Prime Minister Theresa May stunned Britain by calling an early or “snap” election for June 8, betting voters will give her Conservative Party a strong mandate as she negotiates the country’s withdrawal from the European Union.
“The country is coming together, but Westminster is not,” May said in an unscheduled appearance outside the prime minister’s residence at No. 10 Downing St., adding that she had “only recently and reluctantly come to this conclusion.”
May last month formally initiated the two-year divorce process from the EU, one of Britain’s most consequential decisions since World War II. She had repeatedly ruled out a snap election — the next one was scheduled for 2020 — so her decision represents an abrupt turnaround. Opinion polls suggest she will increase her Conservative majority significantly in an election. That would give her more freedom in negotiations and make her less dependent on the support of the “euro-skeptics” of her Conservative Party who favor a clean break with the European Union.
Situs Europe CEO Christian Bearman says, “The ‘Brexit Climate’ in the UK is not so much of the issue here, as is the perceived electoral disarray of the opposition Labour Party. With opinion polls at historic lows for Labour, Mrs. May clearly feels that the time is right to strengthen her electoral advantage and claim a reaffirmed mandate to continue with her government’s path outlined for the Brexit process.”
An unscientific Situs poll of Newswatch readers, taken during the last week of March, found an overwhelming majority believe Britain’s exit from the European Union will have a negative impact on Commercial Real Estate.
“The markets have been factoring in Brexit for some time, says Situs Europe’s Bearman. “I don’t think anyone on this side of the pond is under any illusions as to just how politically challenging the process will be and no one can yet predict the final picture, but the short-term fundamentals remain stable enough to allow the UK and Europe generally to remain attractive investment propositions.”
Learn more about the European commercial real estate market: click here to download your free copy of the Situs RERC European Report today.
Lloyds Reportedly Chooses Berlin Post-Brexit
Lloyds Banking Group has reportedly chosen the German capital as the location for its European hub after the UK leaves the EU.
According to several media reports, the bank has decided to convert its Berlin branch into an official subsidiary of the main company, to enable the lender to continue to be able to provide clients with all its services after the split.
The Telegraph reported that Lloyds hopes to submit an application to German financial regulator BaFin to change the status of the Berlin branch by the end of September.
The bank considered several cities for the location of its EU base, including Amsterdam and Dublin, but Berlin proved the most appropriate because it is already home to Lloyds’ biggest European operations, employing around 300 staff, according to the paper.
Lloyds declined to comment on the reports when contacted by The Independent.
Major financial institutions, insurers and asset management companies with significant operations in the UK have for months been weighing up the impact that Brexit might have on their business and assessing how they might have to change their set-ups to continue to cater to clients’ needs.
Lloyds has almost all of its assets in Britain and is also the only major British retail lender without a subsidiary in another EU country, according to Reuters.
read more: The Independent
Frexit: Communist Candidate Wants to Nationalize French Banks
A specter is haunting Europe — the specter of Jean-Luc Mélenchon.
In the latest plot twist in France’s highly contentious presidential election, Mélenchon — an outspoken 65-year-old leftist who often appears on the campaign trail via hologram and who has pitched his proposal to nationalize France’s biggest banks and renegotiate its relationship with the European Union via free Internet games and YouTube videos — is now soaring in the polls. With less than two weeks before the election, his meteoric and unexpected rise is already sending jitters through financial markets and shock waves through an increasingly anxious electorate.
For months, analysts have likened the upcoming French election to “Europe’s Stalingrad,” a crucial turning point that will determine the future of a country and a continent. But while commentators worldwide have focused on the steady rise of the far-right, fiercely anti-immigrant National Front of Marine Le Pen, few have paid any attention to the leftist fringe of Jean-Luc Mélenchon, who has vaulted into the picture in the past week and who shares with Le Pen the desire to drastically alter France’s relationship with the E.U., the 28-state bloc it once designed.
Mélenchon is running as the candidate of the Unbowed France political movement, in an alliance with the French Communist Party. The latest polls show him narrowly trailing Emmanuel Macron, long seen as the favorite, and Le Pen, expected to qualify for the final round of the two-round vote but to lose to Macron in the end. In the final days of a truly unprecedented campaign, Mélenchon’s unexpected surge is a reminder that radical change is in the air and that its extremist apostles — on the right or the left — may soon hold power.
read more: Washington Post
Amazon Puts Retail at Historic Tipping Point
Along the cobblestone streets of SoHo, Chanel handbags and Arc’teryx jackets are displayed in shops like museum pieces, harking back to the height of the neighborhood’s trendiness. But rents there are softening, and the number of vacant storefronts is rising.
