Real Estate Daily News Buzz October 17, 2016

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.

Friday, the Dow Jones industrial average inched up 39.44 points, or 0.2 per cent, at 18,138.38. The Standard & Poor’s 500 added 0.43 points to 2,132.98. The NASDAQ composite rose 0.83 points to 5,214.16. U.S. crude oil gave up 9 cents to $50.35 a barrel in New York. Brent crude, the international standard, fell 8 cents to $51.95 a barrel in London. That sent energy companies lower. In other energy trading, wholesale gasoline added 1 cent to $1.49 a gallon. Heating oil lost 1 cent to $1.57 a gallon. Natural gas slumped 6 cents, or 1.7 per cent, to $3.29 per 1,000 cubic feet.

US stocks inch higher as banks rise and drugmakers fall — U.S. stocks gave up large gains and finished barely higher Friday. Banks and technology companies traded higher, while stocks that pay large dividends fell thanks to a jump in bond yields. Stocks were on track for large gains early in the day as reports showed consumers in both the U.S. and China appeared to be spending more. Banks rose after JPMorgan Chase and Citigroup disclosed solid quarterly results. But the gains faded as the day wore on. Drug company stocks continued to fall and energy companies slipped. (NEW YORK AP)

US retail sales up 0.6 pct., but signs of caution emerge — U.S. shoppers stepped up their spending in September, with sharply higher sales at auto dealers, restaurants and gas stations. But the government’s retail sales report released Friday also contained some evidence that spending might be slowing. For much of this year, consumers have spent at a solid pace as income gains have accelerated and the job market has improved. Last month’s overall retail sales gain was a decent seasonally adjusted 0.6 per cent. Much of it, though, was due to higher oil prices, which increased how much people spent at gas stations but were not necessarily a sign of stronger consumer spending. (WASHINGTON AP)

Wealthy Chinese buyers are a growing force in U.S. real estate markets “Yet while technology billionaires gobble up estates from Puget Sound to Lake Washington, Jim Conlan, a real estate broker with Century 21 North Homes Realty in Seattle, says the real catalyst for the dramatic upswing can be found in China. ‘To be honest, Chinese buyers have been flooding this market the past few years,’ says Conlan, who has been selling homes in Seattle for more than 30 years. ‘Some of them buy homes sight unseen, while others travel here for a kind of real estate tourism and buy real estate after only one viewing.’ Seattle is not alone. For the fourth year in a row, buyers from China ranked first among foreign nationals purchasing property in the United States, according to a survey by the National Association of Realtors (NAR). U.S. home sales to Chinese nationals totaled $27.3 billion — exceeding the total dollar sales figure of the next four countries in the rankings combined, the survey showed. Chinese investment in U.S. real estate could hit $50 billion by 2025, according to a report by the Rosen Consulting Group and the Asia Society. While the influx of investment from China is lifting some markets, it is reshaping many others, real estate experts say. The torrent of cash is fueling sharply rising prices and dwindling housing supply while keeping homeownership out of reach of first-time buyers in some of the country’s most important real estate markets.” (The Washington Post)

Don’t rent an apartment from these landlords? Public advocate releases controversial and sometimes inaccurate annual list “The New York City Public Advocate’s Office on Thursday released its annual Worst Landlord Watchlist, highlighting multifamily building owners that have racked up violations from city agencies, have accrued tax liens on their properties and often have left tenants living in deplorable conditions. ‘Every New Yorker deserves a safe and decent place to live, and every apartment must meet basic standards of decency,’ Public Advocate Letitia James said in a statement. According to the list, Harry D. Silverstein, who owns eight buildings in Queens, Brooklyn and the Bronx, is the worst landlord in the city. Silverstein, whose office declined to comment, has more than 2,000 violations from the city’s Department of Housing Preservation and Development, along with 50 violations from the Department of Buildings. Silverstein assumed the top spot after coming in second last year behind Ved Parkash, who now ranks fifth with more than 1,000 violations from the two agencies on just four buildings in the Bronx. One of Parkash’s tenants, Yoselyn Gomez, said that her building is full of rats and cockroaches and that her daughter developed asthma from the poor living conditions. ‘It’s really important he gets attention, so that tenants don’t have to take him to court, like we did, in order to make simple repairs,’ Gomez said in a statement. Parkash’s office said that repairs will be made and that inspections have been scheduled for the four buildings.” (Crain’s New York Business)

Website Aims to Connect Developers to Safety Site Managers Amid Construct Safety Tension “This current real estate boom has taken a deadly toll on the city. It seems like a month doesn’t go by without a construction worker falling to his death, getting trapped in a site collapse or falling victim to the job site in some other gruesome way. Two construction veterans have teamed up to create, a website that went live today, linking developers and construction site inspectors to avoid future catastrophes amid New York City’s construction boom. Think of it as something of an Indeed or a Monster—a job site that allows companies to create profiles, list their resumes as well as credentials and job opportunities. ‘If you are independent it’s hard, because you don’t know developers,’ said Reagan Branch, the site’s co-founder and a construction safety manager who started her own firm three years ago. ‘You don’t have those contacts. So we offer that, too. It’s a scramble.’” (Commercial Observer)

