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January 6, 2017
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Real Estate Daily News Buzz January 6, 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.

Thursday, the Dow Jones industrial average shed 42.87 points, or 0.2 percent, to 19,899.29. The Standard & Poor's 500 index slipped 1.75 points, or 0.1 percent, to 2,269. The Nasdaq composite gained 10.93 points, or 0.2 percent, to 5,487.94.

Benchmark U.S. crude picked up 50 cents to $53.76 a barrel in New York. Brent crude added 43 cents to $56.89 a barrel in London. In other energy trading, wholesale gasoline lost 1 cent to $1.64 a gallon. Heating oil remained at $1.69 a gallon. Natural gas rose 1 cent to $3.27 per 1,000 cubic feet.

The Nasdaq squeaked out a record high close on Thursday thanks to Amazon.com, while deep drops in Macy's, Kohl's and other department stores weighed on the broader stock market. U.S. stocks have wavered over the past three weeks following a strong surge in the wake of the November election, with investors expecting President-elect Donald Trump to stimulate the economy through tax cuts and infrastructure spending. Many on Wall Street want evidence that his campaign-trail promises will be approved by Republican lawmakers and come to fruition. Department stores Macy's (M.N) dropped 13.89 percent while Kohl's (KSS.N) slumped 19.02 percent after the companies said their holiday sales fell more than expected. The warnings swept up other department stores in their wake - Nordstrom (JWN.N) fell 6.87 percent and J.C. Penney (JCP.N) fell 7.20 percent.

Hands-free driving ordinance takes effect Jan. 6 – Oro Valley’s new “hands-free” Town ordinance becomes effective January 6, 2017. The new ordinance prohibits drivers from holding their electronic device while operating a motor vehicle on a public road, regardless of being stopped at a light or stop sign. Exceptions include calling 911 or speaking to a hospital or physician. Drivers are encouraged to utilize car manufactured Bluetooth integration, consumer Bluetooth devices, cellular phone mounts, and/or device speaker functions while driving. Single finger "touch and swipe" is allowed to activate and deactivate phone functions so long as the device is not in the driver’s hand. The Oro Valley Police Department (OVPD) will begin its educational campaign Monday, January 9, 2017. The educational campaign will be motorcycle and patrol officers conducting high visibility traffic stops on drivers seen holding a cellular phone or mobile electronic device (e.g. GPS, gaming device). Drivers will be warned about the violation and receive an educational pamphlet describing the provisions of the new ordinance. OVPD will hold several outreach events in the coming months to educate the public. To learn more about this new ordinance please visit the Town’s website or contact Lt. Chris Olson at 520-229-4902.

Fed Sees Faster Economic Growth Under Trump, But Not a Boom “Federal Reserve officials expect Donald J. Trump’s election to result in somewhat faster economic growth over the next several years, but they see little chance of the boom Mr. Trump has promised, according to an account of the Fed’s most recent meeting in mid-December. That is in part because the Fed plans to raise interest rates more quickly if growth accelerates. The minutes, released Wednesday, offer more evidence that the Fed sees itself as a counterweight to Mr. Trump’s promised policies of tax cuts and infrastructure and defense spending.” (The New York Times)

Amazon is Opening its First Book Store in New York City “Online retailer Amazon plans to continue its push into brick and mortar stores when it opens its first Manhattan bookstore later this year, according to reports. The shop, a 4,000-square-foot location in the city's Columbus Circle complex, joins Amazon stores in Seattle, San Diego and Portland, according to a Wall Street Journal report. The company also plans to open stores in Chicago and Massachusetts and is considering building another store at a different location in Manhattan.” (Fortune)

6th Annual Youth Baseball Clinic coming to Kino Sports Complex Jan. 7 -- Local youth are invited to attend the 2017 Tucson Youth Baseball Experience to receive baseball tips from the experts from 10 a.m. to 1 p.m. Jan. 7 at Kino Sports Complex, 2500 E. Ajo Way. In its sixth year, this event offers kids, ages 6 to 14, a unique baseball experience alongside pro athletes who teach them basic skills of the game. Major League Baseball stars, J.J. Hardy and Kenny Lofton will coach this year’s event along with other past and present MLB players. Registration is free and each participant will receive a complimentary event t-shirt. Interested participants should register in advance online. Check-in will begin at 8:30 a.m. Practice and fun starts by 10 a.m. and will continue until 1 p.m.  After the clinic, kids can get autographs and pose for photos with their favorite baseball stars until 2 p.m. For more information about this event, please visit the Tucson Youth Baseball Association website. (Pima County)

