Real Estate Daily News Buzz June 13, 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.

Monday, the Standard & Poor’s 500 index dipped 2.38 points, or 0.1 percent, to 2,429.39. The Dow Jones industrial average, which closed at a record high Friday, lost 36.30 points, or 0.2 percent, to 21,235.67. The Nasdaq composite dropped 32.45 points, or 0.5 percent, to 6,175.46.

Benchmark U.S. crude added 25 cents to $46.08 a barrel in New York. Brent crude, used to price international oils, added 14 cents to $48.29 a barrel in London. In other energy trading, wholesale gasoline dipped 1 cent to $1.49 a gallon. Heating oil lost less than 1 cent to $1.43 a gallon. Natural gas fell 2 cents to $3.02 per 1,000 cubic feet.

Interest rates on short-term Treasury bills rose in Monday’s auction to their highest levels since October 2008. The Treasury Department auctioned $39 billion in three-month bills at a discount rate of 0.990 percent, up from 0.980 percent last week. Another $33 billion in six-month bills was auctioned at a discount rate of 1.100 percent, up from 1.070 percent last week. The three-month rate was the highest since those bills averaged 1.250 percent on Oct. 20, 2008. The six-month rate was the highest since those bills averaged 1.400 percent on Oct. 27, 2008. The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,974.98, while a six-month bill sold for $9,944.39. That would equal an annualized rate of 1.006 percent for the three-month bills and 1.122 percent for the six-month bills. Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, stood at 1.20 percent on Friday, up from 1.16 percent at the start of last week on June 5.

US budget deficit jumps in May as spending outpaces revenue — The U.S. budget deficit rose to $88.4 billion in May from $53 billion a year earlier, as government spending in areas such as Medicaid and defense rose at a faster pace than revenue. The Treasury Department says government receipts from individual and corporate taxes rose 7 percent last month from May 2016 to $240 billion.

Fed is set to raise rates this week despite political tumult — The Washington political world is in disarray. Britain’s election tumult has scrambled the outlook for Europe. And economies in the United States and abroad are plodding along at a pace that hardly suggests robust health. Yet when the Federal Reserve meets Wednesday, it’s all but sure to raise its benchmark interest rate for the third time in six months, a pace the Fed would normally adopt when it’s trying to slow an economy.

Public Sector Investors Favor Real Estate, Renewables—Survey “Public sector investors plan to raise exposure to real estate, infrastructure, green bonds and renewables over the coming year, while cutting holdings of low-yielding government bonds, an annual survey showed on Monday. The Official Monetary and Financial Institutions Forum (OMFIF) polled chief investment officers and reserve managers at 31 public sector institutions with combined assets under management of $4.21 trillion. With low or even negative returns from fixed income, and volatility in equity markets, there is growing appetite for illiquid assets that deliver steady, predictable returns.” (Reuters)

Walmart Under Siege as Germany’s Aldi Announces Major U.S. Attack Plan “Aldi is coming after Walmart’s grocery market share, as the German discount retailers said it will invest $3.4 billion to expand its U.S. presence. The privately held German grocery store said it plans to increase its store base to 2,500 by 2022, the company said Monday. Aldi currently operates 1,600 U.S. stores. In February, the retailer announced it was investing $1.6 billion in its U.S. stores, with plans to remodel and expand more than 1,300 stores by 2020. The new openings are expected to create 25,000 jobs over the next five years and make Aldi the third-largest grocery chain operator in the U.S. behind Walmart and Kroger.” (The Street)

Houston Ranks 4th in Nation for Industrial Real Estate Sales “Colliers International ranked Houston fourth among U.S. metro areas for volume of industrial transactions in the first quarter of 2017, putting the Bayou City above Northern New Jersey, a major national port area, and suggesting a relatively resilient local economy.  A current boom in industrial real estate has been fueled largely by demand for warehouse space for distribution of consumer goods as retail models shift towards e-commerce. Colliers said industrial real estate was the only real estate sector to post year-over-year sales volume gains last quarter.” (Chron)

Macy’s Inc. Quietly Courts Buyers for Cincinnati Properties “Local department stores have been spared so far in a Macy’s cost-cutting quest to close about 100 stores nationwide. But that doesn’t mean the company isn’t working on real estate deals in Cincinnati. At the International Council of Shopping Centers convention in Las Vegas last month, local real estate brokers were buzzing about the possible sale of Macy’s Florence Mall furniture store. Florence Mayor Diane Whalen has been working the grapevine and is convinced a deal is being explored.” (WCPO Cincinnati)

WeWork Versus CoWrks: How Two Real Estate Scions Are Betting Big on the Co-Working Space  “Currently, there are more than 160 players in the co-working space who run more than 350 operational centres across tier-1 and tier-2 cities in the country, according to a report by Colliers International. The better-known names among these are InstaOffice, Awfis, BHive, Regus, Spaces, 91springboard, and Investopad. Co-working spaces have become a viable option for startup companies and professionals who cannot afford to maintain an office because of high rentals and deposits as well as maintenance hassles.” (YourStory)

Overbuilding in Richmond? “Following several years of strong supply, Richmond’s multifamily market is shifting down a gear. Rents rose 1.6 percent year-over-year through April, continuing to trail the national average. With almost 20,000 units in the pipeline—more than a third of which are under construction—the metro is at risk of overbuilding. With $830 million in assets changing hands, 2016 marked the sixth consecutive cycle high. Investors are focusing mainly on value-add opportunities. There were roughly 7,800 units under construction as of April, and the metro is well on track to surpass 2016’s level of completions this year.” (Commercial Property Executive)

Creative Markets for Property Rights Can Solve Many Problems “Property rights are at the core of the American success story. Businesses won’t invest in plants and equipment if they worry about losing the rights to the future profits generated by that property (see Venezuela). When we talk about somebody’s home being their castle, we are talking about the owner’s right to control her property. While the basic concept of property rights is generally well understood, what is underappreciated is how flexible property rights can be when markets are created for unbundled parts of those property rights. A perfect example of how useful unbundled property rights can be is air rights.” (Forbes)