Why Amazon Should Buy Staples “Online pioneer Amazon is increasingly showing a desire to venture into the world of brick-and-mortar retailing. From getting ready to open bookstores in Portland, Ore., and Chicago next year, to reportedly looking to debut curbside grocery pickup locations, clearly Amazon realizes it needs some physical presence if it wants to put all of retail out of business (which is its goal, of course). Huge strategy change relative to its founding, but one that is long overdue. Reading the tea leaves makes one wonder why an apparently store-loving Amazon shouldn’t go big and just buy a dying Staples. Consider the pros on such a deal that would undeniably catch heavy scrutiny from lawmakers and drive a ton of traffic to news sites for at least a month.” (The Street)

Ulta Beauty steps up store expansion, raises outlook “A sizzling Ulta Beauty wowed the Street on Thursday, announcing aggressive store expansion at a time when many brick-and-mortar retailers are cutting back. It also upped its outlook. In conjunction with its annual analyst and investor conference in Chicago, the specialty beauty retailer unveiled an updated real estate analysis that, it said, validates “incremental new store potential in the United States.” Accordingly, the beauty retailer raised its outlook for U.S. store expansion to a range of 1,400 to 1,700 stores. (As of October 1, 2016 the company operates 928 retail stores across 48 states and the District of Columbia.) Ulta’s expansion will take place both in smaller markets and in urban markets. While Ulta stores average 10,000 sq. ft., the retailer is not ruling out opening smaller stores in the future, according to the Chicago Tribune. For the fiscal third quarter, Ulta now expects same-store sales, including online sales, to  rise 14% to 15%, compared to previous guidance of 11% to 13%.” (Chain Store Age)

Paramount Closes $850M Financing of NYC High-Rise “Paramount Group Inc. has wrapped up the financing of 1301 Avenue of the Americas, a 1.8 million-square-foot office tower in Manhattan, to the tune of $850 million. It’s all in the name of bolstering the balance sheet. A 45-story building developed in 1964, 1301 Avenue of the Americas has been part of Paramount’s portfolio since the office REIT acquired it for $1.5 billion in 2008. The premier office destination, which has served as headquarters to many a major company over the years, also features 30,000 square feet of ground-level retail space, as well as a lower-level connection to Rockefeller Center. The opportunity to provide financing for the Midtown Manhattan asset was apparently a big draw in the insurance segment of the lending community. A group consisting of AXA Equitable Life Insurance Co., MetLife Real Estate and New York Life delivered for Paramount. The financing came in the form of a five-year, interest-only loan with the option of two one-year extensions. Scheduled to mature in October 2021, the loan has an initial weighted average interest rate of 2.77 percent.” (Commercial Property Executive)

NYC is mulling a major air rights reformThe administration of Mayor Bill de Blasio is considering a significant change in how property owners can trade air rights, but details remain unclear. The Department of City Planning recently sent out a survey to community organizations and land use attorneys to get a sense of the changes they would like to see. On Sept. 30, city officials hosted a meeting to discuss some of the proposals and attendees told Crain’s that the de Blasio administration plans to release proposals soon. A spokesperson for the planning department told Crain’s that the discussions build on a 2015 conference called ‘Trading High in the Sky.’ At the time, planning chair Carl Weisbrod said the city wants to ‘begin a period of analysis and stakeholder engagement and start to reconsider our current policy and mechanisms for air rights.’ Exact plans remain unclear, but the city could seek changes to the way air rights are traded between private parties. The practice is popular among developers looking to build skyscrapers, but some local advocates have criticize it as being too opaque.” (The Real Deal)

New Condos Fuel Record Real Estate Prices In Brooklyn, Report Shows “Third quarter housing data released today on Brooklyn’s soaring real estate market includes some sobering news for home buyers. Residential property prices in New York’s most populous borough are up sharply, rising 69% in new condo developments, according to a third-quarter report from Corcoran Real Estate. The report shows average prices in new developments above $1.5m for the first time in eight years while average prices per square foot rose 6% versus last year and exceeded $1,200 for the first time. The median sales price of all homes in Brooklyn reached $675,000, the highest level in eight years, the report shows. The $950 average price per square foot also set a record.  ‘Brooklyn continued to experience high buyer interest for properties across the borough,’ says Frank Percesepe, executive vice president of the Corcoran Group’s Brooklyn and East End teams.” (Forbes)

