Situs Newswatch 12/9

Amazon Go: Job Killer or CRE Savior

Amazon has opened it’s first ‘Amazon Go’ grocery store in Seattle — many say it’s a  plan to automate American workers out of existence — a futuristic grocery store without any cashiers.  But, other say it could be a savior for ‘brick-and-mortar’ retail, and for the Commercial Real Estate industry.

High-tech sensors and artificial intelligence are allowing shoppers to swipe an app when they enter, then roam the aisles and grab staples like bread, milk, artisanal cheeses and chocolates and ready-made meals. Customers can watch as the items they pluck off the shelves get added to a virtual cart on the app — and subtracted if they put them back — with receipts emailed to them once they leave, according to the company.

“This could be the ‘killer app’ to keep malls and Commercial Real Estate from falling to online shopping,” says Situs CEO Steve Powel.

“It would be amazing if Amazon, which has taken so many shoppers away from the malls, is actually the company to bring them back.”

Amazon wants to open more than 2,000 brick-and-mortar grocery stores, compared with about 2,800 operated by The Kroger Co., now the nation’s largest full-service grocery retailer.

Amazon’s plans mark its latest push into the $800 billion-a-year grocery business, following its AmazonFresh delivery service that began expanding across the country in 2013 and arrived in Brooklyn in late 2014.

“People are far more comfortable seeing, smelling and touching fruits, vegetables and cheeses when buying them, then having an e-tailer pick them out for them,” says Situs’s Powel.  But, he adds, “We all hate waiting in those long, endless lines as the supermarket, this concept is brilliant.”

If successful Amazon Go, also threatens countless jobs at grocery stores, which are the leading employers of cashiers and had 856,850 on their payrolls in May 2015, according to the latest figures from the federal Bureau of Labor Statistics.

Powel admits, “Disruption like this is tough, but I remember when there were phone and elevator operators, they eventually found new employment, these people will too.”

>>Watch the Amazon Go Video Here<<
Wall Street as Landlord: Blackstone Going Public with a $10 Billion Bet on Foreclosed Homes

Jonathan Gray of Blackstone Group LP went on the biggest home buying spree in history after the U.S. foreclosure crisis, purchasing repossessed properties from the courthouse steps and through online auctions.

Four years, $10 billion and roughly 50,000 homes later, he will find out if his gambit will pay off. Invitation Homes LP, the Dallas-based company Blackstone formed to maintain and rent those homes, has filed confidentially for an initial public offering that could come as soon as January.

Though Blackstone is unlikely to sell much or even any of its stake in an IPO, the stock market debut will test investors’ interest in the idea that the rental-home business can be institutionalized as apartments, shopping centers and office towers were before.

Blackstone and others investors believed that the housing collapse presented a rare opportunity to acquire homes for less than it cost to build them. Millions of foreclosures created a market large enough to justify investing in large systems to manage and maintain sprawling portfolios of rental homes.

Now, these new institutional landlords say the move toward rentals further supports their business model. They point to tight lending standards and a generation of renters who are outgrowing apartments but are too burdened by student debt to buy homes.

Historically, mom-and-pop investors and regional players have owned nearly all the single-family homes for rent. Blackstone and other investors that emerged from the foreclosure crisis face unique challenges in joining them, beyond the chore of maintaining thousands of far-flung homes.

To generate the revenue growth that shareholders will demand, they must pace rent hikes to avoid spooking tenants into becoming home buyers themselves. And now that foreclosure rates have returned to normal levels and prices have rebounded, they could find it difficult to add new houses at attractive prices.

read more: Wall St Journal

Secret Service Advertised as Hot, New Amenity at Trump Tower

The U.S. Secret Service is the hot, new ‘amenity’ in the Trump Tower, where desperate brokers are trying to lure well-heeled clients into the building on New York’s Fifth Avenue that has served as President-elect Donald Trump’s home as well as his campaign and transition headquarters.

Less than a week after Trump was elected, prominent New York real estate agency Douglas Elliman blasted out an e-mail with the subject: ‘Fifth Avenue Buyers Interested in Secret Service Protection?’ to advertise a $2.1 million, 1,052-square-foot condo in the tower on 721 Fifth Avenue.

While there’s been a great deal of attention to how Trump plans to divest himself from his conflicts of interest, less attention has been applied to how business associates – including owners and marketers of his properties – may seek to profit from his new job in the White House.

read more: Politico

Toll Brothers Sees Strong 2017, Powered by Millennial Buyers

Toll Brothers Inc. on Tuesday again reported double-digit revenue growth in its latest quarter and projected continuing strong performance in 2017 as the home builder lures millennial buyers.

Chief Executive Douglas Yearley Jr. said in prepared remarks that about 22% of the company’s settlements included one primary buyer who is 35 or younger. Many are snatching up urban condos and rental apartment properties, as well as Toll Brother’s core suburban homes.

“With the millennial generation now entering their thirties and forming families, we are starting to benefit from the desire for home ownership from the affluent leading edge of this huge demographic wave,” Mr. Yearley said.

Results in the fourth quarter were broad-based across the country, with every region showing contract growth for its traditional home building business.

However, the company reported fewer contracts for its City Living division, which builds urban apartments. Revenue in the segment decreased sharply to $13.9 million from $131.1 million in the year-ago period. The average price per unit jumped to $2.3 million from $1.7 million.

