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.
Wednesday, the Dow Jones industrial average rose 40.68 points, or 0.2 per cent, to 18,202.62. The Standard & Poor’s 500 index gained 4.69 points, or 0.2 per cent, to 2,144.29. The Nasdaq composite added 2.58 points, or 0.1 per cent, to 5,246.41.
U.S. benchmark crude oil gained $1.31, or 2.6 per cent, to close at $51.60 a barrel in New York. Brent crude, the international standard, added 99 cents, or 1.9 per cent, to close at $52.67 a barrel in London. Wholesale gasoline was little changed at $1.51 a gallon. Heating oil rose 2 cents to $1.59 a gallon. Natural gas fell 9 cents to $3.17 per 1,000 cubic feet.
US home construction fell 9 per cent in September — Homebuilders pulled back on construction for a second straight month in September, with a plunge in apartments offsetting gains in single-family homes. Building activity was weak in all parts of the country except the Midwest. Construction tumbled 9 per cent in September to a seasonally adjusted annual rate of 1.05 million units, the Commerce Department reported Wednesday. It was the slowest pace in 18 months. Construction had fallen 5.6 per cent in August. The weakness last month reflected a 38 per cent drop in construction of apartments, which overshadowed an 8.1 per cent rise in single-family construction. (WASHINGTON AP)
US economy grows a bit faster in September, Fed says — U.S. economic growth accelerated slightly as summer ended and fall began, supported by modest hiring, an uptick in consumer spending, and steady homebuilding, according to the Federal Reserve. The Fed’s “Beige Book” survey of economic conditions in its 12 regional bank districts, released Wednesday, found that growth was modest or moderate in eight districts, slight in three, and flat in the New York district. That’s an improvement from its September survey, which found that growth weakened in two districts and was unchanged in two. The mild improvement could encourage Fed policymakers to lift short-term interest rates by their December meeting. (WASHINGTON AP)
Starbucks plans to double stores in China in 5 years — Starbucks is pushing ahead with its expansion into mainland China, saying Wednesday it’s on track to have 5,000 stores by 2021, more than doubling the number of its coffee shops in the country. The Seattle-based coffee chain is looking to China to fuel its growth. It’s grown rapidly since opening its first Chinese store in 1999. Starbucks CEO Howard Schultz has said China could one day surpass the U.S. as the chain’s largest market. There are about 13,000 Starbucks stores in the United States. (NEW YORK AP)
A New Real-Estate War in Silicon Valley “Soaring apartment costs in Silicon Valley are fueling popular support for an idea bitterly opposed by many landlords in America’s technology capital: rent controls. Voters in five small and midsize cities in the Bay Area are set to decide Nov. 8 on whether to enact various forms of rent regulation that would keep rent increases for existing tenants pegged near the rate of inflation. Tenant organizations, unions and church groups are knocking on thousands of doors in an effort to drum up support for measures designed to protect apartment dwellers from runaway rents. On the other side, landlords and real-state agents are pouring money into mailers and television ads in a vigorous effort to battle the initiatives. ‘We’re taking it very seriously,’ said Thomas Bannon, chief executive of the California Apartment Association, a landlords group. ‘We are engaged in some pretty aggressive campaigning to get the word out as to why rent control is not the answer.’ In all, the proposals’ opponents have raised more than $1.8 million against the measures in the five cities, according to campaign finance records, largely from groups like the National Association of Realtors and an array of landlords including apartment giant Equity Residential. That far outstrips the roughly $200,000 reported raised by various groups supporting rent control.” (The Wall Street Journal)
Higher rates don’t mean the death of housing, says Blackstone’s real estate chief “Concerns about the impact of what’s expected to be higher Federal Reserve interest rates on the property market are overblown, Jonathan Gray, global head of real estate at Blackstone, told CNBC on Tuesday. ‘We’re later in the cycle, but some people are getting a bit too negative,’ said Gray, who manages $103 billion of investor capital — nearly a third of Blackstone’s total assets under management. He controls more than $200 billion worth of real estate. There’s too much of a focus on rates, he said. ‘There’s a [false] sense that owning real estate is the same as owning a bond. Real estate, like stocks, can see earnings growth,’ he argued. ‘And that’s what we’re seeing today because of favorable fundamentals.’ In recent periods of rising rates — such as the early 1990s, the late 1990s and the mid-2000s — the property market ‘did OK,’ Gray said.” (CNBC)
First-Time Millennial Buyers Poised to Revolutionize the Real Estate Market in 2017 “Although a shortage of homes for sale will continue to dog the market, first-time buyers are more worried about financial issues, according to the survey. Topping the list: coming up with a down payment (37%) and finding a home within their budget (30%). With all the emphasis on financial issues, millennial buyers want to make sure that their money is well spent: Making a sound financial investment is a top goal. This new generation of first-time home buyers is focused on safety, privacy, and more space, indoors and out. That’s because millennials’ top reasons for buying a home are that they’re getting married or moving in with a partner, growing tired of their current living space, or planning a lil’ addition to the family. Or perhaps all three! So it’s no wonder that millennial buyers prefer single-family homes (39%) or townhomes (34%). Just 15% are interested in multifamily homes, and 10% in condos.” (Realtor.com)
