana, and economic ties are expected to follow. Among those eager for access to a Cuban market cut off by an economic embargo are U.S. farmers, travel companies, energy producers and importers of rum and cigars.
SONY CANCELS ‘THE INTERVIEW’ DECEMBER 25 RELEASE
NEW YORK (AP) — Sony Pictures has cancelled the Dec. 25 release of “The Interview” after hackers threatened terrorist attacks and the largest multiplex chains in North America pulled the film from its screens. In a statement Wednesday, Sony said it was cancelling “The Interview” release “in light of the decision by the majority of our exhibitors not to show the film.” The studio, which has been shaken by hacker leaks over the past several weeks, said it respected and shared in the exhibitors’ concerns.
RUSSIANS FLOCK TO STORES TO PRE-EMPT PRICE RISES
MOSCOW (AP) — Russian consumers flocked to the stores Wednesday, frantically buying a range of big-ticket items to pre-empt the price rises kicked off by the staggering fall in the value of the ruble in recent days. As the Russian authorities announced a series of measures to ease the pressure on the ruble, which slid 15% in the previous two days and raised fears of a bank run, many Russians were buying cars and home appliances — in some cases in record numbers — before prices for these imported goods shoot higher. The Swedish furniture giant IKEA already warned Russian consumers that its prices will rise Thursday, which resulted in weekend-like crowds at a Moscow store on a Wednesday afternoon. Shops selling a broad range of items were reporting record sales — some have even suspended operations, unsure of how far the ruble will sink. Apple, for one, has halted all online sales in Russia.
US CONSUMER PRICES FELL 0.3% IN NOVEMBER
WASHINGTON (AP) — Plunging gasoline costs pulled U.S. consumer prices lower in November, muting inflation across the entire economy. The Labor Department said Wednesday the inflation reading fell a seasonally-adjusted 0.3% last month, after prices were flat in October. Gas costs plummeted 10.5% in November, the steepest decline in nearly six years. Core inflation, which excludes volatile energy and food prices, rose 0.1% in November. For the past 12 months, overall inflation has risen 1.3% while core inflation has increased 1.7%.
14 CHARGED IN DEADLY 2012 MENINGITIS OUTBREAK
BOSTON (AP) — Mold and bacteria were in the air and on workers’ gloved fingertips. Pharmacists used expired ingredients, didn’t properly sterilize them and failed to test drugs for purity before sending them to hospitals and pain clinics. Employees falsified logs to make it look as if the so-called clean rooms had been disinfected. Federal prosecutors leveled those allegations in bringing charges Wednesday against 14 former owners or employees of a Massachusetts pharmacy in connection with a nationwide meningitis outbreak that killed 64 people. U.S. Attorney Carmen Ortiz called it the biggest criminal case ever brought in the U.S. over contaminated medicine.
STUDY: WEALTH GAP LARGEST ON RECORD
NEW YORK (AP) — There’s even more proof that the rich are getting richer while everyone else gets poorer. In a new report, Pew Research Center said Wednesday that the gap between the nation’s wealthiest households and middle- and low-income earners is the widest it has been since the government began collecting data 30 years ago. Pew, which analyzed Federal Reserve data, said the median wealth of upper-income families was $639,400 in 2013. Middle-income households were worth $96,500, while low-income families were worth $9,300. Pew calculated wealth by adding a family’s assets, including homes, cars and businesses, and subtracted it from debts.
McDONALD’S IN JAPAN LIMITS ORDERS OF FRIES
TOKYO (AP) — Only small fries with that? McDonald’s in Japan is limiting the serving size of fries as stocks run short due to labor disruptions on the U.S. West Coast. McDonald’s began rationing its fries Wednesday morning. It said prolonged labor negotiations with port workers on the West Coast have made it difficult to meet demand despite an emergency airlift of 1,000 tons of processed spuds and an extra shipment from the U.S. East Coast by sea. Japanese consume more than 300,000 tons of french fries a year, mostly at fast-food restaurants, and largely sourced from imports of frozen, processed potatoes from America, according to U.S. figures.