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10 Must Reads for the CRE Industry Today (Jan. 31, 2020)

The New York Times looks at where apartment renters are moving. Seeking Alpha examines Simon Property Group’s potential bid to acquire Forever 21. These are among today’s must reads from around the commercial real estate industry.

  1. Why Low Rates Are Raising Questions About the Next Commercial Real Estate Unwind “Rents may be too damn high for apartment dwellers, but they look pretty weak for the rest of the U.S. commercial property market as prices skyrocket. That might not be a problem now, particularly as the Federal Reserve reaffirms its plan to keep rates low, its balance sheet available and credit spigots open. Yet analysts at BCA Research see potential trouble when the next downturn comes for office buildings, shopping centers and industrial properties that were purchased in the past decade at soaring prices.” (MarketWatch)
  2. Facades on 1,400 Buildings in New York Are a Threat to Pedestrians “The warning from the New York City building inspector was blunt. The facade of the apartment building in the Bronx was crumbling and a corner was separating. The playground outside a day care center in the building had to close immediately. That was in 2001. Nineteen years later there is still a three-foot gap in the brick facade and the playground, for the center’s 50 children between 2 and 4 years old, is still off limits.” (The New York Times)
  3. Real Estate ETFs Rocked in 2019 “At Forbes Real Estate Investor, we track more than 70 real estate ETFs across eight categories. We’re nothing if not thorough, you could say. We’re also nothing if not practical. So we recognize that the majority of the sector’s assets can be found in 11 ‘core’ REIT ETFs. As with most market-specific ETF categories, there’s a lot of overlap, or repetition, as it were.” (Forbes)
  4. Which Cities Are Renters Fleeing and Where Are They Going? “A new study by the real estate listing site Apartment List examined millions of rental searches made on its platform in an effort to identify the U.S. cities that people most want to leave (the ones from which the highest share of searches for out-of-town properties originated), and the cities people most want to move to (the ones for which the highest share of rental searches originated out of town). The study looked at all searches occurring on Apartment List between June 1 and Dec. 31, 2019. Only areas with at least 2,500 inbound and outbound users searching were included, for a total of 157 cities.” (The New York Times)
  5. Simon Property Group’s Rumored Bid for Forever 21 Feels Like Desperation “As Simon’s 7th largest tenant, Forever 21’s 96 stores are responsible for close to $50M of $3.5B or 1.4% of Simon’s minimum base rent. Although less than a hundred stores, Forever 21 stores are huge making the brand one of Simon’s largest inline tenants. The average Forever 21 store is 38,000 sq. feet. (Although Simon’s seem to be a little smaller). Needless to say, in today’s retail environment, if all these stores were to unexpectedly go dark there would be a lot of valuable space to repurpose.” (Seeking Alpha)
  6. Before and After Photos Show What San Francisco’s Treasure Island Will Look Like Once its $6 Billion Redevelopment Is Complete “Treasure Island is a man-made landmass that was built in 1936 and named after a novel of the same name written by Robert Louis Stevenson, a writer who lived in San Francisco from 1879 to 1880. It has served as the site of the 1939 World's Fair for which it was built, as a military base for the US Navy, and since the 1990s, home to the formerly homeless and others in need of supportive housing. And despite its whimsical name, it has a bit of a past.” (Business Insider)
  7. What’s in a B-Piece? Morgan Properties’ Jason Morgan Breaks It Down “When a landlord gets a mortgage on an apartment building, there’s a good chance that either Fannie Mae or Freddie Mac — two giant agencies now under government conservatorship — will play a role. Freddie Mac in particular buys groups of multifamily mortgages and securitizes them, selling the senior debt to investors and offering them a guarantee that they’ll get paid back on time.” (Commercial Observer)
  8. Gymboree Makes its Retail Comeback “The Children’s Place announced it is relaunching Gymboree in February. The brand, which went out of business last year, will be available on a new website and in shop-in-shop locations in more than 200 Children’s Place stores across the U.S. and Canada. Gymboree Group filed for bankruptcy in January 2019, and subsequently closed all its stores.” (Chain Store Age)
  9. Los Angeles High-Rise That Caught Fire Doesn’t Have Sprinklers. Neither Do 54 Others, Officials Say “A 25-story Los Angeles high-rise that caught fire, injuring 11 civilians and two firefighters, lacked sprinklers, the fire department said. Los Angeles has about 770 high-rises, and 55 residential high-rises do not have sprinklers, public information officer Erik Scott said at a Wednesday evening press conference. ‘That’s because they were built prior to 1974, and they’re not currently required to be equipped with fire sprinklers,’ Scott said.” (Los Angeles Times)
  10. Walker & Dunlop Acquires AKS Capital Partners “Walker & Dunlop is raising its profile in the nation’s most active office market by snapping up New York City-based capital markets advisory shop AKS Capital Partners. Through the deal, the Bethesda, Md.-based finance heavyweight has acquired a 15-person team led by Partners Aaron Appel, Keith Kurland, Jonathan Schwartz and Adam Schwartz. They will join Walker & Dunlop as senior managing directors and co-heads of the New York Capital Markets Practice.” (Commercial Property Executive)
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