A brief history of Donald Trump’s LA real estate career “With the most torturous election season in recent memory mercifully nearing conclusion, the Los Angeles Times has put together a very detailed analysis of Republican nominee Donald Trump’s fairly underwhelming career in the Los Angeles real estate game. While the hotel and casino magnate has certainly left his mark on his home city of New York, Trump hasn’t managed to acquire anywhere near the same number of signature properties out west. As the Times notes, however, that hasn’t been through lack of effort. Here’s a few highlights from Trump’s history of Los Angeles dealings.” (Los Angeles Curbed)
New retail powerhouse in the making? “Lidl, the German no-frills grocery chain, is shaping up as a potential retail powerhouse even before it opens its first U.S. store. The company will generate $8.8 billion in sales by 2023, larger than Wegman’s 2016 value of $8.1 billion, according to a just-released forecast by Kantar Retail. Lidl is expected to begin its U.S. store rollout in 2018. Kantar Retail estimates it will open about 100 stores per year, reaching 630 locations by 2023. Early stores could generate an average of $10 million in sales, averaging $15.2 million in sales per store by 2023. Lidl is targeting the eastern seaboard of the United States, putting it into direct competition with a number of retailers including Walmart, Dollar Tree, Food Lion and Stop & Shop, the report notes.” (Chain Store Age)
Facebook Begins Construction of Los Lunas Data Center “The facility has the potential for multi-phase development. The first phase of the project includes a 510,000-square-foot facility powered by 100 percent renewable energy. It will generate 30 full-time jobs and $250 million in investment. Moreover, Facebook expects the Los Lunas data center to support thousands of indirect jobs by way of construction, operations and services. In return, according to the Albuquerque Journal, Los Lunas has promised Facebook a property tax break through $30 billion in industrial revenue bonds, a gross receipts tax reimbursement of up to $1.6 million annually and $10 million in Local Development Act funding. Furthermore, the state will offer Facebook access to $3 million in Job Training Incentive Program money.” (Commercial Property Executive)
U of Chicago Sells 11-Property Portfolio “Pioneer Acquisitions LLC has acquired a portfolio of 11 properties from the University of Chicago. The portfolio includes six graduate student housing properties, four faculty/staff buildings, one retail property and five land sites. The properties have a total of 520 beds, with the residential units averaging about 692 square feet, and are in the Hyde Park neighborhood within walking distance of campus. The buyer acquired the properties free and clear of existing debt. It isn’t the first time Pioneer has acquired properties from the university. Late last year, the company closed on a 19-property, 676-unit multi-housing portfolio plus two land sites. HFF marketed the both offerings on behalf of the University of Chicago. Associate director Michael Higgins and managing director Brian Kelly led the HFF investment sales team representing the University of Chicago.” (MultiHousing News)
San Francisco is Greenest U.S. Office Market in 2016 “According to the third annual Green Building Adoption Index Study by CBRE Group, Inc. and Maastricht, institutional owners of office buildings continued to pursue green building certifications in the 30 largest U.S. markets during 2015. Continuing an upward trend over the past decade, green certifications are now held by 11.8 percent of all surveyed buildings, representing 40.2 percent of all office space. Both figures are slightly above last year’s results. ‘Green’ office buildings in the U.S. are defined as those that hold either an EPA ENERGY STAR label, USGBC LEED certification or both. After placing second on the Green Building Adoption Index the two prior years, the San Francisco market claimed the top spot with 73.7 percent of its space qualified as green certified. Chicago claimed the second spot, narrowly trailing the leader at 72.3 percent and Minneapolis fell from the top into third spot at 60.6 percent. Houston, Atlanta and Los Angeles all also achieved more than 50 percent green certification in their office markets.” (World Property Journal)
Airbnb offers up policy changes as illegal rental bill sits on Cuomo’s desk “Airbnb has offered up a few changes to its policy as it waits to see if Gov. Andrew Cuomo will sign a bill that fines illegal rentals. The short-term rental site suggested a few new rules, including one that will restrict the number of apartments a host can list to just one starting on Nov. 1, the New York Daily News reported. This measure would help ‘ensure that home-sharing does not remove permanent housing from the rental market,’ Chris Lehane, head of Airbnb’s global policy, wrote in a letter to the editor. The company will also implement a “three strikes” policy that will ban hosts who repeatedly break the site’s rules. Lehane also asserted, however, that state law needs to distinguish between illegal hotel operators and ‘everyday New Yorkers.’” (The Real Deal)
Another South Florida developer is putting a condo project on hold “As the luxury market struggles, condo projects are dropping like flies. Argentine developer Alan Faena confirmed Tuesday he was ‘pausing’ a planned two-tower condo complex in Miami Beach. ‘In all of my business dealings, from Buenos Aires to Miami, I have always trusted my sense of the market and successfully read its cycles,’ Faena said in a statement. ‘The best business decision at this time is to pause Faena Mar as we evaluate various options. …. Because of the shifting market and the success we have already achieved … we are not in a hurry to decide.’ Faena said he could shift from condos to another hotel. Developers across South Florida have pumped the brakes on condo high-rises as a strong dollar and weak economies abroad cripple the buying power of foreign investors. The Real Deal first reported the news of the delay at Faena Mar, formerly called Faena Versailles, on the site of the old Versailles Hotel at 35th Street and Collins Avenue. The hotel building is being renovated.” (Miami Herald)