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Mogul Minute 06/15/2016
June 15 | 2016

Here at RealtyMogul.com, we keep our finger on the pulse of all things real estate, from finance to technology and everything in between. We make a point of sharing interesting articles and think pieces among RealtyMogul.com staff to help our team stay abreast of the market, and ahead of the curve.

So we thought, why not share some of these insights with you, our partners?

Got A Minute? Here’s some recommended reading with key points from the content:

Fed leaves interest rates unchanged, signals two hikes this year (Reuters)

  • The Fed left rates unchanged on Wednesday and signaled that it is planning two rate increases for the remainder of the year. While they are still bullish on improvement from the US job market, the Fed has lowered their growth forecast in 2016 and 2017 to account for the slower than expected economic growth to date in 2016. They gave no indication as to what future rates will increase to.

Online Retail Gives Industrial REITs a Lift (WSJ)

  • Shares of industrial REITS are up 17.3% this year compared to just a 6% bump for all equity REITs and 1.7% for the S&P. Analysts believe that the increase in e-commerce is driving the demand for an increase in industrial space. The growing appeal of industrial REITs is occurring at the same time that brick and mortar stores are struggling and inventory levels have been rising faster than sales since 2011.
  • Hamid Moghadam, Chief Executive Officer of Prologis, is interested to see the future of industrial as companies shift towards deliveries to individual customers. He believes that “as online shopping grows; retailers will have to shift from traditional distribution facilities to those structured around ‘parcels instead of pallets.’ The change would take place more quickly if retailers weren’t already committed to current leases.”
  • The sector could also be affected if companies shift away from traditional industrial space in favor or renting out small downtown buildings in order to get goods faster to costumers.

The Implications of the May Employment Report for the CRE Market (National Real Estate Investor)

  • The article focuses on the meaning of the recent decline in the labor market, will this dip pass or is this the start of something bigger?
  • The author, Chris Macke, the managing director of research and strategy for American Realty Advisors, “points out two distinctive differences between this drop and previous periods of downward employment: 1) “the two most recent periods of declining employment growth lasted four and two months, respectively, before reaching bottom. The current downward trend is on its seventh month and has not yet bottomed” and 2) “Corporate profits are now declining, falling on a year-over-year basis for three consecutive quarters.” Here are two interesting charts that plot these observations:

  • Going forward, Macke said his firm is focusing on assets with the following characteristics:
    • Assets located in markets with high education and income levels
    • Asset with long-term leases
    • Assets with larger and more financial secure tenants
    • The necessity of digging into key tenant’s financials
    • Maintaining market diversification and limiting industry concentration levels

The Brexit Vote Happens this month: Here are the Potential Real Estate Effects (Bisnow)

  • Interesting read with a couple different opinions
    • “My guess is that a Brexit vote in the affirmative will have the additional effect of US real estate managers looking to the UK for CRE, where prices may drop for a while,” Harvard economist and commercial real estate lecturer Ray Torto.
    • However, Bob Brach (of Newmark Grubb Knight Frank) believes differently, “It could also draw more direct foreign investment into the relative safety of US CRE at the expense of Europe and the UK.”
    • FWIW, Fed Chair Janet Yellen believes a potential UK departure would have significant negative economic repercussions.

Yahoo explores sale of Sunnyvalue real estate (SF Chronicle)

  • Yahoo is looking to potentially sell nearly 1.2M SF of office space across the Bay Area – an area where there is already a rising amount of subleased space. Yahoo owns 8% of the office space in Sunnyvale and the sale of its assets could have a significant effect on the market.

Amazon seeks tax relief to build in NW Houston (Houston Chronicle)

  • Amazon is looking at bringing an 855,000 SF warehouse in northwest Houston (at the 970-acre Pinto Business Park) that would bring 1,000 jobs to the area. Amazon is seeking a tax abatement from Harris County in order to expand there. If the abatement is denied, Amazon is also considering Haslet, San Marcos and a third out-of-state location.
Tim Ednoff Headshot
Written by , Associate - Commercial Equity at RealtyMogul.com

Tim evaluates investment opportunities as well as performs due diligence and writes content for various equity and debt transactions. Outside of the office, Tim is an avid sneaker collector, a passionate health and fitness advocate, and a dedicated podcast enthusiast.

 
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