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 gave up 108.75 points, or 0.6 per cent, to 17,840.62. The Standard & Poor’s 500 index shed 14.40 points, or 0.7 per cent, to 2,088.55. The NASDAQ composite declined 39.67 points, or 0.8 per cent, to 4,822.90.
Benchmark U.S. crude sank $2.39, or 4.9 per cent, to close at $46.60 a barrel in New York. Brent crude, used to price international oils, fell $2.14, or 4.3 per cent, to close at $47.96 a barrel in London. In other energy trading, wholesale gasoline fell 8 cents, or 5.6 per cent, to $1.43 a gallon. Heating oil lost 7 cents, or 4.4 per cent, to $1.45 a gallon. Natural gas dropped 22 cents, or 7.5 per cent, to $2.76 per 1,000 cubic feet.
Ward Statement on Clinton Investigation - Although the FBI Director has confirmed that Hillary Clinton was “extremely careless” in mishandling classified emails on a system with less security than a Gmail account, he is not recommending federal charges. U.S. Senate candidate, Dr. Kelli Ward released the following statement: “Hillary’s reckless disregard for national security information deserves handcuffs, not a slap on the wrist. Anyone else would have been indicted already. Bill Clinton and Loretta Lynch must have had a very substantive discussion of grandchildren and golf during their chance encounter on the runway here in Phoenix. However, since the decision has been made, it is time for Republicans to further make the case against Hillary by fighting her long record of bad ideas with better ones. Hillary’s vision of America involves a bigger Obamacare, reduced economic freedoms, more debt, and more abortion. Hillary’s vision would roll back the clock on the amazing progress and prosperity that capitalism has achieved for all of us in recent centuries, especially women. As a well-educated, well-spoken conservative woman, I look forward to facing off against Ann Kirkpatrick and Hillary Clinton and exposing their left-wing agenda for what it is: the real war against women.”
Chipotle executive turns himself in to face drug charges — The Chipotle executive leading the chain’s efforts to rebound after an E. coli outbreak turned himself in Tuesday to face cocaine-possession charges. Mark Crumpacker, one of the chain’s top executives, heads marketing as its chief creative and development officer. Police said Crumpacker, 53, was arrested Tuesday on seven counts of possession of a controlled substance. He was released on $4,500 cash bail. Chipotle Mexican Grill Inc. said late Thursday it placed Crumpacker on leave following a New York Daily News report that he was among 18 customers of a cocaine ring named in an indictment by the Manhattan District Attorney’s Office. (AP)
Economy Watch: Total Construction Spending Down, Though Spending on Apartments, Offices Up “The Census Bureau reported on Friday that U.S. construction spending during May 2016 came in at an annualized rate of $1,143.3 billion, or 0.8 percent below the bureau’s April estimate. The May figure is, however, still 2.8 percent above the May 2015 estimate. Both private and public construction were down for the month, the bureau noted, with spending on private projects dropping 0.3 percent, while public projects were off 2.3 percent. Year-over-year, private construction spending rose by 4.7 percent in May, while public construction was down 2.6 percent. Some kinds of construction spending continues to grow robustly. Spending on new multifamily residential projects, for instance, gained 1.8 percent for the month in May, and was up year-over-year by 23.9 percent. Spending on office construction dropped 0.4 percent for the month in May, but was up for the year by 22.5 percent. Spending on hotel projects rose by 1.9 percent for the month, and by 20.6 percent for the year. (MultiHousing News)
Brexit vote could mean US real estate boom as investors look outside London “The US real estate market could get a boost in the coming months, some analysts are predicting, thanks to the UK’s vote to leave the European Union. The news could add further fire to the already overheated property markets in some of the US’s biggest cities. Uncertainty about UK’s future and its economy could put real estate market on pause, especially in London, and sending international investors in search of another safe-haven property market. Most experts agree the US is likely to see increased demand. The Brexit fallout could especially affect areas and industries that depend on the UK’s immigrant population.” (The Guardian)