Today, some of the most sought-after real estate by retailers is not in SoHo, but five miles away in Red Hook, a gritty Brooklyn enclave with a shipbuilding past. E-commerce merchants are vying to lease part of a huge warehouse space, spanning 11 acres, that would allow them to deliver goods the same day they’re ordered online.
The profound reordering of New York’s shopping scene reflects a broad restructuring in the American retail industry.
E-commerce players, led by the industry giant Amazon, have made it so easy and fast for people to shop online that traditional retailers, shackled by fading real estate and a culture of selling in stores, are struggling to compete. This shift has been building gradually for years. But economists, retail workers and real estate investors say it appears that it has sped up in recent months.
Between 2010 and 2014, e-commerce grew by an average of $30 billion annually. Over the past three years, average annual growth has increased to $40 billion.
“That is the tipping point, right there,” said Barbara Denham, a senior economist at Reis, a real estate data and analytics firm. “It’s like the Doppler effect. The change is coming at you so fast, it feels like it is accelerating.”
read more: NY Times
The New Shopping Hubs for Cities: Warehouse Distribution Centers
Past scrapyards, railroad tracks, stacks of old wooden pallets and rusty shipping containers here sits a nondescript warehouse, alongside a snarl of freeway overpasses, with two dozen trucks parked at its docks.
This is where families across the dense New York City metropolitan area are getting their essential household shopping done.
Every day, tens of thousands of bulk household items move through the Boxed.com fulfillment center, destined for the online retailer’s customers along the Northeast corridor. Incoming orders get assigned to large plastic bins that travel along an automated system of nearly 2 miles of conveyors. Workers stationed along the winding route drop each item — from paper towels to peanut butter — into the bins as they pass by. When the order is complete, packers arrange the items in a box, tape it shut and set it on another conveyor headed for a waiting delivery truck.
“All these undesirable locations are now really desirable” for retail, Boxed founder Chieh Huang said on a recent tour of this facility.
read more: Wall St Journal
Neiman Marcus Finds Even Wealthy Shoppers Want Better Deals
Lysa Heslov used to be a loyal Neiman Marcus shopper. Now, she buys most of her clothes, shoes and handbags at websites that carry the same designer brands, often at cheaper prices.
“I price compare now much more than I ever did before,” said Ms. Heslov, a 52-year-old documentary film director who lives in Los Angeles.
Neiman Marcus and other luxury retailers were long thought immune to the troubles of mass-market chains — falling foot traffic and the constant price wars that have triggered widespread closure of brick-and-mortar stores.
But high-end chains, which raised prices incessantly over the past decade, are learning the hard way that even wealthy customers are hunting for better deals and selection, whether online or at shops run by individual brands.
“Even a very rich person can say, ‘Enough is enough,’ when it comes to price,” said Matthew Singer, Neiman’s former men’s fashion director, now with his own clothing line.
Sales of personal luxury goods, such as designer apparel and handbags, fell 1% last year, the first decline since 2009, according to Bain & Co. The slowdown contrasts with 4% growth in the global luxury market, which reached $1.16 trillion when including expenditures on pricey cars, travel, restaurants and such.
“In the past, women had loyalty to a particular department store, and they would come in with a page torn from the retailer’s catalog and say, ‘I want that look,’ ” said Robert Burke, the former fashion director of Bergdorf Goodman who now runs his own consulting firm.
The shift in consumer tastes has put pressure on several storied brands, including Tiffany & Co. and Ralph Lauren Corp., which both recently ousted their chief executives.
“Consumers no longer prefer a one-stop approach to shopping,” said Deborah Weinswig of Fung Global Retail & Technology, a think tank. “This coincides with the current sentiment that big is the opposite of cool, making it very difficult for major retailers and brands to maintain a high level of cachet.”
Few are feeling the heat as much as Neiman Marcus Group Ltd., which holds nearly $5 billion in debt that has grown through more than a decade of private-equity ownership. The company, which lost $406 million on sales of nearly $5 billion in the year that ended in July, recently abandoned plans to go public; credit-rating firms have warned there is a high risk it will default on its obligations.
read more: Wall St Journal
Millennials Crave American Dream of Homeownership
Millennials don’t want to own homes. It’s an oft-repeated assertion that simply is NOT true.
