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11 Must Reads for the CRE Industry Today (Sept. 22, 2022)

High natural gas prices are leading European-based manufacturers to shift operations to the U.S., reports The Wall Street Journal. The AIA’s latest billing index shows demand for design services accelerated in August. These are among today’s must reads from around the commercial real estate industry.

  1. High Natural-Gas Prices Push European Manufacturers to Shift to the U.S. “As wild swings in energy prices and persistent supply-chain troubles threaten Europe with what some economists warn could be a new era of deindustrialization, Washington has unveiled a raft of incentives for manufacturing and green energy. The upshot is a playing field increasingly tilted in the U.S.’s favor, executives say, particularly for companies placing bets on projects to make chemicals, batteries and other energy-intensive products.” (The Wall Street Journal)
  2. Demand for design services accelerates “AIA’s Architecture Billings Index (ABI) score for August rose to 53.3 compared to 51.0 in July (any score above 50 indicates an increase in billings). During August, the score for new project inquiries rose to 57.9 from 56.1 the previous month, while the design contracts score softened slightly with a score of 52.3, down from 52.9 in July.” (AIA)
  3. Big Banks Pulling Back On New CRE Loans As Interest Rates Rise “The drop-off is noticeable because in the first half of this year, U.S. banks lent $316B in net new commercial real estate loans, according to Federal Reserve data cited by Bloomberg. The lending boom represented a 172% increase over H1 2021 numbers and came as higher interest rates made borrowing twice as expensive.” (Bisnow)
  4. SEC Charges Real Estate Investment Firm with $100 Million Fraud “The Securities and Exchange Commission charged Secured Income Group, Inc., its owner and president, Max McDermott, and its investor relations representative, Stacey Porter, with investment fraud tied to their $100 million ‘Secured Debentures’ offering between July 2017 and January 2021.” (The DI Wire)
  5. Manhattan Real Estate Fund Manager Sentenced To Prison For Securities Fraud “From in or about 2019 through in or about 2021, Burrell obtained millions of dollars of investments for the Activated Tax Advantaged Opportunity Fund, LLC and Activated Capital Opportunity Zone Fund II, LLC (collectively, the “Activated OZ Funds” or the “Funds”) based on fraudulent representations.” (Southern District of New York)
  6. With Carried Interest Unchanged, What You Should Know About It “Currently, the three-year holding period does not apply to gain on real property used in a trade or business. The original proposal would have expanded its reach to real property as well as other preferentially taxed items such as qualified dividends.” (Commercial Property Executive)
  7. Midtown Office Spaces Embrace A Deeper Shade Of Green “Just when it seemed Midtown had entered the point of no return, innovators got busy literally planting the seeds of rebirth. They are reshaping and revegetating the concrete jungle’s center.” (Forbes)
  8. Amazon commits to hiring 5,000 refugees by end of 2024 “Amazon announced the hiring commitment at the U.S. Business Summit on Refugees, which brought together a coalition of more than 100 companies that are dedicated to helping displaced people start a new life in the U.S. The summit was organized by The Tent Partnership for Refugees, a network of over 260 major businesses, including Amazon, committed to supporting refugees.”(Chain Store Age)
  9. Developers rush to convert run-down hotels and offices into shiny new apartments as the costs of new construction and borrowing money soar “For many developers, finding new and cheaper projects is top of mind as they get pinched by seemingly inexorable rises in inflation, construction costs, and interest rates.” (Insider)
  10. Chinese Firms Flee U.S. Commercial Real-Estate Market After Big Property Bets Sour “Chinese companies have sold a net $23.6 billion of U.S. commercial properties since the start of 2019, according to data provider MSCI Real Assets. That marks a dramatic turnaround. Between 2013 and 2018, Chinese firms were net buyers of nearly $52 billion of U.S. commercial properties, according to MSCI.” (The Wall Street Journal)
  11. It's Curtains For Some Theaters Across The U.S., But Developers Are Planning Sequels “Long seen as a potential saving grace for battered retail centers, movie theaters have been well-trafficked destinations that could draw crowds to nearby stores and restaurants, but as major theater chains struggle, these big boxes could instead become redevelopment targets.” (Bisnow)
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