Cracks in commercial real estate rally, but no collapse “There are certainly signs this market is slowing and may have peaked for the near term. Deals in New York are drying up. U.S. malls are facing tighter lending terms as investors question their future. A rash of building in the nation's hottest markets have left a glut, particularly among the more-expensive properties. But a widespread crash is improbable. While commercial property values have certainly climbed, this cycle looks a bit different from the one leading up to the 2008 credit crisis. Less leverage is being deployed. Property prices are high, but so are values for everything else. There's still a lot of money sitting around looking for something to do, and a building at the right price could be just the income-producing ticket many investors are looking for. Furthermore, many owners of new buildings aren't in a hurry to sell.” (Herald Tribune)
Hines REIT Seals $1.1B Deal with Blackstone “Hines Real Estate Investment Trust Inc., one of three public non-listed REITs sponsored by Hines, plans to undertake its liquidation and dissolution, primarily through the cash sale, for $1.162 billion, of a portfolio of office assets, Hines has announced. The buyer of the office portfolio, consisting of seven properties on the West Coast, will be BRE Hydra Property Owner LLC, an affiliate of Blackstone Real Estate Partners VIII. The plan, which at the moment remains subject to stockholder approval, “takes advantage of the current strong demand for high-quality assets by institutional buyers,” according to Hines. The West Coast portfolio totals about 3 million square feet of office space and comprises Howard Hughes Center in Los Angeles; Daytona Buildings in Redmond, Wash.; Laguna Buildings in Redmond, Wash.; 5th and Bell in Seattle; 2100 Powell in Emeryville, Calif.; 2851 Junction Ave. in San Jose; and 1900 and 2000 Alameda in San Mateo, Calif. In addition to stockholder approval of the liquidation plan,this transaction is subject to certain closing conditions, although there is no financing contingency.” (Commercial Property Executive)
Amazon inks deal for store, cafe at Hudson Yards “Amazon Books is opening its first East Coast store and cafe, and what better launching ground than Hudson Yards? The online retail giant will take space at Related Companies and Oxford Properties Group’s megadevelopment, according to the New York Post. The stores are set to open in late 2018 or 2019 though it’s not yet clear which building the retailer would call home. Seattle-based Amazon opened a brick-and-mortar store last year in its hometown. The store also doubles as a showroom for Kindle and Fire tablets. Earlier this year, the CEO of General Growth Properties, Sandeep Mathrani, accidentally disclosed that Amazon plans to open hundreds of stores. In New York City, Amazon inked a $30 million deal with the city’s Department of Education to sell e-books to the school system. The contract also has a $34.5 million option to extend the deal for another two years.” (The Real Deal)
Honeywell buys into warehouse automation with $1.5b Intelligrated deal “Industrial conglomerate Honeywell has agreed to buy Intelligrated, a provider of warehouse fulfillment solutions, from private equity group Permira Funds for $1.5 billion. Intelligrated's customers include Amazon, United Parcel Service and Nordstrom, and the deal follows other fulfillment-related acquisitions in recent years by Amazon and others, including forklift trucks supplier Kion Group AG's $2.1 billion agreement to purchase automated systems developer Dematic Corp., announced last month. Permir paid about $500 million in 2012 to aquire Mason, Ohio-based Intelligrated, which has more than 3,000 employees in the U.S. and four other countries….E-commerce is a very big deal, and so is fulfillment of e-commerce purchases. Just ask Amazon, a giant e-commerce retailer that also has been extremely aggressive investing in innovations on the fulfillment side of its business. For example, Amazon acquired Kiva Systems, a developer of robots for warehouse fulfillment functions, back in 2012, before a lot of companies were thinking about robots for fulfillment, and before a lot of companies understood that fulfillment—and not just price—could be Amazon's competitive edge.” (Retail Dive)