Amazon, Forever 21 Vying for Bankrupt American Apparel: Report “Online retailer Amazon.com and teen apparel store chain Forever 21 are among the companies weighing offers to acquire bankrupt American Apparel, people familiar with the talks said on Wednesday. The bankruptcy auction of Los Angeles-based American Apparel, which made its branding theme ‘Made in the U.S.A,’ will determine the future of a major clothing manufacturing plant in California, one of the most expensive U.S. states in terms of labor costs.” (Reuters)

How Sears Lined Up $2 Billion in Much Needed Money in the Last 10 Days “Sears Holdings said on Thursday it had reached a deal to sell its popular Craftsman tool brand to Stanley Black & Decker, its latest move in the last week or so to shore up its finances with urgently needed money as sales continue to collapse. The company is selling Craftsman, a brand that generated sales of $200 million in the last year, 90% of which were at Sears and Kmart stores, for a total of about $900 million. That includes $525 million at the closing of the deal, another $250 million at end of year three.” (Fortune)

These Startups Are Bringing Commercial Real Estate into 2017 “Commercial real estate is behind the times. That might come as a surprise, especially since the industry is valued at $12.6 trillion. Thankfully, a growing community of tech startups is beginning to address common issues that plague the industry. Just weeks ago, Hightower and VTS, software solutions that help real estate professionals and owners manage the sales and leasing of properties, announced a $300 million merger to combine both services under the name VTS. The company focuses on helping real estate professionals track deals and manage space in real-time, and collaboratively.” (Forbes)

Restaurant Industry Ends 2016 on a Sour Note “While the restaurant industry struggled with weak sales and traffic throughout 2016, it seems that December, in particular, had the worst same-store sales growth of the year. According to Nomura-Instinet analyst Mark Kalinowski, December is slated to be the only month where the industry as a whole generated negative same-store sales growth. Kalinowski points to adverse weather as the largest factor in the sales decline, particularly during the second and third week of the month.” (CNBC)

What CRE Finance Will Look Like in 2017 “The commercial real estate financing market is facing numerous obstacles this year, ranging from the potential impact of newly implemented regulations to a likely shift in federal monetary policy to shifting solid fundamentals—and whether or not those changes will decrease demand for debt. There is also the rise of nontraditional, nonbank lenders in the marketplace to consider, as well as an incoming presidential administration that many believe will bring about policies beneficial to the overall economy but whose specific agenda remains notoriously hard to predict.” (Commercial Observer)

CBRE Gets Floored: Brokerage Acquires Real Estate Tech Startup “CBRE acquired real estate tech startup Floored for an undisclosed price, in a deal that expands the real estate services behemoth’s technology division. Founded in 2012, Floored produces virtual, 3D office floor plans for landlords and brokers. The firm’s co-founders David Eisenberg, Dustin Byrne and Judy He will join CBRE along with their 36 employees.” (The Real Deal)

Real Capital Markets: Investors still sweet on commercial real estate “Investors still love commercial real estate. And they love multifamily properties most of all. That’s the takeaway from a national investment survey published this January by Real Capital Markets. The company completed the survey in November of last year, finding that 70 percent of commercial real estate investors from around the United States were in a buying mode at the end of the year. ‘RCM’s Investor Sentiment Survey showed that investors are still aggressively looking for acquisitions and intently focused on keeping the course with tried and true property sectors,’ said Steve Shanahan, executive managing director with Real Capital Markets, in a statement. ‘Many investors remain optimistic in spite of economic conditions, potential interest-rate changes and domestic and international events that could impact short-term activity.’ Not surprisingly, the multifamily sector is the top investment choice among survey respondents, with 49 percent of investors saying they prefer to sink their dollars into apartment properties. Industrial was also a popular investment choice, with 34 percent of investors saying they prefer this asset class. Next came retail and office, both favored by 32 percent of investors.” (REJournals.com)

