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Real Estate Daily News Buzz January 11, 2017

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 Dow Jones industrial average slipped 31.85 points, or 0.2 percent, to 19,855.53. The S&P 500 index was unchanged at 2,268.90. The Nasdaq added 20 points, or 0.4 percent, to 5,551.82.

U.S. benchmark crude oil lost $1.14, or 2.2 percent, to close at $50.82 a barrel in New York. Brent crude, which is used to price oil sold internationally, fell $1.30, or 2.4 percent, to close at $53.64 a barrel in London.

In other energy trading, wholesale gasoline slid 2 cents to $1.55 a gallon and heating oil fell 3 cents to $1.61 a gallon. Natural gas futures rose 18 cents, or 5.6 percent, to $3.28 per 1,000 cubic feet.

Nasdaq sets another record high on mixed day for US stocks –The Nasdaq composite index notched its third record-high close in three days Tuesday, eking out a modest gain on a day when the other major U.S. stock indexes barely budged. After wavering between small gains and losses for much of the day, the Standard & Poor’s 500 index closed unchanged, while the Dow Jones industrial average posted a slight loss. More stocks rose than fell on the New York Stock Exchange. Consumer-focused companies, banks and health care stocks were among the biggest gainers. Real estate companies lagged the most. Energy stocks also fell following a drop in crude oil prices.

Apple is Planning a High-Tech Manufacturing Site in Arizona “Apple is asking permission to conduct ‘high-tech manufacturing’ in a facility in Mesa, Arizona, according to a notice published Monday. A notification published in the Federal Register said that Apple sought approval from the Foreign-Trade Zones Board to make “finished products” in a zone that will exempt it from customs duty payments. The request comes as Apple has faced criticism from President-elect Donald Trump for producing the iPhone and other products abroad.” (Fortune)

US wholesale inventories up 1 percent in November — U.S. wholesale businesses boosted their stockpiles in November by the largest amount in two years, while sales increased at a slower pace. The Commerce Department says inventories held by wholesalers rose 1 percent in November after having fallen 0.1 percent in October. It was the biggest one-month gain since November 2014. Sales at the wholesale level rose 0.4 percent in November after a 1.1 percent surge in October, the best in four months.

Mexico says it will negotiate with Trump — Mexico’s new foreign relations secretary said Tuesday his country isn’t just willing to negotiate changes to the North American Free Trade Agreement, it wants to start talks as soon as possible. Luis Videgaray said there’s “enormous uncertainty” following the U.S. election of Donald Trump as president. Trump has pressured companies not to move jobs to Mexico, warned he would tax those who do, and has vowed to renegotiate NAFTA. Videgaray said in a Radio Formula interview that Trump’s actions have caused concern, adding “that is why this (negotiation) process is so important, to dispel this uncertainty.”

A sales bounce late in the year for Chipotle — Sales at established Chipotle restaurants turned positive last month, potentially sign that the burrito chain may be starting to recover from a food safety scare. The Denver company said Tuesday that sales at established stores jumped 14.7 percent in December. They fell 1.4 percent in November and fell 20.2 percent in October. The rebound in the final month of the year eclipsed a disappointing outlook for the entire fourth quarter.

Carlyle Said to Target $5 Billion for New U.S. Real Estate Fund “Carlyle Group LP is preparing to raise an eighth U.S. real estate fund in the first half of 2017, people with knowledge of the matter said. The Washington-based private equity firm is planning to target $5 billion for the pool, said the people, who asked not to be identified because the information is private. A representative of Carlyle declined to comment. Carlyle closed its most recent North American real estate fund, Carlyle Realty Partners VII, in 2015, securing $4.2 billion in commitments.” (Bloomberg)

World Bank forecasting brighter prospects for 2017 — The World Bank is forecasting the global economy will accelerate slightly in 2017 after turning in the worst performance last year since the 2008 financial crisis. The 189-nation lending agency says that the global growth should expand at a 2.7 percent annual rate this year. That is down from the bank’s June forecast for 2.8 percent growth this year, but it’s better than last year’s 2.3 percent growth. The global economy faced a number of headwinds last year, from economic troubles in China to bouts of financial market turmoil.

