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.
Thursday, the Dow Jones industrial average rose 18.42 points, or 0.1 per cent, to 18,419.30. The Standard & Poor’s 500 index lost 0.09 points to 2,170.86. The NASDAQ composite gained 13.99 points, or 0.3 per cent, to 5,227.21.
U.S. crude oil gave up $1.54, or 3.4 per cent, to $43.16 a barrel in New York. Brent crude, the benchmark for international oil prices, fell $1.44, or 3.1 per cent, to $45.45 a barrel in London. Wholesale gasoline dropped 6 cents to $1.27 a gallon. Heating oil fell 4 cents to $1.38 a gallon. Natural gas fell 10 cents to $2.79 per 1,000 cubic feet.
US productivity down in spring, while labor costs rise — U.S. productivity fell in the April-June quarter by a larger amount than first estimated, while labor costs accelerated sharply. Productivity declined at an annual rate of 0.6 per cent, even worse than the 0.5 per cent drop initially reported, the Labor Department reported Thursday. It marked the third straight quarter that productivity has fallen. Labor costs rose at an annual rate of 4.3 per cent, the biggest rise since a 5.7 per cent increase in the fourth quarter. Labor costs had fallen at a 0.3 per cent rate in the first quarter.
US construction spending unchanged in July — U.S. construction spending was unchanged in July as weakness in spending on government projects offset gains in home building and the strongest month for non-residential construction on record. Construction spending was flat in July but declines in May and June were revised to show slight gains, the Commerce Department reported Thursday. Spending in June is now reported up 0.9 per cent while May showed an increase of 0.1 per cent. The advance in July was led by a 1.7 per cent increase in spending on non-residential projects which rose to an all-time high of $429.5 billion at a seasonally adjusted annual rate. Office building and shopping centres both showed solid gains.
US factory activity shrinks for first time in 6 months — U.S. manufacturing contracted last month for the first time since February, as new orders and output plummeted and factories cut jobs. The Institute for Supply Management said Thursday that its manufacturing index dropped to 49.4 in August from 52.6 in July. Any reading below 50 signals contraction. The report suggests that manufacturers continue to struggle as businesses spend less on machinery, computers and other large equipment. Auto sales have also levelled off this year after reaching a record level in 2015.
Weekly requests for US jobless aid rise — Slightly more Americans sought unemployment benefits last week, but the overall levels still remain near historic lows in a positive sign for the job market. Applications for jobless aid rose 2,000 to a seasonally adjusted 263,000, matching its four-week moving average, the Labor Department said Thursday. The number of people collecting unemployment checks has fallen 4.4 per cent from a year ago to 2.16 million. Weekly requests for jobless benefits have stayed below the threshold of 300,000 for 78 straight weeks, the longest streak since 1970. This indicates that employers are holding onto their workers in the belief that the broader U.S. economy will continue to grow.
US average 30-year mortgage rate rises to 3.46 per cent — Long-term U.S. mortgage rates rose this week amid expectations in financial markets that an increase in interest rates by the Federal Reserve may be on the horizon. Mortgage rates remain at historically low levels, however. Mortgage giant Freddie Mac said Thursday the average for the benchmark 30-year fixed-rate mortgage was 3.46 per cent, up from 3.43 per cent last week. The average rate is down from 3.89 per cent a year ago, and is close to its all-time low of 3.31 per cent in November 2012. The 15-year fixed mortgage rate increased to 2.77 per cent from 2.74 per cent.
