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 fell 57.18 points, or 0.3 percent, to 19,762.60. The Standard & Poor's 500 index fell 10.43 points, or 0.5 percent, to 2,238.83. The Nasdaq composite gave up 48.97 points, or 0.9 percent, to 5,383.12.
Benchmark U.S. crude fell 5 cents to close at $53.72 a barrel in New York. That translates into a 45 percent gain for the year. Brent crude, used to price international oils, slipped 3 cents to close at $56.82 a barrel in London.
In other energy trading, wholesale gasoline dropped 2 cents to $1.67 a gallon and heating oil held steady at $1.70 a gallon. Natural gas futures fell 7.8 cents, or 2.1 percent, to $3.72 per 1,000 cubic feet.
Distressed Sales Make Up 7.3 Percent of All Home U.S. Sales “According to CoreLogic, cash sales accounted for 31.7 percent of total U.S. home sales in September 2016, down 1.3 percentage points year over year from September 2015. The cash sales share peaked in January 2011 when cash transactions accounted for 46.6 percent of total home sales nationally. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in September 2016, the share should hit 25 percent by mid-2019.” (World Property Journal)
New wood technology may offer hope for struggling timber (RIDDLE, Ore.)— D.R. Johnson Lumber Co. is one of two U.S. timber mills making a new wood product that's the buzz of the construction industry. It's called cross-laminated timber, or CLT, and it's made like it sounds: rafts of 2-by-4 beams aligned in perpendicular layers, then glued — or laminated — together like a giant sandwich. The resulting panels are lighter and less energy-intensive than concrete and steel, much faster to assemble on-site than regular timber and strong enough to build even the tallest skyscrapers, proponents say.From Maine to Arkansas to the Pacific Northwest, the material is sparking interest among architects, engineers and researchers. Many say it could infuse struggling forest communities like Riddle with new economic growth while reducing the carbon footprint of urban construction with a renewable building material.
Globalization took hits in 2016; Will 2017 lead to more? — Globalization, the path that the world economy has largely followed for decades, took some hefty blows in 2016. The election of Donald Trump as U.S. president and Britain's decision to leave the European Union have raised questions over the future of tariff-free trade and companies' freedom to move production to lower-cost countries. Borders are back in vogue. Economic nationalism is paying political dividends. (LONDON AP)
Real Estate: Through the Noise, Opportunities Exist “Morningstar's real estate coverage is trading at a 7% discount to our fair value estimates. We view themes in commercial real estate as generally defensive in nature, with lingering concerns about increasing bond yields pressuring property stocks globally by double-digit percentages. However, we continue to focus on underlying performance, which has remained healthy overall, as REITs have been focused on repositioning and strengthening their portfolios, deleveraging, and capital recycling. Construction of new property continues, however, as firms look for higher returns, putting into question levels of new supply as economic uncertainty remains.” (Morningstar)
Last-minute spending surge lifts U.S. holiday shopping season “A jump in consumer spending in the final stretch of December significantly offset a slow start to the U.S. holiday shopping season, and is likely to help many retailers beat sales forecasts, industry research groups said on Tuesday. The December spending boost is in contrast to a muted November, when early holiday promotions and expectations among consumers that deals would always be available took a toll. Spending over the Thanksgiving weekend in November fell 3.5 percent from a year ago despite a strong jump in online sales, according to the National Retail Federation. ‘It was a hot start with Cyber Monday, followed by a lull for the last couple of weeks and then a big-bang finish,’ said Pete Madden, a director at retail consultancy AlixPartners. Sales data released on Tuesday showed the major shift in fortunes in late December.” (Reuters)
Sears announces new round of store closings “Sears Holdings’ store portfolio continues to shrink. The struggling retailer told employees on Tuesday that it will close 30 Sears and Kmart stores in early 2017, reported Business Insider. The latest round of closures will bring the total number of stores that the retailer has closed this fiscal year to more than 200, according to the report, and leave it with fewer than 1,500 locations by early 2017.” (Chain Store Age)
Stryker Co. Invests $130M in New Facility in Michigan “Stryker Co. recently announced the investment of more than $130 million to establish a new facility in Portage, Michigan. The company offers a diverse array of products and services in orthopedics, medical and surgical, neurotechnology and spine that help improve patient and hospital outcomes. The facility will create more than 105 jobs and likely feature a customer experience center, functioning showroom, R&D and bio-skills labs, as well as space for sales, marketing and support functions. As an incentive, the project has been awarded a $1 million Michigan Business Development Program performance-based grant. The city of Portage has offered support to the project in the form of property tax abatement, and the Kalamazoo County Brownfield Redevelopment Authority is offering a Brownfield redevelopment incentive.” (Commercial Property Executive)
