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Mogul Minute 06/22/2016
June 22 | 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:

Starwood Said to Offer $1.2B of US Malls for Sale (Bloomberg)

  • The malls are said to be of the lower tier variety and include assets located in Chicago, San Francisco, and Cleveland. Starwood has hired Eastdil Secured to broker the transaction. As we have already previously detailed, a pretty strong separation between higher and lower tier malls has begun to arise. It will be interesting to see what the buyer pool and pricing looks like for these assets.

Risk of Overbuilding Inches Up For Class A MF (Globestreet)

  • New construction in Central Business District’s (CBD) are at risk of being overbuilt as supply continues to rise. They issued a note before their Tuesday webcast warning, “if the pace of rent increases continues to fall, this concentration could compound downward rent pressure on rents in those areas. Currently, however, the impact of the new supply is relatively muted, as asking-rent gains remain strong and vacancy rates are still low.”
  • Fitch also noted other areas of concern are metros with high exposure to the oil and gas industry – namely Dallas and Houston. Fitch also notes that these two cities have diversified to some degree which will mute the impact of any declines in the energy sector.
  • Supply for student housing is at an all-time high as 48,000 units were delivered in 2015 alone. In conjunction with declining enrollment at certain institutions, the level of new supply is something to monitor, however, the author notes that the ratings agency expect vacancies to be around 2% for 2017.

These Office Markets Saw Double Digit Rent Growth Over the Past Year (Bloomberg)

  • According to Collier’s Q1 Office Market Outlook, these are the hottest market office markets over the past year (city - with annual rent growth figure):
    • Atlanta – 14.36%
    • East Bay (SF) – 30.17%
    • Baltimore – 15.98%
    • SF – 11.16%
    • Dallas – 10.06%
    • Midtown South (NY) – 20.2%
    • Greenville, SC – 11.83%

Debate Blooms at Fed as Policy Makers Wrestle With ‘New Normal’ (Bloomberg)

  • The combination of low interest rates, slow GDP growth and low inflation is making the Fed contemplate what Chair Janet Yellen called a “new normal.”
  • The Fed also did not submit long-run forecasts for the June Meeting and projected only one rate increase through 2018. “The fact that the economy has been slow to respond to rock-bottom borrowing costs is drawing attention to a possible decline in the long-run equilibrium, or neutral, rate that’s consistent with an economy at full employment and stable prices.”
  • The Fed still sees a return to 2.4% by 2018, however different viewpoints are emerging. St. Louis Fed President James Bullard believes the fed should keep the fed funds rate at 63 basis points through 2018 unless something drastic changes. While “rates are going to be lower than they have historically been, and where they’ll settle is highly uncertain.”

WeWork, Kushner mulling WeLive in Jersey City (The Real Deal)

  • Co-living could be coming to Jersey City as WeWork and Kushner Companies are in talks to bring the concept to the $400M development. The 57-story location would be WeWork’s third co-living location in the US.
  • WeWork already has plans to lease 101,000 square feet of co-working space in the tower.

Brandywine, Drexel Unveil $4.5B Plan for Philly Transit Hub (Commercial Property Executive)

  • Plans were released for the 100-acre redevelopment of downtown Philly. The development is by a partnership between Amtrak, Brandywine Realty Trust, Drexel University, PennDOT, and the Southeastern Pennsylvania Transportation Authority.
  • The site is projected to have 40 acres of open space and 18 million square feet of new mixed-use development. In total, the area is expected to bring 8,000-10,000 new residents and 40,000 new jobs to the District.

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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