The Mall Owners Strike Back “Call it the revenge of the malls. Mall operators Simon Property Group and General Growth Properties swooped in late Tuesday night with a $243 million offer to save Aerospostale, the ailing 800-store retail chain that filed for bankruptcy in May and seemed destined for liquidation. The pair is teaming up with licensing firm Authentic Brands Group and liquidators Gordon Brothers and Hilco Merchant Resources to keep 229 Aeropostale stores open.” (Bloomberg)
Best Buy Slows Closures as Stores Seen Key to Digital Shopping “Best Buy is methodically shrinking its store base in the U.S. as it tries to operate more efficiently in the age of digital shopping. Unlike competitors such as Sears Holding Corp. and Macy's, though, the closures come with little hype and from a position of strength. The electronics retailer said Monday it will close two Baltimore-area locations that employ a total of 120 people, after closing one large box store and four Best Buy Mobile stores earlier this year.” (The Street)
Record Number of City Jobs, Yes, but Are They Going to Fill Offices? “My post ‘City jobs set a record (again!)’ last week about the strong gain in jobs in July, which pushed the city’s employment to a new high of 4.3 million, has attracted some dissent for its bullish tone. ‘Yes, Greg David’s headline is correct,’ wrote Savills Studley economist Heidi Learner in a research note earlier this week, ‘but how strong has job growth been in the office-using sector?’ Her answer: not very. Learner notes that large, publicly held companies based in New York have seen very little increase in revenues in the past 12 months, which she sees reflected in the job numbers.” (Crain’s New York Business)
The New Downtown: Lower Manhattan Reborn 15 Years After 9/11 “Fifteen years after the Sept. 11th attacks, Lower Manhattan has been reborn. The revitalization of the city's downtown, powered by $30 billion in government and private investment, includes not just the reconstruction of the World Trade Center site, but also two new malls filled with upscale retailers, thousands of new hotel rooms and dozens of eateries ranging from a new Eataly to a French food hall, Le District. The statistics alone are stunning. There are 29 hotels in the neighborhood, compared to six before 9/11.” (Associated Press)
Why it’s So Hard to Kill a Restaurant Chain “It’s really hard to kill a restaurant chain, which is why chains have continued to proliferate even amid growing concerns about industry oversupply. This became obvious with this week’s news that the owner of Fox & Hound and Champps narrowly avoided being shut down. First, a caveat: Shutting down restaurants should not be taken lightly. Each restaurant employs numerous workers, and an entire chain can provide for the livelihoods of hundreds or thousands of people.” (Nation’s Restaurant News)
City Hashes Out Plan to Allow Landmarked Property Owners in Midtown East to Sell Air Rights “The city is currently conducting an appraisal of unused development rights in midtown east. The result, which will become a part of the city's plan to rezone the area in order to construct more modern office towers, has been a point of contention in the past. In fact, it stymied an earlier rezoning attempt. One of the sticking points of a Bloomberg-era plan to rezone the area, bounded by East 39th and East 57th streets to the north and south, and Madison and Third avenues to the east and west, was exactly how much money landmarked property owners in midtown east would be able to get for their air rights.” (Crain’s New York Business)
Midwest Office Portfolio Commands $417M “Hertz Investment Group has acquired a four-property office portfolio totaling 3.1 million square feet from Equity Commonwealth for $416.9 million. The acquisition, the largest in Hertz’ history, included the 19-floor North Point, an 878,000-square-foot office complex at 901 Lakeside Ave. in Cleveland, which is currently 78 percent occupied; and the 37-story, 100 E. Wisconsin in Milwaukee, which overlooks the Milwaukee River. The 435,629-square-foot building was 88 percent leased at the time of the sale to a tenant roster that includes Michael Best & Friedrich, Wells Fargo and the Marcus Corp.” (Commercial Property Executive)
L.H. Charney Refis 1441 Broadway with $185M MetLife Loan “L.H. Charney & Associates refinanced its 460,000-square-foot office tower at 1441 Broadway with a $185 million loan from Metropolitan Life Insurance. The landlord, whose namesake founder died earlier this year at the age of 77, replaced $183 million in existing debt and landed a $2 million gap loan from the insurer, according to property records filed with the city Wednesday. Company president Bruce Block said the original loan’s term was coming due, and declined to comment on the rate secured with MetLife.” (The Real Deal)
Vulcan Sells Land Under UW Research Buildings for $133 Million “Vulcan Real Estate continues its selling spree in South Lake Union, announcing on Wednesday it has dealt a block-length stretch of property to an investor for $133.6 million. The Shidler Group, based in Honolulu, purchased the 2.4-acre site on 850 Republican St., between Eight and Ninth avenues North. The sale is for the land only: The University of Washington School of Medicine owns 361,000 square feet of researchfacilities on the property, which was developed by Vulcan last decade.” (The Seattle Times)
63 Percent of GCC Wealthy Individuals to Invest in Global Real Estate in 2016 “According to international real estate consultant Cluttons, Gulf Cooperation Council (GCC-based) high net worth individuals are set to continue investing in global real estate for the remainder of the year, with the 63% claiming that they are likely to invest in their most preferred real estate investment location during 2016. The third installment of Cluttons' 2016 Middle East Private Capital Survey, carried out in partnership with YouGov, shows that London, New York and Singapore; are the destinations of choice (outside of the Middle East) for the region's wealthy.” (World Property Journal)