Mall developer Rick Caruso and his affiliates have donated $470K to City Hall “Retail impresario Rick Caruso has already made his mark on the Los Angeles landscape with shopping wonderlands like The Grove and The Americana, but now the developer is looking upward. Caruso’s latest project is 333 La Cienega, a 20-story luxury residential tower that would alter the skyline in Beverly Grove (13 of the 145 residential units would be earmarked for tenants earning very low and moderate incomes). The 240-foot tower would soar well above the neighborhood’s height restriction of 45 feet, requiring a zoning change from the city planning department. As the La Cienega tower moves to City Hall for final approval, the Los Angeles Times reports that, over the past five years, Caruso and his family members and employees have contributed about $470,000 to local politicians and their pet projects. Among them, a $125,000 donation to the Mayor’s Fund at the request of Mayor Eric Garcetti, a $200,000 contribution supporting the Measure M campaign, and $100,000 to Councilman Mike Bonin’s Los Angeles Forward project.” (Los Angeles Curbed)
Developers chase a drug rehab center’s prime land in a once-seedy area “Beneath Edgewater’s looming condo towers, an aging drug-rehabilitation center housed in a converted motel — a last relic of this gentrifying neighborhood north of downtown Miami — is preparing to sell out. The Village South substance-abuse treatment program opened in the 1970s, when drugs, crime and the sex trade made Edgewater a place few outsiders dared tread at night, unless they bore hearts heavy with sin. Now high-rises have replaced the crumbling apartments and seedy flop-houses. The streets around the rehab center teem with construction crews. Like alchemists’ gold, Edgewater has transformed into a magnet for foreign investors and local workers seeking sleek urban condos without hefty Brickell rents. Owned now by a national nonprofit, the innovative and well-respected Village knows the cold, hard value of its land at Northeast Fourth Avenue and Northeast 31st Street — and Miami Beach developer Russell Galbut is ready to pounce.” (Miami Herald)
Miami market settling into slowdown in 2017: real estate players “Miami’s real estate market experienced the first wave of a slowdown in condo sales at the start of 2016, with some experts warning it could lead to a recession by the end of the year. Twelve months later, South Florida real estate didn’t implode, but the industry is beginning to feel the pinch of a bear market. As we head into 2017, developers, brokers and investors believe construction financing for new projects will be harder to come by and condo sales will continue at a snail’s pace. The Real Deal spoke to major players in South Florida’s real estate game to weigh in on what to expect from now through next December. In downtown Miami, a saturation of projects marketed to buyers looking for units as investments has created too much inventory, said Dan Kodsi, developer of Paramount Miami Worldcenter and Paramount Bay.” (The Real Deal Miami)
Vornado Pops Up in Metro DC “Vornado Realty Trust plans to spur a sea change in the multifamily market, starting with its new 699-unit The Bartlett luxury apartment community, just outside Washington, D.C., in Arlington, Va. Through its WhyHotel platform, the REIT has transformed a segment of The Bartlett into a pop-up hotel, and D-day for the endeavor is the very timely date of January 13, 2017, according to The Washington Post. ‘Our first 50-unit pilot goes live in the Washington, D.C., metro area in January 2017, just in time for the U.S. Presidential Inauguration,’ Vornado notes on the WhyHotel website. It was in 2013 when Vornado obtained the Arlington County Board’s approval for development of The Bartlett, which stands at 520 12th St. South in the Pentagon City area and holds the distinction of being the largest residential high-rise in Arlington County. And in June 2016, the doors of the $250 million property swung open to tenants for the first time, offering premier living accommodations and more than 40,000 square feet of coveted indoor and outdoor amenity space, as well as a Metro-centric location that places the building within 15 minutes of downtown D.C. But the 22-story, Maurice Walters Architect-designed tower’s debut to an eager population of renters was just part of the plan.” (Commercial Property Executive)
Developers rush in to meet pent-up demand for multifamily units “For Louisville, the boom times are expected to continue into 2017 and beyond. Since 2014, more than $9 billion in capital has been injected into the local economy for new hotels, new office buildings, new distilleries and new housing, among other projects. As the housing market continues to recover from the national foreclosure crisis and the demand for apartments remains strong, there has been a spike in development of subdivisions and multifamily complexes in Jefferson County.” (Insider Louisville)
These 5 Trends Will Shape the Housing Market in 2017 “If the U.S. economy is to hit escape velocity in 2017, you can expect the real estate sector to serve as its rocket fuel. At its most broadly defined, housing can be counted on to compose 15% of GDP. It hasn't done that much heavy lifting lately, however. That's because in the wake of the real estate bubble, lending standards have remained tight, while the cautious builders who survived the crisis have been reluctant to dive headfirst into expanding their operations again. But there are signs that these trends are about to change. As the new year rolls on, we'll fill you in on the health of builders and other key trends to watch below.” (Fortune)