Real Estate Predictions 2017: Has multifamily housing finally hit its peak? Has multifamily housing finally hit its peak? That's the opinion of at least one of our circle of experts for our highly anticipated real estate predictions for 2017. It’s a mixed bag of opinions from experts connected to the industry in a variety of ways. Agreements? There are a few, as most still feel urban centers will be where it’s at. And though most feel the election of business-minded Donald Trump as president is a good thing, many feel real estate could be facing a downturn, especially during the second half of the year.” (NJBiz.com)

It’s getting cheaper to rent in downtown Miami “Good news, renters: It’s getting cheaper to live in downtown Miami. As developers deliver a bounty of new condos and rental apartments in 2017, the increased supply is helping keep rents in check, according to a new report from Miami’s Downtown Development Authority. ‘Landlords are trying to retain tenants because [tenants] now have these new options,’ said Anthony Graziano, of Integra Realty Resources, who authored the report. ‘It’s going to be a renter’s market in 2017.’ In 2017, developers are expected to complete nearly 6,350 condo and rental apartment units, the most in a single year during this real estate cycle, according to the DDA. (For the first time, the majority of those units are rentals, reflecting Miami’s rapidly cooling condo market.) Developers already delivered more than 4,700 units in 2016.” (Miami Herald)

Caution On Commercial Real Estate “The past few years have been good ones for commercial real estate in the Twin Cities. Office tenants absorbed nearly 1 million square feet of space in 2015, the best showing for the market since the Great Recession. The retail market has rebounded, with an uptick in consumer spending as new grocery stores keep opening left and right across the metro. The continuing growth of e-commerce has been a key factor driving the robust industrial property sector as demand for large bulk-distribution centers remains strong. But commercial real estate has always been a cyclical business. If companies aren’t growing, they don’t need more office space. If consumers aren’t spending, the market doesn’t need more stores. Looking to the year ahead, many brokers forecast that markets will continue at roughly the same pace as in 2016. But some signs indicate that the pace of deals is starting to taper. Some brokers in all sectors are seeing signals of caution that could temper the pace of leasing as companies try to gauge where the economy, businesses and interest rates are headed.” (Twin Cities Business Magazine)

PAC Buys Atlanta Trophy Office Tower “Three Ravinia, an 813,748-square-foot trophy office tower in Atlanta’s Central Perimeter submarket, has changed hands for the second time in less than four years. The new owner, Preferred Apartment Communities Inc., an Atlanta-based company which acquired the property through its indirect wholly-owned subsidiary, Preferred Office Properties LLC, did not disclose the sales price. When it was sold in May 2013 by Colonial Properties Trust to CBRE Global Investors, the 31-story office building went for $144.3 million. The Class A office tower is adjacent to the Crowne Plaza Hotel. The high-rise was built by Hines in 1991 and previously owned by Colonial Properties Trust from 2002 through 2013.” (Commercial Property Executive)

Brennan Sells Prime Windy City Warehouse “Brennan Investment Group LLC knows when to let go. Roughly one hear after opening the suburban Chicago warehouse at 1780 Birchwood Ave., developed in partnership with DLJ Real Estate Capital Partners, the private real estate investment firm has sold the 140,000-square-foot industrial facility to Morgan Stanley’s Prime Property Fund. Located in Des Plaines, Ill., fewer than five miles from O’Hare International Airport, 1780 Birchwood sits on an 8-acre site that Brennan and DLJ purchased in 2013. With construction financing from The PrivateBank and Keeley Construction aboard as general contractor, the partners built the state-of-the-art facility as a spec project, and quickly attracted two tenants that claimed the entire tenant roster. Relying on the leasing expertise of Colliers International, which also represented Brennan in the sale transaction, the real estate company signed Pet Food Experts to a 98,800-square-foot lease in June 2015, and landed a commitment from quartz surfaces producer Cambria Co. for the remaining 40,500 square feet just three months later.” (Commercial Property Executive)

