Real Estate Daily News Buzz March 21, 2017

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Real Estate Daily News Buzz March 21, 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.

After an early-afternoon slump Monday, U.S. stocks finished mostly lower Monday in a quiet day of trading. Banks fell along with bond yields as stocks declined for a third straight day. Lower bond yields hurt banks because they force interest rates down on mortgages and other kinds of loans. Utility companies gave up some of their recent gains. Most sectors didn’t move much on the lightest trading day of the year. European markets mostly fell after the British government said it will formally begin the process of leaving the European Union next week. Sameer Samana, a strategist for the Wells Fargo Investment Institute, said politics may keep investors occupied for the next few weeks as they wait for elections in France and a European Central Bank meeting, both next month, while legislators in the U.S. debate the proposed Republican-backed health care law.

The Standard & Poor’s 500 index lost 4.78 points, or 0.2 percent, to 2,373.47. The Dow Jones industrial average slipped 8.76 points to 20,905.86. The Nasdaq composite rose 0.53 points to 5,901.53. The Russell 2000 of small-company stocks fell 7.43 points, or 0.5 percent, to 1,384.10.

The stock market has mostly been quiet this month. Its two big moves were both linked to the Federal Reserve: on March 1 stocks jumped after the central bank signaled it would raise rates, and they climbed last Wednesday after the Fed made it clear it will move slowly for the rest of the year.

The Pima County Wastewater Reclamation Department (RWRD) has embarked on a program to ensure all users connected to the sanitary sewerage system are appropriately billed.  Through June 30, 2017, the Department has instituted a one-time Amnesty Program aimed at addressing the potentially large number of customers who may be receiving free sewer service.

Over the years, it has been determined there are a number of sewer users that are connected to the system but not paying sewer user fees.  The reasons these accounts have not been added to the billing system are numerous and explainable.  It is appropriate the County take steps to ensure all users connected to the sanitary sewerage system pay their fair share of user fees. This one-time Amnesty Program will allow unauthorized users of the sewer system to come forward and have the issue corrected without enforcement of back billing or penalties.  After this grace period has ended, any unauthorized sewer system user found will be back billed per Pima County Code.  The one-time Amnesty Program is available through June 30, 2017, and forgives back user fee charges plus related interest, administrative charges, and penalties.  The Program is open to anyone without a sewer user account who discharges into a Pima County sanitary sewer system. For more information or to determine if you qualify, please visit www.pima.gov/wastewaterreclamation or contact the RWRD Director’s Office at (520) 724-6511.

Fiesta Park Apartments at 1033 S. Longmore Rd, Mesa AZ has been sold for $20 million. A California real estate company has acquired the property to expand its portfolio of apartment communities in the Greater Phoenix area. “The Fiesta Park property offered a very well located opportunity within the dynamic East Valley submarket,” says Bill Hahn, executive vice president with Colliers International in Greater Phoenix. “Employment in the Tempe/Mesa/Chandler area has grown substantially in recent years and is forecast to continue expanding. Vacancies in multifamily are low and rental rates are rising, which offers great upside potential for a property like Fiesta Park,” Hahn, Jeff Sherman and Trevor Koskovich of Colliers International in Greater Phoenix represented the seller, Los Angeles-based private equity company BH Properties. The buyer was INCO Real Estate Company of Long Beach, CA. Mark Forrester and Ric Holway of Berkadia-Phoenix represented the buyer. Fiesta Park Apartments is located near Alma School Road, north of Southern Avenue. The Superstition Freeway is situated less than a half-mile from the community. Mesa is the third largest city in Arizona, boasting a population nearing 460,000 and a labor force of 300,000 people. The property consists of 10, three-story apartment buildings that contain 320 units totalling 234,696 square feet. Situated on 8.8 acres of land, the community was constructed in 1979 and was 93% leased at the time of the sale. Fiesta Park offers sizable one and two-bedroom apartments with the largest unit exceeding 1,000 square feet. The property features covered parking, a clubhouse and a kid’s playground.

