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Nine Must Reads for the CRE Industry Today (June 6, 2022)

Trepp LifeComps portfolio report showed a cumulative negative return of 5.77 percent, reports GlobeSt. A group of Manhattan lawmakers have proposed a three-year freeze on commercial rent taxes, according to The Real Deal. These are among today’s must reads from around the commercial real estate industry.

  1. CRE Mortgage Returns for Life Investors Have Uncertain Future “Those who have bet that commercial real estate can only go up and never down might take a close look at the Trepp LifeComps portfolio report for Q1—and its cumulative negative return of 5.77% over 12 months.” (GlobeSt.com)
  2. Manhattan lawmakers pitch 3-year pause of commercial rent tax “Manhattan’s commercial rent tax was enacted almost 60 years ago to generate revenue for the city. Lawmakers have scaled back the tax’s scope in recent years: The City Council in 2017 exempted about 2,000 businesses from the surcharge.” (The Real Deal)
  3. Walmart Rolling Out Next-Gen Fulfillment Centers, Starting in Chicago Area “Walmart is rolling out four next-generation fulfillment centers nationally, with the first slated to open this summer in Joliet, IL, the retailer said Friday. The centers, featuring robotics and machine learning, will reportedly double the company’s capacity for order fulfillment and, together with the company’s existing fulfillment centers, put 95% of the U.S. population within range for next- or two-day shipping.” (Connect CRE)
  4. Hong Kong’s Property Market Isn’t a One-Way Bet Anymore “Higher interest rates in developed countries pose risks to housing markets around the globe, which have been fueled by cheap mortgages over the past decade. Even land-hungry Hong Kong—which has long held the dubious title of the world’s priciest real-estate market—may now find it difficult to defy gravity.” (The Wall Street Journal)
  5. SPACs Were All the Rage. Now, Not So Much. “After two hot and heavy years, during which investors poured $250 billion into SPACs, rising inflation, interest rate increases and the threat of a recession are fomenting doubts. Increasingly, investors are withdrawing their money from SPACs, which they’re allowed to do at the time of the merger.” (The New York Times)
  6. Affordable Housing Is Getting Squeezed By Construction Cost 'Emergency' “Balancing costs has always been a challenge for developments in which rents are capped. But as labor costs, rising inflation, interest hikes and two years of pandemic-induced supply chain complications are piled on top of increasing materials costs, developers say calculations are becoming even trickier.” (Bisnow)
  7. Cushman & Wakefield on the hunt for new NYC office “It’s possible that the firm could grab some floors at Brookfield Properties’ 660 Fifth Avenue, one of the people suggested. Cushman is the leasing agent at the redeveloped Midtown tower, which was previously owned by Kushner Companies. Brookfield declined to comment.” (The Real Deal)
  8. New York’s 421a Development Tax Abatement Doomed as Legislature Wraps “New York state’s legislative calendar drew to a close Saturday morning as lawmakers failed to extend a housing construction tax break for developers or take measures to protect tenants from eviction as rents balloon across New York this year.” (The Real Deal)
  9. Pension Funds Push for More Disclosure Rules for Private-Equity, Hedge Funds “Many pension plans are having a hard time meeting their payout obligations to members, the result of decades of underfunding, benefit overpromises and unrealistic demands from unions. This year’s simultaneous decline in stocks and bonds has only made matters worse.” (The Wall Street Journal)
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