In fact, 79% of millennial homeowners believe owning a home has a positive impact on their long-term financial picture, according to Bank of America’s second annual Homebuyer Insights Report. And a whopping 86% believe owning a home is more affordable than renting.
Young homeowners aren’t as picky and are the least likely to seek a move-in- ready home among all the generations — because they don’t necessarily view their first home as their permanent residence, BofA’s head of consumer lending Steve Boland told Yahoo Finance. Sixty-eight percent of millennials surveyed view their current home as a “stepping stone” to their forever home.
An earlier survey by The Collingwood Group found Millennials were willing to sacrifice Starbucks visits and cable television to finance home purchases.
“It’s fascinating that millennials want to live in the city while they’re single but want the American Dream of white picket fences and yards when they are ready to buy, according to our exclusive poll,” says The Collingwood Group Chairman Tim Rood. “That is so critical given the ambiguity and fear that millennials will get hooked on urban conveniences and abandon the suburbs, leaving baby boomers and other downsizing households in the lurch.”
The Bank of America study highlights the fact that, simply put, when millennials grow up they’re not much different from their predecessors. It found millennials are looking to purchase a home, but not taking as committed of an approach as their parents or grandparents did at the same age.
Robots Will Build Your Next Home, Saving Labor Costs
The future of homebuilding depends on more people like Cyndicy Yarborough, a 26-year-old former Wal-Mart clerk with no background in construction.
At Blueprint Robotics in Baltimore, she works in a factory that builds houses like cars, on an assembly line, using robots that fire thousands of nails into studs each day and never miss. Yarborough operates a machine that lifts floors and walls and packs them onto a flatbed truck, the final step before delivery to a development site where they’ll be pieced together.
“I like being a part of something new, on the cutting edge,” said Yarborough, a single mother who took the job at Blueprint last May.
Builders hire the factories to manufacture homes in sections, which are transported on trucks, then laid down on foundations by cranes, like giant Legos. Sometimes the modules are fully framed rooms, complete with tile showers and gourmet kitchens.
“This has to be the wave of the future — I don’t know how we solve the labor shortage otherwise,” said John Burns, an Irvine, California-based homebuilding consultant. “What drives modular construction is the ability to build the house more cost-effectively.”
U.S. homebuilders say the labor crunch is their biggest challenge, and that it’s pushing costs up as much as 5.2 percent on average, according to National Association of Home Builders/Wells Fargo surveys last year. President Donald Trump’s proposals to crack down on undocumented workers may further squeeze the industry, one heavily dependent on immigrant labor.
The idea of transporting homes in prefabricated sections has roots in the early 1900s, when homesteaders could buy kits from a Sears, Roebuck & Co. catalog for assembly on their newly acquired plots of land. In the 1980s and 1990s, it became increasingly popular to build lower-cost homes in factories, according to Gary Fleisher, who runs a blog for the industry called Modularhomecoach.com.
Labor costs are more favorable for factory construction, according to David Reed, vice president of Champion’s modular division. Workers make about $15 to $20 an hour in rural Pennsylvania. That compares with $50 to $100 an hour in the markets the manufacturers serve, like New York’s Hudson Valley, and the Washington, D.C., area, Reed said.
Builder Kris Megna works with Champion to create houses as large as 10,000 square feet (930 square meters) in the pricey suburbs of Boston. Megna, 31, who founded Dreamline Modular Homes in 2010, said almost any custom design is possible, even though the modules can’t be much bigger than 60 feet by 16 feet (18 meters by 5 meters). Walls between sections can be knocked down for open-concept kitchens, and cutouts can create vaulted ceilings, he said.
“The house is 60 percent complete when it arrives, and that means 60 percent of the headaches of building are gone,” Megna said.
For less-expensive homes with smaller margins for developers, transportation costs can eat up the savings of going modular. Federal restrictions also limit the size of each box, or section of home being moved, which can mean more on-site construction. There’s also the stigma, modular manufacturers say, that connects them to the industry’s oldest relative.
“Often when we exhibit a model home at trade shows, I will hear comments like ‘This is nice for a trailer,’” said Biggs of Ritz-Craft. “Our homes are far from it, and in many ways higher-quality than those built on site.”
read more: Bloomberg
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