Fed on track to raise U.S. rates twice more this year: Evans “The Federal Reserve is on track to raise interest rates twice more this year after a policy tightening last week, and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration, a Fed rate-setter said on Monday. The public comments from Chicago Fed President Charles Evans were among the first since the U.S. central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017 in a nod to low unemployment and some inflation pressures. ‘Three is entirely possible,’ Evans, speaking on Fox Business Network TV, said of hikes in 2017. ‘As I gain more confidence in the outlook I could support three total this year. If inflation began to pick up, that would certainly solidify (that expectation). It could be three, it could be two, it could be four if things really pick up.’ Asked about U.S. President Donald Trump’s promise to boost the economy to a 4 percent growth rate, from about 2 percent in the last few years, Evans said: ‘Four percent would be really an outsized number.’ While that level of growth could be reached “in any given year,” he said it was hard to imagine given the economy is already doing well, the labor market is “very strong,” and sectors like automobile sales are at all-time highs.” (Reuters)

Affordable Housing Heats Up in New Jersey “A joint venture of landlords and investors obtained a $144 million loan from Fannie Mae to finance its purchase of more than 1,000 affordable apartments mostly for seniors across several buildings in central and northern New Jersey, according to the company that structured the loan deal.” (The Wall Street Journal, subscription required)

Eric Trump insists he doesn’t talk business with his dad anymore “Since becoming the leader of the free world, billionaire dad left the Trump Organization in the hands of his two oldest sons – Don Jr. and Eric — while daughter Ivanka moved to Washington where her husband, Jared Kushner, works for the president. Critics wanted Trump to completely sell off his investments to avoid any conflicts of interests but he instead opted to keep out of business decisions and pledged the company would not make new international deals. ‘I speak to my father and I speak to him a decent amount,’ Eric Trump said. ‘We do keep perfect separation of church and state. It was something that was incredibly important to him. It’s something that’s incredibly important to me.’ Now the two son’s split management of the Trump hotels, wineries, golf courses, and commercial and residential real estate holdings. ‘We’re a great company but quite frankly he’s got much bigger fish to fry,’ Eric said. Limiting new deals to the US has been a “big” shift in the Trump brand. Eric praised states that have low taxes, a high quality life and are pro-infrastructure. He points to Florida, North Carolina, South Carolina and Texas for creating business-friendly climates.” (New York Post)

Mack-Cali Snaps Up $368M Office Portfolio “HFF recently played a role in making history in the New Jersey commercial real estate market, arranging the disposition of a 1.1 million-square-foot office portfolio. Acting on behalf of RXR Realty, the commercial real estate and capital markets services provider sold the group of six assets to Mack-Cali Realty Corp. for $368 million, marking one of the largest office portfolio trades ever in the Garden State. The collection of Northern New Jersey office properties, all sited in the Route 25 Corridor, includes 51, 101 and 103 JFK Parkway, which account for an aggregate 564,000 square feet of space in Short Hills. The three buildings were constructed between 1980 and 1985. The remaining three properties, 1, 3 and 7 Giralda Farms, are located in Madison. Built between 1983 and 2000, they encompass a total of 504,200 square feet. ‘These are the best suburban office assets in the New Jersey market and they had not traded in well over a decade,’ Jose Cruz, senior managing director with HFF, said in a prepared statement. In addition to boasting a certain prominence, the portfolio is also 91 percent leased, counting among its tenants the likes of KPMG, Merrill Lynch, Dun & Bradstreet, and Pfizer.” (Commercial Property Executive)

