Situs Newswatch 10/23/2017

Amazon the Disruptor
Category killer Amazon is moving into a new market – Australia. The seemingly unstoppable Amazon has had profound effects on the other markets in which it operates, changing the entire retail landscape.

US-based SEC-registered investment advisor Situs RERC and Melbourne-based advisory firm Urban Property Australia (UPA) have collaborated again to produce the second issue of the Australian Real Estate Trends report; this one examines the economic and real estate impact of Amazon’s imminent entry into Australia.

Based on survey results from investors across the Australian real estate and financial markets spectrum, Situs RERC/UPA find that Australia’s brick-and-mortar retailers can expect increased pressure to compete and will be forced into making their businesses an experience rather just a place to shop. Industrial and logistics centers, on the other hand, if properly located, will became more attractive as e-commerce increases the need for warehouse space.

President of Situs RERC Ken Riggs says, “As Amazon continues to be an innovator and disruptor in many areas of our life, all eyes are on the winners and losers throughout the world at the hands of Amazon. In the US, the increasing market share of e-commerce sales worldwide has created losers on the sticks and bricks side of retail commercial real estate, but has created winners in the industrial distribution centers.”

Look for your free copy of the report in Wednesday’s Newswatch; learn more about Situs RERC reports here.

Situs and The Collingwood Group will attend the MBA Annual Convention in Denver this week. Please let us know if you would like to make an appointment.

What Will Be the Impact of Retail Landlords Taking a Black Friday Holiday?
By now, the list of retailers that have vowed to close up shop on Thanksgiving Day is no less than 75. One major landlord, CBL & Associates Properties Inc., also announced that its retail properties will go dark in the run up to Black Friday, accounting for about 62 centers.

This is the second consecutive year that CBL has decided to close its malls on Thanksgiving Day, a decision that officials said was prompted in part by negative feedback from consumers and employees.

“We employ about 100,000 people at the malls, including the employees of retailers, security and maintenance,” says Stephen Lebovitz, CBL’s president and CEO. “There are a significant number of people who can spend the day with families.”

The decision to close stores does not mean landlords and retailers will starve their companies’ bottom lines while indulging in traditional holiday feasting. The National Retail Federation (NRF) expects 2017 holiday sales in November and December to increase between 3.6 percent and 4.0 percent for total sales of $678.75 billion to $682 billion. That haul excludes sales at restaurants, as well as gasoline and automobile sales.

read more: NREI

Target Expands Store Makeovers
Target Corp. said it would expand plans to remodel its existing supercenters and open smaller stores in cities as the retailer seeks to win back shoppers in the competitive retail environment.

At a media event Thursday, Target executives said they now plan to remodel more than 1,000 of its 1,800 existing stores by the end of 2020. Earlier this year, company executives said they planned to remodel 600 stores over three years, part of a $7 billion investment, including lowering prices and investing in e-commerce.

Chief Executive Brian Cornell said he is making “big commitments” to improving stores and expanding digital capabilities. “We’re remodeling and across the street someone is closing the door,” he said.

Mr. Cornell declined to say whether the new pace of remodels would increase Target’s spending plan, saying he would provide an update at the next meeting with financial analysts. Sales have increased 2% to 4% at recently renovated stores, he said.

The company has remodeled 110 stores so far in 2017. It is opening 32 new stores in 2017 and 35 next year. Most of those new locations are smaller formats that the company is opening in urban areas and college towns. It is opening 11 such stores this week, bringing the total number of smaller stores to 55 so far.

read more: WSJ

Multifamily Lending Up 8 Percent in 2016
Multifamily lending was up 8 percent year over year in 2016, with nearly 3,000 multifamily lenders providing a total of $269.2 billion in new mortgages for apartment buildings with five or more units, according to a new report from the Mortgage Bankers Association (MBA).

“Last year was another record year for multifamily mortgage lending,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “In 2016, strong property performance, rising property values and low mortgage rates all meant greater access to mortgage credit for apartment property owners. The $269 billion in lending that took place shows the breadth of the market — with loans ranging in size from tens of thousands of dollars to hundreds of millions, and the largest lender closing more than 7,500 loans while 61 percent of active lenders closed five or fewer loans. Market momentum has continued in 2017, with strong demand from borrowers and a strong appetite to lend by lenders, especially of loans going to government-related entities.”

The MBA report is based on its surveys of the larger multifamily lenders and the recently released Home Mortgage Disclosure Act (HMDA) data that covers multifamily loans made by many smaller lenders, particularly commercial banks. There were a total of 2,822 active lenders in 2016.

The $269.2 billion of multifamily mortgages originated in 2016 went to a variety of investors. By dollar volume, the greatest share (39 percent of the total) went to the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac.

read more: MBA

Senate Approves Budget Plan That Eases Path Toward Tax Cut
The Senate took a significant step toward rewriting the tax code on Thursday night with the passage of a budget blueprint that would protect a $1.5 trillion tax cut from a Democratic filibuster.

The budget resolution could also pave the way for opening up the Arctic National Wildlife Refuge in Alaska to oil exploration by ensuring that drilling legislation can pass with only Republican votes.

Despite having full control of the government, Republicans have so far been unable to produce a marquee legislative achievement in the first year of President Trump’s tenure, putting even more pressure on lawmakers to succeed in passing a tax bill. The budget’s passage could keep Republicans on track to approve a tax package late this year or early in 2018.

As early as next week, the House plans to take up the budget blueprint that the Senate approved on Thursday by a 51 to 49 vote. Doing so would allow for the tax overhaul to move ahead quickly.

Speaker Paul D. Ryan will need most House Republicans to back the blueprint without changes; in the Senate, Rand Paul of Kentucky was the lone Republican to vote against the measure on Thursday, in protest of what he deemed excessive spending. If House Republicans were to insist on negotiating a compromise that melds the Senate and House budget plans, tax legislation could be delayed.

read more: NYT

Fewest Jobless Claims Since 1973 Show Firm U.S. Job Market
Filings for unemployment benefits plunged last week to the lowest level since 1973 as workers affected by hurricanes Harvey and Irma continued to return to their jobs, Labor Department figures showed Thursday.

The larger-than-projected decrease in claims probably reflected difficulty adjusting for the Columbus Day holiday. At the same time, the report showed further declines in claims in hurricane-affected states. The storms initially led to a spike in applications in Texas and the southeastern U.S. in late August and early September.

read more: Bloomberg

EU to Prepare for Next Round of Brexit Talks, but Says Progress Is Too Slow
European Union leaders said Friday they were set to begin preparations for the next phase of Brexit talks but noted that progress so far has been insufficient, despite continued efforts by British Prime Minister Theresa May at a two-day summit in Brussels to move the discussions forward.

May had urged them over dinner on Thursday to help her craft a deal that could win backing at home, after weeks of impasse.

In a positive gesture, the EU leaders said the bloc should prepare internally for talks on the U.K.’s future relationship with the bloc and its proposed post-Brexit transition period, so that if more progress is made, they will able to move on to the next phase in December.

May on Friday acknowledged that both sides had more work to do.

“I am ambitious and positive for Britain’s future and for these negotiations, though I know we still have some way to go,” she said at a press conference.

read more: Marketwatch