What Chicago learned from privatizing some affordable housing “No one really knows what affordable housing policy will look like under the Trump administration. Budget cuts and other regulatory changes could be on the horizon. Some big trends, particularly the shift to deregulate public housing agencies and privatize affordable housing, could continue. It's likely, though, that private developers, both nonprofit and for-profit, will still play a growing role in providing housing for low-income households. In that context, I have been thinking about what Chicago's experience tells us about how private developers of affordable housing see themselves. After all, they're not just housing working families or seniors—they are also housing and providing support services to the neediest families.” (Crain’s Chicago Business)

Manhattan office demand just couldn’t keep up with new supply in 2016 “Tenants gobbled up more than 33 million square feet of Manhattan office space in 2016, pushing leasing activity up 5.5 percent year-over-year, according to a new report from Colliers International. But even as large chunks of new supply came online, many big tenants chose to renew their leases and stay put, resulting in the market seeing negative absorption for the first time since 2009. Demand was strong last year, with WeWork on a tear signing roughly 800,000 square feet of new leases and expansions and Swiss bank UBS renewing 900,000 square feet at RXR Realty’s 1285 Sixth Avenue, Colliers data show. In fact, the 33.1 million square feet leased in 2016 was the third-highest total in the past 10 years, behind 37.38 million square feet in 2014 and the 33.92 million square feet leased in 2013.” (The Real Deal)

New Orleans Saints champion, partner, to expand Dunkin’ Donuts in Louisiana “A new partnership plans to open dozens of Dunkin’ Donuts locations in Louisiana. The company announced that New Orleans Saints Quarterback Drew Brees, in partnership with existing franchisee Vik Patel, has signed an agreement to develop up to 69 new Dunkin' Donuts restaurants in New Orleans, Baton Rouge, Shreveport, Monroe and Alexandria, Louisiana over the coming years. Brees is a New Orleans Saints Super Bowl champion and MVP. The first location under the new partnership is planned to open in 2017, and the group will also co-own five existing Dunkin' Donuts restaurants in Louisiana.” (Chain Store Age)

Pima County’s Natural Resources, Parks and Recreation Department are working with two dozen women this weekend to build a new multi-use trail in Tucson Mountain Park.  The Women’s Build Day is a collaboration with the Bell Joy Ride women's ride series, and is an opportunity to get more women involved in trail building and stewardship of public lands, said Evan Pilling, executive director of Sonoran Desert Mountain Bicyclists, a volunteer group that has worked with NRPR to train volunteers to help build or rebuild trails.  The effort this Sunday, Jan. 8, begins at 8 a.m. at the Richard Genser Starr Pass Trailhead. It takes about $25,000 to build a mile of trail, according to NRPR staff members Mark Flint and Steve Anderson, but NRPR does it at virtually no cost, thanks to SDMB. Many of the social or “wildcat” trails in Tucson Mountain Park go through areas with damaged resources. Some of the unsustainable wildcat trails were trails left by ranchers and miners that people have been using for more than 60 years.  The NRPR team is working to reroute or rebuild trails to avoid eroded areas and cultural sites that haven’t been surveyed as well as to improve the aesthetics of the trail experience for all trail users. NRPR’s Flint designed the section of the Arizona Trail that runs through Pima County from the Santa Ritas north to Saguaro National Park. The crew of volunteers put in 100,000 volunteer hours and 30 miles of trail over seven years. Volunteers can find information about build days, social rides, and other events at the SDMB website. SDMB and NRPR provide all of the needed tools, along with lunch and post-work refreshments.  Volunteers need to bring work gloves, water/snacks, long pants, and closed-toe shoes.  No trail building experience is needed to participate.  Volunteers should be comfortable walking a mile or more at a time, and engaging in moderate physical activity in a desert environment.  Volunteer events are capped at between 25 and 45 volunteers, depending on availability of crew leaders; please register through the appropriate link to reserve your space. Dates of upcoming SDMB work events in January and February are:

Business sponsorship of build days are available and appreciated.  Please contact trailsteward@sdmb.org for more information.  All donations are tax-deductible.

 

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