DC’s $2B Wharf Project Just a Year Away “The Wharf, a $2 billion mixed-use project in Washington is just 365 days from its debut, and developer Hoffman-Madison Waterfront has found a way to mark the time. A partnership between PN Hoffman and Madison Marquette, Hoffman-Madison just revealed a public countdown clock to tick off the days to the big reveal in 2017. ‘The Wharf is a transformative project for the region, and is perfectly timed with the explosive growth in the District of Columbia—creating an active and exhilarating waterfront area for a rapidly expanding population base,’ Monty Hoffman, founder & CEO of PN Hoffman, told Commercial Property Executive. PN Hoffman and Madison Marquette are joined on the project by ER Bacon Development, City Partners, Paramount Development and Triden Development. Bringing the premier, 3.2 million-square-foot mixed-use community to fruition has been a decade-long endeavor, with Hoffman-Madison jumping through hoops—including the advocating of acts of Congress—to arrive at the point where the company can count the days, not years, to the opening of The Wharf’s first phase.” (Commercial Property Executive)

Developers resist mandatory workforce-housing rulesA push to mandate workforce housing in new Miami-Dade projects met with warnings Thursday from developers who said the rules would boost real estate prices for home buyers making too much money to qualify for the help. The proposal by County Commissioner Barbara Jordan would require developers of projects with at least 20 housing units to set aside 10 percent of their inventory for families making up to 140 percent of the median income in Miami-Dade. That is currently $43,000, according to the latest Census figures, so the target market would be capped at families making about $60,000 a year. In exchange for reserving the units for working-class buyers, developers could build 15 percent more units than zoning currently allows. Developers could also opt out of the restrictions by paying an undetermined fee for each required unit, with the money going to a fund used to subsidize affordable-housing projects.” (Miami Herald)

Yellen: Slow recovery confounds economists’ expectations — Federal Reserve Chair Janet Yellen said Friday that the slow recovery from the Great Recession has surprised economists, confounding long-held beliefs about growth and inflation. Her remarks could help explain why the Fed has been reluctant to raise U.S. interest rates. Speaking to an economic conference at the Federal Reserve Bank of Boston, Yellen did not address the Fed’s timetable for rates. The central bank is widely expected to resume raising rates in December, a reflection of an improved economy. Yellen said sluggish worldwide growth would likely keep global interest rates low, making it harder for central banks to combat the next recession with rate cuts. (WASHINGTON AP)

Wells Fargo’s earnings fall as bank deals with scandal — Wells Fargo’s earnings slipped in the third quarter as the banking giant started dealing with the aftermath of a sales practices scandal. Wells said Friday that it earned $5.6 billion, or $1.03 per share, compared with $5.8 billion, or $1.05 per share, in the same period a year earlier. The results beat analysts’ expectations of $1.01 per share. The bank is being roiled by a crisis that ultimately toppled its CEO this week. Wells reached a $185 million settlement with regulators last month following allegations that its employees opened up to 2 million bank and credit card accounts without their customers’ authorization in order to meet sales goals. (NEW YORK AP)

JPMorgan’s 3Q earnings fall 8 per cent, still beat estimates — JPMorgan Chase’s third-quarter profit fell 8 per cent as higher revenue in retail and investment banking was offset by money set aside to cover loans that might go bad. However, the results still beat Wall Street’s expectations. The largest U.S. bank by assets and revenue said it earned $6.29 billion in the quarter, or $1.58 per share, down from a profit of $6.80 billion, or $1.68 per share, in the same period a year earlier. The results beat the $1.39 per share analysts were looking for, according to FactSet. (NEW YORK AP)

Citigroup’s profit falls 11 per cent, but beats forecasts — Citigroup said Friday that its profit fell nearly 11 per cent in its third quarter, but the results easily beat Wall Street expectations and its shares rose. The bank reported net income of $3.8 billion, or $1.24 per share, in the three months ending Sept. 30, compared with $4.3 billion, or $1.35 per share, in the same quarter the year before. That’s better than the $1.15 per share that Wall Street analysts expected, according to FactSet. Revenue fell 5 per cent to $17.76 billion in the quarter, beating the $17.29 billion that analysts expected. (NEW YORK AP

Chinese nationals who defrauded Goodyear get prison in Ohio — Federal authorities say two Chinese nationals who defrauded Goodyear Tire and Rubber Co. out of $1.5 million in a kickback scheme have each been sentenced in Ohio to more than two years in prison. Authorities say Xin Franco Fan and Rex Xu Yu earlier pleaded guilty to conspiracy to commit wire fraud and honest services wire fraud. They were sentenced Thursday in Akron to 27 months in prison and ordered to repay the $1.5 million. Affidavits say Akron-based Goodyear contacted the FBI in February about the men, who worked for a Singapore-based subsidiary that acquires $1 billion a year in rubber for Goodyear. (AKRON, Ohio AP)

Medicare unveils far-reaching overhaul of doctors’ pay — Changing the way it does business, Medicare on Friday unveiled a far-reaching overhaul of how it pays doctors and other clinicians. The goal is to reward quality, penalize poor performance, and avoid paying piecemeal for services. Whether it succeeds or fails, it’s one of the biggest changes in Medicare’s 50-year history. The complex regulation is nearly 2,400 pages long and will take years to fully implement. It’s meant to carry out bipartisan legislation passed by Congress and signed by President Barack Obama last year. (WASHINGTON AP)