What's ahead for 2017? Headwinds form in real estate boom-bust cycle “Last New Year, the business staff of The Dallas Morning News put together a list of the key topics likely to shape DFW's business landscape. And we did pretty well. We thought oil prices were likely to remain lower but relatively steady throughout the year, and we cast doubt on prevailing predictions that our economy would tank if lower oil prices did, in fact, persist. We were right on all counts. So we've put our minds together again to come up with what we see as the Top 10 economic catalysts for the year ahead. We're rolling out one a day between now and the new year.” (Dallas Morning News)
After Success in Real Estate, Edward Noble Found Federal Job Frustrating “Like many entrepreneurs, Edward Noble was eager to help sort out the federal government after he had made his name in business. He finally got his chance in the early 1980s—and found the experience deeply frustrating. The son of an Oklahoma oil tycoon, Mr. Noble struck off on his own and in the late 1950s developed the hugely successful Lenox Square shopping mall in Atlanta. He helped found the conservative Heritage Foundation think tank and in 1980 lost a Republican primary bid to represent Oklahoma in the U.S. Senate. When Ronald Reagan became president in 1981, he put Mr. Noble in charge of Synthetic Fuels Corp., which was created during the Carter administration in an effort to reduce dependence on imported oil. His initial advice was that the program should be scrapped. Later, Mr. Noble concluded the corporation was worthwhile, though on a far smaller scale than originally envisioned.” (The Wall Street Journal)
Millennials will buoy retail in ’17, says Consolo “Noted retail real estate expert Faith Hope Consolo, who heads up the retail group at Douglas Elliman Real Estate, has high hopes for 2017, predicting that bigger-spending millennials and recession-proof retailers will keep sales humming on high streets and in malls, if not in department stores. ‘Millennials are going to start shopping differently this coming year,’ Consolo told Chain Store Age. ‘It used to be they’d spend up to 75% of their disposable income on food, but that was a fad. This year, they will start spending more on fitness and fashion.’ More retail leases will be snapped up by hot online sellers expanding their reaches and customer experiences, she said, naming Kyliecosmetics.com and Goodamerican.com as two to watch.” (Chain Store Age)
NYC Garment District Office Property Commands $108M “ATCO Properties & Management has acquired 240-246 West 35th St., an 18-story Class A office building in Manhattan’s Garment District, from the RPW Group for $108 million. ‘It is one of the garment center’s best mid-block office buildings, with great light and air, better elevators and lobbies than other properties, and excellent floor plans,’ Damon Hemmerdinger, ATCO’s co-president, told Commercial Property Executive. ‘While we are happy to own this property at today’s market rents, we believe that this will be the next neighborhood in Manhattan to see significant rent growth.’ Duval & Stachenfeld LLP represented ATCO in the acquisition and financing of the property, which was provided by MetLife.” (Commercial Property Executive)
Mapping the rise of LA's tallest towers in 2016 “For Los Angeles, let's call 2016 the year of the skyscraper. The 73-story Wilshire Grand Center was crowned with a decorative spire that reaches a height of 1,100 feet, making it the tallest building in Los Angeles. It edged out the US Bank Tower for that title, but not to be outdone, the bank tower made news headlines around the world with the opening of a hair-raising glass slide attached to its exterior, dropping from the 70th to the 69th floor—nearly 1,000 feet in the air. Meanwhile, developers, by our count, filed plans over the past 12 months to construct nearly one dozen impressively tall towers. More than half would rise above 40 stories, earning them the designation of ‘skyscraper.’” (Los Angeles Curbed)
Lurie Children's eyes $51 million expansion “Lurie Children's Hospital wants to pony up $51 million to add more beds to its crowded Streeterville facility in the heart of the Mag Mile. Plans call for adding 44 intensive-care beds to an existing 92. The specialty hospital, which treats the sickest children, also wants to add four neonatal intensive-care beds for babies, for a total of 64 NICU beds. The total number of beds would increase to 336. Lurie, which partners with many community hospitals, said it's had a surge of children referred by providers in northeast Illinois in particular and has had to deny transfers, according to an application Lurie filed this month with state regulators.” (Crain’s Chicago Business)
Jacksonville REIT Pays $92M for Orlando Shopping Center “Plaza Venezia, one of Florida’s top shopping destinations, was recently sold in a $92.5 million deal, according to the Orlando Business Journal. The 201,808-square-foot open-air shopping center was purchased by Jacksonville-based Regency Centers Corp. and an unnamed co-investment partner. The seller, TH Real Estate, a division of TIAA Global Asset Management, was represented in the transaction by CBRE’s Casey Rosen and Dennis Carson. Located at 7640 Sand Lake Road, between downtown Orlando, Walt Disney World, Universal Studios and Orlando International Airport, Plaza Venezia encompasses 27 acres of land and five outparcels. The property is currently 95 percent occupied by anchor tenant grocer Publix and restaurants including Bonefish Grill, Eddie V’s Prime Seafood, Rocco’s Tacos and Seasons 52.” (Commercial Property Executive)