JV to Develop $100M Student Housing Project “Armada Hoffler Properties recently announced that the firm teamed with Spandrel Development Partners to develop and build two $100 million student housing apartments in downtown Charleston, S.C. In the new joint venture, Armada Hoffler will serve as both majority partner and general contractor. With two assets featuring a variety of amenities and price points, Armada Hoffler expects to deliver more than 600 new beds within one mile of the College of Charleston in time for the fall 2019 semester. The peninsula is home to roughly 20,000 students and current enrollment at the College of Charleston alone approaches 12,000 students.” (MultiHousing News)

HHGregg deal with anonymous bidder collapses “HHGregg on Thursday said it has terminated its previously announced nonbinding term sheet with an anonymous party to purchase substantially all of its assets through a reorganization under Chapter 11 of the United States Bankruptcy Code, for which it filed March 6. The companies were unable to reach a definitive agreement on terms, according to a press release. The struggling electronics retailer has obtained interim approval of its $80 million debtor-in-possession loan facility to fund operations of the business during the sale process.” (Retail Dive)

Ann Arbor outpaces Detroit with highest real estate values “Even after Detroit’s decades of decline, the state’s largest city both by size and population still had bragging rights in 2014 as the one with the highest total real estate value: $12.3 billion. No more. In the last two years, Ann Arbor, a fraction of Detroit’s size and population but mighty in academic and tech culture, has overtaken the Motor City as the Michigan community with the highest total assessed value. It’s a head-turning revelation. It shows, at least on paper, just how far post-bankruptcy Detroit — which has received considerable positive press locally, nationally and internationally for its buoyed business district, though that represents just a few of its 143 square miles — still has to go in its recovery.” (Crain’s Detroit)

Office rents in Chicago rose 20 percent in 2016 — the second highest in the world “The bill for high-end office space in Chicago rose almost 20 percent in 2016, the biggest increase in the U.S. and second-highest in the world. Chicago’s one-year jump is especially striking considering the city is typically known for less dramatic fluctuations in property values and rents than those seen in coastal markets such as New York and San Francisco. The numbers help explain why developers continue drawing up plans, even though tenants just began moving into two brand-new towers along the Chicago River. Rents in Chicago’s newest and best-located office buildings rose to $38.84 a square foot in 2016, up from an average of $32.40 in 2015, according to a report from commercial real estate brokerage CBRE.” (Chicago Tribune)

Cuomo’s $1.8B infrastructure plan could be boon for South Bronx real estate “The state next year plans to kick off a $1.8 billion redesign of the Robert Moses-built Sheridan Expressway in the South Bronx that will provide waterfront access to neighborhoods long cut off from the shoreline and parks, likely boosting property values and making the prospect of development more attractive. Gov. Andrew Cuomo on Sunday announced the project, which will integrate pedestrian walkways so that residents in the South Bronx can access Starlight Park and the Bronx River, the Wall Street Journal reported. The park has long been separated from neighborhoods by the mile-long expressway, also known as Interstate 895. Construction is slated to kick off next year and wrap up by the spring of 2019. Cuomo said the project will create more than 4,200 jobs, and the first phase will be funded with $700 million in this year’s state budget. ‘While plans have been proposed and languished for decades, we’re taking action to finally right the wrongs of the past by reconnecting South Bronx communities that have dealt with unnecessary barriers to revitalization and growth,’ Cuomo said.” (The Real Deal)

Redevelopment of Panorama City high-rise could include a new shopping mall “A derelict 13-story structure in Panorama City could soon see new life as a mixed use project with an adjacent shopping mall. The Panorama Towers building, which was constructed in 1962, was damaged in the 1994 Northridge earthquake, and has been sitting empty ever since. In 2015, however, prolific developer Izek Shomof purchased the Welton Becket-designed building for $12.5 million and soon announced plans to redevelop the property with a mix of housing and retail. Last week, Shomof filed plans with the city (spotted by The Real Deal) calling for construction of an “open mall building” to supplement the new development. Further details are hazy at this time, but it appears that the tower and the mall would share a new parking structure that Shomof also plans to construct.” (Los Angeles Curbed)