Situs Newswatch 11/29/2017

Situs RERC Q3 Report is Now Available
Situs RERC, the premier global provider of strategic business solutions for the finance residential and commercial real estate industries for more than 30 years, announced today the release of its third- quarter commercial real estate (CRE) report, “Reshaping the Landscape.” The report offers insight into the state of the CRE market, identifying regions and areas that are best positioned to provide value in this ever-changing business environment.The research reinforces that rapidly changing technologies are reshaping the way that we live, work and play, causing a major disruption in the CRE market. The world is now built on Amazon – both a boon for the industrial sector as online retailers need more space for logistics and fulfillment centers and a serious challenge to retailers as shoppers are doing more of their purchasing online. More broadly, industry participants must adapt to changing consumer preferences and needs in order to stay relevant – and profitable.

President of Situs RERC Ken Riggs says, “The broader retail market is suffering from e-commerce’s effect on brick-and-mortar retail. Pricing for high-quality retail is holding up although the market is quiet on the transaction side. The reality is that e-commerce is clearly having an impact, but we are over-retailed by 40 percent; many malls were built 40 years ago, and retail has always been a Darwinian environment.”

To purchase your copy of the Situs RERC Real Estate Report, visit store.rerc.com or call 319-352-1500.

Battle for Control of Consumer Agency Heads to Court
The battle over who will lead the federal government’s top consumer financial watchdog agency is now headed to court.

The extraordinary fight, which intensified on Sunday night, adds to the uncertainty over the fate of the Consumer Financial Protection Bureau, a regulator created in the aftermath of the global financial crisis of nearly a decade ago. It encapsulates dueling visions of how the American financial system could be regulated, as President Trump moves to loosen regulation created under the Obama administration to rein in the financial industry.

Leandra English, the deputy director of the bureau who was set to become its temporary chief, filed a lawsuit late Sunday night to block Mr. Trump’s choice of someone else from taking control of the agency on Monday morning.

Mr. Trump has been seeking to install his budget director, Mick Mulvaney, as the agency’s acting director. The bureau had been a “total disaster” and needed new leadership to “bring it back to life,” Mr. Trump has said on Twitter. Mr. Mulvaney has been openly hostile to the consumer bureau, calling it a “sad, sick” joke and supporting legislation to eliminate it.

At stake is the immediate future of the consumer bureau — one of the last holdouts, within the federal government, against Mr. Trump’s efforts to strip away business regulations. While Mr. Trump can appoint his own director, confirmation could take months and slow down Republican efforts to defang the agency.

read more: NYT

Malls Never Wanted Gyms. Now They Court Them
Todd Mullins and his wife, Julie, started going to a shopping center 15 minutes from their Palm Beach Gardens, Fla., home about a year ago—after they joined a gym inside of it. They work out at the Orangetheory Fitness there three to four times a week, and at least half the time visit a nearby juice shop, restaurant or Trader Joe’s, he says.

“There would be no other reason to go to that mall,” says Mr. Mullins, a senior pastor at a local church.

Mall owners long treated gyms like pool halls, unwanted tenants that attracted lower-rent visitors who were unlikely to shop. Now they’re giving health clubs some of their best real estate.

The reason is twofold. Retailers have closed hundreds of stores across the country amid increasing competition from online shopping, leaving mall owners to grapple with declining foot traffic and rising vacancies. At the same time, fitness centers have boomed and diversified, and a proliferation of smaller, boutique gyms that draw higher-end customers have created more attractive tenants that are easier to accommodate.

The result is that health clubs that were once pariahs at malls are helping transform them into hubs of living, working and playing.

read more: WSJ

Self-Storage Properties Deal with Competition
Self-storage properties are finally beginning to feel some pain from overbuilding. Rents that rose quickly over the past few years are likely to rise slowly this winter—if they rise at all.

“We are experiencing a development boom,” says Brandon Carr, director of the national self-storage group for Marcus & Millichap, based in Fort Worth, Texas.

Experts have worried for years that developers would build too many self-storage properties. But rents continued to rise quickly, as strong demand filled new properties. Rents are likely to rise much more slowly over the next year as another wave of newly-built properties opens. Even in sub-markets that aren’t overbuilt, the owners of older properties now often compete with new properties in stronger locations with professional management—changing the expectations of their customers for service and convenience.

read more: NREI

Black Friday Boosts Battered Department Stores
Department stores overall appear to have fared well on Black Friday, kicking off the holiday shopping season on a high note.

Already on Thanksgiving Day, throngs of shoppers were spotted across the country outside of places such as J.C. Penney, Macy’s and Kohl’s, hoping to snag limited doorbusters and other deep discounts on home goods, kitchen accessories and apparel.

That doesn’t include the millions of shoppers who opted to ring up purchases from the convenience of their smartphones and computers. Adobe Insights, which measures 80 percent of online transactions at 100 major U.S. retailers, said a record $5.03 billion was spent online by the end of Black Friday, an increase of 17 percent from 2016.

“I think department stores had a reasonable time of it, better than last year,” GlobalData Retail Managing Director Neil Saunders told CNBC.

GlobalData’s preliminary tracking figures have already predicted total Black Friday sales to have risen the most since 2011. The National Retail Federation (NRF), the industry’s trade group, is calling for an increase as much as 4 percent, with those results set to be released Tuesday afternoon.

read more: CNBC

Fed Nominee Powell: Financial System ‘Quite Strong,’ Backs ‘Tailoring’ Regulations to Ease Up on Small Banks
Jerome Powell, picked by President Donald Trump to lead the Federal Reserve, said Tuesday he favors “tailoring” regulations to alleviate the burden on smaller banks.

Speaking before the Senate Banking Committee during his confirmation hearing, Powell mentioned several areas he’d like to see addressed when it comes to the rules that banks operate under in the postfinancial crisis atmosphere.

The hearing featured a number of exchanges were Powell was pressed on his regulatory views, while other senators unsuccessfully sought to get him to comment on the looming tax reform bill in Congress.

“Tailoring of regulations is one of our most fundamental responsibilities,” he said under questioning. “We want regulations to be the most intense, the most stringent for the very largest, most complex institutions and want it to decrease in intensity and stringency as we move down through the regional banks and the community banks. This is something we strive to achieve. We’re taking a fresh look at that now.”

read more: CNBC

New Jersey Office Rents Near Records
Asking rents for New Jersey office space are nearing records as landlords undertake extensive renovations and fill older properties with amenities from beach volleyball courts and yoga studios to outdoor lounges with firepits.

The steady climb in asking rents during the past two years reached $26.86 a square foot in the third quarter, just shy of the record $26.90 from the second quarter of 2001, according to real-estate services firm Transwestern.

“Landlords are investing capital, adding amenities into office buildings, many built in the ’80s and ’90s, which has given them the ability to increase the office rents,” said Matthew Dolly, Transwestern’s New Jersey research director. “Now almost every building acquired is a value-add play where tenant upgrades are planned.”

In New Jersey asking rents rose in eight of the past nine quarters. In 16 of 21 submarkets, third-quarter rents increased from the previous year, Transwestern said. Submarkets such as the Hudson waterfront, Newark and urban Essex County and the Short Hills and Millburn areas were among office districts with the biggest rent increases.

The state’s vacancy rate improved, dropping to 14.8% in the third quarter from 15.5% in the same period last year, Transwestern said.

read more: WSJ

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