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.
The Dow Jones industrial average climbed 80.19 points, or 0.4 per cent, to 18,226.93. The S&P 500 added 7.26 points, or 0.3 per cent, to 2,137.16. The NASDAQ composite added 31.88 points, or 0.6 per cent, to 4,988.64
Benchmark U.S. crude fell 65 cents, or 1.4 per cent, to close at $44.76 a barrel in New York. Brent crude, a standard for international oil prices, lost 51 cents, or 1.1 per cent, to $46.25 a barrel in London. In other energy trading in New York, wholesale gasoline rose 1 cent to $1.38 a gallon, heating oil was flat at $1.42 a gallon and natural gas dropped 10 cents, or 3.5 per cent, to $2.70 per cent.
Stocks gain, setting a new record high for S&P 500 index — The Standard and Poor’s 500 index closed at a record high Monday, beating the mark it set a bit over a year ago. The Dow Jones industrial average was within 1 per cent of its own closing high, which was also set in May last year, but the Nasdaq composite has further to go. The technology-focused index is still negative for the year and would have to gain nearly 5 per cent to regain the closing high it reached last July.
Sky pools and helipads: apartment developers focus on ‘thoughtful’ high-end amenities “Gone are the days when luxury buildings could satisfy residents with a friendly doorman and a few exercise machines in the basement. That’s so 2000, says Brett Ringelheim, a licensed real estate salesperson at Nest Seekers International. ‘Having a gym and pool is common sense,’ he says. But today’s buyers and renters demand more customized amenities and top-of-the-line everything. Knock-your-socks-off amenities packages have become as important — and common — as high ceilings and great views. ‘Buildings are now loaded with dog runs, helipads, hotel rooms for guests within the building, private catering and event space,’ says Denae Montesi, a real estate salesperson at William Raveis, a real estate firm in New York City. ‘Underground drive-in lobbies, private parking space and Turkish baths are also topping the lists of must haves.’… Well thought-out ‘extras’ are as much about luring buyers as it is make residents’ lives that much easier.” (MarketWatch)
Auction is an increasingly popular way to buy, sell commercial real estate “Selling and buying commercial real estate can be a lot like sprinting through Jell-O. Lots of effort expended, but rather slow progress. The properties are often unique, negotiations can be complex and urgency may slip away as the process stalls. According to Jeff Cates, president of Cates Auction & Realty, these are precisely the reasons both sellers and buyers turn to the auction process. He adds that many commercial properties sit for extended periods with “For Sale” signs out front while qualified buyers don’t even know they are available. He points to a recent commercial auction promoted and handled by his firm. The seller had purchased, redeveloped and fully leased two retail commercial buildings. According to Ray Bucklew, Cates’ commercial auction specialist who handled the listing, the buildings were in great shape with solid tenants and good cash flow. ‘Our seller had a successful project and was ready to move his cash into other business activities,’ he said. ‘He chose auction as a way to streamline the process and he was attracted to the idea of competitive bidding to surface his buyer.’ Following a 45-day advertising campaign fully designed and managed by Cates’ marketing department, the auction took place on May 25. Prospective buyers competed live onsite and online.” (Kansas City Star)
Buchanan: The good old days of commercial real estate, aka, where is my DeLorean? “It was 1985, and we closed the sale of an industrial building in 30 days. The buyer waived contingencies in two weeks, secured financing from his savings and loan at 9.5 percent, and moved in quickly. Man, those were the days! Recently, I pondered how the deal process has morphed in the last 30 years. Thanks to the regulatory environment, all California real estate brokers must adhere to these days, the savings-and-loan implosion, three ugly recessions – 1991-93, 2000-2001, and 2008-2009 – and changes in the tax laws, our sprint to close a deal has many new hurdles and new costs to bear. Nonbinding letters of intent: A binding offer has evolved into a “we will consider if we want to but only if the consideration will not adversely affect anyone or if it does we can change our mind.” And “only a lease or a purchase and sale agreement will bind us unless we have a great lawyer and we didn’t really mean it and can get a judge to see it our way.” Phase I, II, and III environmental reports: These took effect in the mid-1980s and add $2,500-plus, depending on the phase and extent of contamination (including regional issues). Lenders won’t lend without them.” (The Orange Country Register)
Merger creates new pet power Two mid-sized U.S. and Canadian chains are joining forces to create the third-largest pet specialty retailer and the largest small format, neighborhood specialty pet retailer in North America Pet Valu and Pet Supermarket have merged to create a combined business named Pet Retail Brands. With more than 930 stores, it is expected to generate approximately $1 billion in system-wide retail sales across the U.S. and Canada. Pet Retail Brands will have stores from the East Coast to the West Coast and from Miami to Vancouver. Headquartered in Markham, Ontario, Pet Valu is a Canadian retailer with more than 770 stores across Canada and the U.S. more than 770 stores across Canada and the U.S. Headquartered in Sunrise, Florida, Pet Supermarket operates 165 stores in the southeastern U.S. Both chains will remain in their current headquarters locations.” (Chain Store Age)