Real estate scam costs investors $4 million “Steven and Kristine borrowed against their home, and Kristine invested her retirement savings. Steven also invested $100,000 of the $150,000 they had already made. All told, the Beelers gave Pantazelos $411,000. They also convinced Kristine's parents to invest money, too. Suddenly, after months of back-and-forth, all communication with Pantazelos stopped. It was then that Kristine said she realized they had been swindled. ‘You know when you need to listen to your gut? That was the one time that I should have been more forceful,’ said Kristine when describing her initial reluctance to invest. It turns out they had been the victims of an elaborate Ponzi scheme orchestrated by Pantazelos. He was using new investor money to pay early investors, building a larger and larger house of cards that eventually came tumbling down.” (ABC Waay 31)
West LA Office Campus Commands $135M “LPC Realty Advisors I, an affiliate of Lincoln Property Co., has acquired Wateridge—a six-building Class A office campus in the heart of West Los Angeles, on behalf of a public pension fund client, for a reported $135.3 million. The campus totals more than half a million square feet and boasts a tenant roster that includes Kaiser Permanente, the L.A. County Department of Children and Family Services and Evolve Media….The property also incorporates a multi-tenant retail building and a standalone 24 Hour Fitness, offering a convenient, state-of-the-art fitness facility right on campus.” (Commercial Property Executive)
$2 million condos planned for Fort Lauderdale “In 2012, with the housing market starting to recover from a prolonged downturn, Grand Birch LLC paid $2.45 million for less than an acre along North Birch Road in Fort Lauderdale. The plan was to build Privage, an 11-story condominium with views of the ocean and Intracoastal Waterway. Four years later, the project is on the verge of breaking ground — but with a new name and a different developer that paid a premium for the site. Boca Raton-based SobelCo. has launched sales for 321 at Water's Edge, a 23-unit condo at 321 N. Birch Road. Construction is set to begin in the fall, and the project is due to open in early 2018.” (Sun Sentinel)
DA Vance, Building Trades want strict sentencing for Harco after construction death “A coalition of 22 groups – including Manhattan D.A. Cyrus Vance and the powerful Building Trades union – is asking a New York judge to hand down the maximum sentence possible to Harco Construction in charges related to a construction worker’s death last year at a Meatpacking District work site. The district attorney’s office submitted its sentencing recommendation last week, which was accompanied by letters from labor unions, community groups and the Building Trade Employers’ Association, according to DNAinfo. Judge A. Kirke Bartley found Harco guilty of manslaughter, criminally negligent homicide and reckless endangerment after 22-year-old Carlos Moncayo died last year at 9-19 Ninth Avenue, the former home of French bistro Pastis. According to reports, the excavation of the property was not properly shored up. Aurora Capital Associates and William Gottlieb Real Estate are redeveloping the commercial building into a Restoration Hardware. On top of fines for each of its felony and misdemeanor charges, Vance wants Harco to pay for a TV and print campaign to run this fall in English and Spanish to promote worker safety.” (The Real Deal)
US factory orders drop in May; military spending plunges — Orders at U.S. factories dipped in May, dragged down by less demand for steel, aluminum, furniture, electrical appliances and military aircraft. The Commerce Department said Tuesday that factory orders fell 1 per cent in May, after gains in the two prior months. So far this year, orders for manufactured goods have dropped 1.9 per cent to $2.2 trillion compared to the same period in 2015. The decline suggests that U.S. manufacturers have yet to fully recover from the sting of weaker economic growth worldwide. (AP)
New 50-euro note unveiled to combat counterfeiting — The European Central Bank has unveiled a new 50-euro note as part of a program to make it harder to counterfeit the currency shared by 19 European countries. The bank said Tuesday that the 50-euro note (worth $55.66) is the most widely used of its banknotes. New features in the banknote to make it safer include a hologram of Europa, a figure from Greek mythology, a new watermark, as well as a new emerald green reflective paint. The new banknote will come into circulation in April next year. (AP)