As a luxury home builder, Toll Brothers has faced concerns about exposure to high-end markets that are softening, including New York City. The company on Tuesday gave a rosy outlook for performance in its current year, with Mr. Yearley noting “positive demand trends in many regions.”

Over all for the October quarter, Toll posted a profit of $114.4 million, or 67 cents a share, down from $147.2 million, or 80 cents a share, a year prior.

read more: Wall St Journal

Home Construction Loan Volume Picks Up the Pace

The volume of U.S. home construction loans grew at the fastest rate in more than two years in the third quarter, according to federal data, a sign that tight post-recession lending conditions might be easing for home builders.

After the housing crash, banks that historically lent money for acquiring land and building new homes cut back significantly.

Access to capital has been especially difficult for small private builders, who are responsible for nearly two-thirds of single-family home construction across the country. Analysts often cite the credit challenges as a prime factor in holding back the supply of new homes.

A return of such lending could spark more home construction. Home prices have recovered from the housing crash and stood at record highs in September, according to the S&P CoreLogic Case-Shiller National Home Price Index. That is partly because the supply of homes is low, with construction about 25% below historical averages.

Financing is critical because builders typically move forward on construction after receiving a deposit from an approved buyer, and don’t see the full home payment until after the project is completed.

read more: Wall St Journal

Red State Homes Are Luring Young Blue Buyers Inland

Dayton, Ohio, gave the world the Wright Brothers and the electric cash register. As recently as 1990, manufacturing jobs there were the backbone of the local economy. But in the two decades since, the area has lost thousands of blue-collar jobs, and the local housing market still wears the scars of the foreclosure crisis.

Those attributes make the city representative of the Rust Belt malaise that carried Donald Trump to his electoral college victory. Montgomery County, composed of Dayton and its environs, opted for President Barack Obama in 2008 and 2012. This year, the county favored Republican Trump over Democratic nominee Hillary Clinton by 1.3 percentage points, or about 3,000 votes.

But the demographics that shifted to the real estate mogul’s favor in places like Dayton may be short lived. Health-care companies and Internet marketers are powering a nascent knowledge economy in the Ohio city, one that also boasts an innovation district seeking to lure tech companies from more expensive locales. City developers have spent recent years trying to replicate the success of the Cannery Lofts, a trendy Dayton rental building carved out of an old downtown warehouse. And there are three new microbreweries and a handful of historic districts where listings pitch homes to “urban pioneers.”

That mix of urban renaissance and bargain real estate has made the city appealing to young workers. During the first 10 months of this year, 51 percent of homebuyers were under 35 years old. That’s the highest share in the U.S., according to a analysis.

Clinton’s loss despite her 2.5 million popular-vote lead over Trump illustrated the concentration of traditional Democratic voters in a handful of coastal states. Will the appeal of cheap housing help Midwest cities such as Dayton attract young, well-educated workers? And if they do, will they change the political culture of states that turned away from the Democrats on Nov. 8?

read more: Bloomberg

Rising Prices in Oakland Push Artists Into Risky Housing

San Francisco is full of big dreams. Oakland is where people make them work.

The city of about 400,000 sits on the east side of San Francisco Bay and historically has served as a low-priced alternative to its more famous neighbor, a place where service workers could buy a home, young professionals could get an extra bedroom and artists lived in low-rent warehouses while sleeping beside their next installation.

But over the past few years, as prices have surged across the Bay Area, Oakland’s pricing advantages have mostly eroded. Rents have increased 70 percent in five years, more than in any other big city in the nation, according to Zillow, the online real estate pricing service. The city’s $2,899 median rent is now among the highest, and just short of median rents in Manhattan.

The conditions that led to the fire that killed at least 36 people on Friday night was a result of a dangerous mix of factors in which dozens of partygoers were invited to a warehouse that was dark, congested and mazelike, with flammable art and a jerry-built electrical system.

The victims died because they were trapped in a tinderbox. Yet the economic backdrop of the tragedy is also important because it shows how rising rents and fears of eviction can push vulnerable people in a desperate search for housing to unsafe spaces.

read more: NY Times

This $8,000 a Month San Francisco Apartment has a Staff Robot

Jasper is a 40-story luxury high-rise steps away from the San Francisco offices of start-ups like Dropbox, Lyft and Silicon Valley shuttle stops ferrying workers to companies like Google and Facebook.
It seems to embody all that the city’s long-standing residents hate, and aims to offer everything its young tech and finance workers might crave. The building looks and feels like a luxury hotel during a perpetual spring break.

“The new jobs are all tech and finance and so we get a lot of those types of residents,” said Roman Speron, vice president at developer and owner Crescent Heights.

Rents in San Francisco are the highest in the nation, according to real estate tracking company Zumper. New buildings are required to include some affordable housing units, but developers can opt to pay into a fund instead, which is what Crescent Heights did.

An autonomous robot designed by Savioke will join the staff in the future, said Speron. Residents will be able to order items — like desert, champagne, toothpaste or toiletries — using an in-app menu. Staff place the requested item in the robot which will call the elevator, arrive at an apartment door, call the person inside and flip open its top to deliver the item, said Speron. (The robot is already being used in some hotels.)

“We have had parties where the robots delivered water to our guests and it’s pretty funny and outrageous and people are amazed,” he said.

read more: CNBC

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