West LA Office Tower Commands $311M “Hudson Pacific Properties Inc. has acquired the former Wells Fargo Center—a 500,475-square-foot, Class A office tower in Los Angeles—for $311 million, from funds managed by The Blackstone Group. ‘Our team’s long history of occupancy and prior ownership of 11601 Wilshire Boulevard provided a competitive edge to understanding the value creation potential for this asset,’ Victor Coleman, Hudson Pacific chairman & CEO, said in a prepared statement. ‘Our success in selling One Bay Plaza and securing the timely repayment of our Broadway Trade Center note adds to our already ample capital sources to fund this transaction.’ Located at 11601 Wilshire Blvd., the property has served as Hudson Pacific’s headquarters since 2007, and was 83 percent occupied at the time of the sale. The company plans to renovate the property and lease up the remaining space.” (Commercial Property Executive)
Vesper Holdings Oversees VA Student Housing Turnaround “Vesper Holdings has successfully reinvented The Harrison, a 288-unit, 1,152-bed student housing community in Harrisonburg, Va. Formerly known as University Fields and labeled “Trashby Ashby” by students at nearby James Madison University, the community was transformed and its value tripled in 18 months. New York City-based Vesper Holdings bought University Fields in foreclosure for $19 million in 2013, and launched a $9 million renovation program. Working in cooperation with the student housing leader’s own management division, Campus Life & Style (CLS), the program resulted in occupancy rates growing from 60 to 100 percent. In conjunction, rents increased approximately 30 percent, and the property was appraised at more than $50 million.” (MultiHousing News)
How much does a construction worker in New York make? “How much do construction workers in New York make? It ought to be an easy question to answer, but it is not, which is why it is so hard to settle the controversy over whether builders should have to use union labor when they receive tax breaks or other government help, especially to create affordable housing. Let’s start with what we know. The average wage of a construction worker in New York City reached $76,300 last year, up modestly since 2011, according to a recent report from the New York Building Congress. The study broke out wages into three broad categories with the best paid being heavy construction and civil engineering (think of those unionized crane operators who can make $400,000 a year). The report is based on a reasonably reliable quarterly census of employment and wages. Builders say those figures don’t reflect their costs for using union labor. During 2015, for example, the carpenters’ contract called for an hourly rate of $49.88 plus $44.10 in supplemental benefits. By extrapolating those numbers, an employer-circulated chart put the total compensation for a carpenter at just under $200,000 a year. Union leaders like Gary LaBarbera label this fantasy math and insist union construction workers earn between $80,000 and $100,000 a year in part because they don’t work year-round.” (Crain’s New York)
Airbnb’s multi-unit hosts and “commercial listings” account for growing share of NYC business “Airbnb is out with new data on its New York City users. While the company is taking steps to tamp down on controversial uses of its service in the face of fierce pressure from Albany lawmakers, the numbers show “hosts” listing multiple units still make up a significant — and growing — proportion of users. The percentage of units booked through the site for more than 180 day over the space of a year — considered “commercial listings” — is growing as well, according to the data. The short-term rental Goliath released a report last week showing there were 878 so-called “multi-hosts” active on the site in New York City as of June 1, 2016, about 4.5 percent of all listers. That’s up from 3.5 percent as of Nov. 17, 2015, according to numbers released by the firm earlier this year. The increase comes despite the company’s removal of over 2,200 of multi-hosts’ listings since December that it said “could impact long term housing,” according to the report. That’s on top of another 1,500 such listings the company removed late last year, just before its first-ever NYC data release.” (The Real Deal)
South Loop Demolition Will Make Way for New 15-Story Tower “Demolition permits have been issued for the shuttered National Association of Letter Carriers building at 1411 S. Michigan Avenue in the South Loop. A new 15-story tower from Russland Capital Group and LendLease will soon take its place as construction on the new development is expected to begin later this year. Designed by BKV Group, the new tower will become a mixed-use project with 199 apartments, 100 parking stalls, and 40,000-square-feet of commercial space. A medical center is expected to take over much of the building’s commercial space, but residents will have access to amenities such as an outdoor swimming pool, basketball court, and yoga studio. According to the timeline on Russland’s website, the development is expected to welcome its first renters by 2017.” (Chicago Curbed)
Vitus Group to Revamp Six Affordable Housing Properties “Vitus Group is set to add roughly 1,200 units to its portfolio in the last six months. The six properties are located in St. Paul, Minn.; Atlanta; Providence, R.I.; East Orange, N.J.; Miami Beach, Fla.; and Danville, Ill. The developer plans to renovate the multifamily communities and maintain their affordability. The modernization process will include adding active design features to each property, giving residents opportunities for healthier choices and physical activity, energy efficiency upgrades and resident services. ‘We have been able to ensure there will be quality affordable housing rental stock in six key locations, impacting 2,400 low-income individuals, families and older adults. We look forward to making long-term upgrades to each property for the residents who will live there,’ Stephen Whyte, managing director at Vitus Group, said. The communities purchased by Vitus offer between 99 and 298 units. Among them is the 210-unit Four Freedoms Miami Beach high-rise, located in a top market and home to 260 residents. According to the Yardi Matrix residential report, the property offers studios, one- and two-bedroom floorplans, while average monthly rates are around $1,200. The property was purchased for approximately $10.4 million from Four Freedoms House of Miami Beach.” (MultiHousing News)