The Crazy Demand Driving Industrial Real Estate Expected to Slow “Though e-commerce continues to power industrial real estate to record levels of occupancy and peaking rents, the general consensus among industry experts is that the sector may slow down this year. The anticipated growth deceleration will have little to do with economic factors. Demand continues to outpace supply, and major retailers and users persist in their scramble for warehouse and distribution space nearer to customers. Investors have been favoring the sector, so it’s been experiencing record levels of acquisition spending and low cap rate.” (Forbes)

Home-Buying Sentiment Index Slides for Fifth Straight Months “Surging mortgage rates, dwindling inventory, and soaring home prices are taking a toll on Americans’ attitudes toward ownership, according to a survey released Monday. The home purchase sentiment index compiled by mortgage finance provider Fannie Mae fell in December, its fifth straight monthly decline. Fannie’s index has six components. In December, two were lower compared to November, two were unchanged, and two increased. But the index was 2.5 percentage points lower than a year ago, with only one component higher.” (MarketWatch)

American Apparel Sold in Bankruptcy Auction for $88M “Canadian apparel maker Gildan Activewear Inc said it had won a bankruptcy auction to buy U.S. fashion retailer American Apparel for about $88 million in cash. The deal is subject to approval from a bankruptcy court on Thursday, the company said. Under the deal, Gildan will acquire the intellectual property rights related to the American Apparel brand and certain manufacturing equipment. The company, however, will not buy any of the 110 American Apparel retail stores.” (New York Post)

Commercial Mortgage Originators Expect Strong, Steady Market in 2017 “According to a new Mortgage Bankers Association survey of the top commercial and multifamily mortgage origination firms, U.S. commercial and multifamily mortgage lending is expected to increase in 2017, as lenders’ appetites to place new loans and borrowers’ appetites to borrow both remain strong. Nearly two-thirds (63 percent) of the top firms expect originations to increase in 2017, with one-quarter (26 percent) expecting an increase of 5 percent or more. A full half (50 percent) expect their own firm’s originations to increase by 5 percent or more.” (World Property Journal)

CREFC 2017: Morningstar Analysts Talk Risk Retention, Retail and Coworking “Following last week’s headlines surrounding Macy’s store closures and layoffs, there is no doubt that retail is on the brains of many as we begin the new year. At CRE Finance Council’s 2017 industry leader’s conference at Loews Miami Beach Hotel, Morningstar Credit Ratings’ top structured finance analysts Lea Overby and Steve Jellinek told Commercial Observer that they expect more bankruptcies in the already-struggling retail sector. The two pointed to the consolidation of electronics retailers and sporting goods stores as internet sales are increasing, and the continued woes of the Macy’s and Sears of the world.” (Commercial Observer)

Mori Trust Enters U.S. with Big Boston Buy “Mori Trust Co. Ltd. knows how to make an entrance. The Tokyo-based real estate company has joined the brimming crowd of foreign investors in U.S. real estate with the formation of a U.S. subsidiary, Mori America LLC, and the acquisition of a premier office complex in Boston. Mori Trust snapped up 10 St. James Ave. and 75 Arlington St. from tenant Liberty Mutual in a partial sale-leaseback transaction. The price tag on the Class A assets: approximately $673 million, according to Suffolk County property records. 10 St. James and 75 Arlington last traded in January 2006, when Liberty Mutual acquired the buildings for $481.5 million.” (Commercial Property Executive)

BioMed Sells D.C. Area R&D Facility for $338M “HFF recently announced the $337.5 million sale of GSK Global Vaccine Centre, a three-building, Class A research and development facility in Rockville, Md. The company represented the seller, BioMed Realty, which is owned by affiliates of Blackstone Real Estate Partners VIII. HFF acquired the undisclosed buyer and also secured an acquisition loan through Goldman Sachs. According to Yardi Matrix data, the Class A asset last traded over a decade ago, in May 2006, when Human Genome Sciences disposed of the property as part of a portfolio sale.” (Commercial Property Executive)

Amazon’s Aggressive Warehouse and Shipping Strategy is Paying Off “Convenience is becoming more important to shoppers at a time when retail is increasingly shifting to e-commerce. And one reason Amazon.com Inc. is such a formidable competitor in the e-commerce space is its ability to fulfill even last-minute shipping needs with the efficiency shoppers increasingly crave. Many traditional retailers relied more heavily on options like in-store pickup as time for shipping packages ran out. But Amazon, through a dense web of fulfillment and distribution centers and other delivery infrastructure, has been able to match the efforts of bricks-and-mortar retailers.” (MarketWatch)

 

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