Urbanexus Update - Issue #81
H. Pike Oliver compiles this weekly update of real estate and community development news. Please note that some links may lead to items that are behind a paywall.
Real estate investment strategy
Real estate consultant RCLCO Fund Advisors was asked to explore the feasibility of increasing the real rate allocation target for this $242 Bb lesion fundand whether it “would result in diminished returns”. RCLCO concluded that CalSTRS (the California State Teachers Retirement Fund) “should be able to increase the allocation… in an accretive manner” while maintaining “discipline with investment criteria”.
Residential
Risky mortgage bonds return — confoundedinterest.net
Subprime mortgages (that is, loans made to borrowers with questionable credit) are like the dinosaur — extinct. But as Ian Malcolm said in the movie Jurassic Park … life finds a way. They simply morphed into a less-threatening sounding product: the non-qualified mortgage (NQF). Hat tip to Tony Sanders for highlighting this.
Why California housing prices are high — www.bloomberg.com How did California’s housing crisis get so bad? Homeless rates are soaring, poverty is spreading and bad, outdated government policies are to blame, along with the big tech boom. The rest of the US is starting to see similar housing affordability problems.
A $2.5 Bn affordable housing commitment
Apple Inc. (NASDAQ: AAPL) has announced a $2.5 billion plan to address the housing availability and affordability crisis in California. Much like Facebook’s recent announcement to commit $1 billion and build 20,000 affordable housing units in the Golden State, Apple cited the major discrepancy between the paces of population growth and affordable housing development as the key catalyst behind its plan. Earlier this year, Microsoft Corp. and Alphabet Inc., the parent company of Google, also pledged a combined $1.25 billion toward the development of affordable housing in metro Seattle and the Silicon Valley area, where those two firms are respectively based.
What will billions for housing from tech firms accomplish?
Efforts by Apple, Facebook and Google to address the California housing crunch must contend with formidable challenges associated with the forces that created it.
Retail
Sears to close 96 more stores by February 2020
Sears Holdings Corp. plans to close 96 underperforming stores by February 2020, according to the retailer’s parent company, Transform Holdco LLC. The closings will consist of 51 Sears stores and 45 Kmart stores, leaving 182 operational Sears and Kmart stores remaining in the United States. The closing stores are scattered throughout all regions of the country, including 28 located in California.
Redeveloping retail malls in response to store closures
The number of retail store closures nationwide in the first half of 2019 surpassed 7,000 and is on pace to reach a record 12,000 by year’s end, according to Cushman & Wakefield. Major retail bankruptcies over the last year have caused the power and regional shopping center sector to experience continued store closures and negative absorption of 2 million square feet in the first half of 2019. That said, discount retailers, entertainment and fitness concepts are still in expansion mode and help backfill vacant space. Mall and shopping center owners are scrambling to redevelop properties and incorporate a variety of uses.
Fifth avenue rents down in NYC
A few blocks makes all the difference when it comes to rent on Manhattan’s Fifth Avenue. Lower Fifth Avenue, an area between 42nd and 49th streets, saw the biggest asking rent decline among Manhattan’s prominent retail corridors in the third quarter, falling 25 percent from the same period last year, according to a report by Jones Lang LaSalle Inc. In contrast, rents along upper Fifth Avenue, from 49th Street north to Central Park, slipped just 0.7 percent over the same period.
Hospitality
The St. Regis New York is the quintessential, global trophy asset and is positioned along Fifth Avenue in Manhattan. Qatar Investment Authority (“QIA”) purchased the 238-key property for $310 million, subject to a long-term management agreement
Infrastructure
How municipal bonds help build the USA From the Erie Canal to the Golden Gate Bridge, U.S. municipal bonds have financed crucial infrastructure. This infographic explores their long history.
Metropolitan dynamics
Time is spent similarly in US cities and suburbs
A new study finds strong similarities in how residents of U.S. cities and suburbs spend their time—with one difference.
Planning and community development
New zoning proposal for downtown L.A. — www.ladowntownnews.com
Last week the Department of City Planning released new proposed zoning rules for Downtown Los Angeles. The package of proposals is part of the wider Downtown Community Plan.
Around the world
Hollow building becomes centre of Iraq's uprising — www.thisisplace.org
The skeleton of a high-rise building overlooking Baghdad's central Tahrir Square known as the Turkish Restaurant has become a temporary home and a bustling centre for protesters staging demonstrations against Iraq's ruling elites.