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The Fed's Timidity Helps No One at This Point: Komal Sri-Kumar
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   7   0   0   0   0   0
(Bloomberg Prophets)—The U.S. Federal Reserve believes it faces a dilemma. Despite more than quintupling its balance sheet from about $800 billion in September 2008 to $4.5 trillion in an effort to stimulate the economy, growth continues to be subpar. A federal funds rate at near zero up until December 2015 did little to encourage consumers to borrow and spend. And although the surge in equity prices boosted consumer wealth, it didn’t lead to increased spending, higher incomes or “a virtuous circle (to) further support economic expansion,” as former Fed Chairman Ben Bernanke wrote in a Washington Post op-ed article in November 2010. Hand-wringing at the Fed got more intense last week as inflation numbers for July showed that the target of 2 percent annual inflation hasn’t been attained despite years of easy monetary policy. The consumer price index in July rose only 0.1 percent from the prior month, well below consensus expectations. Even more distressing to the central bankers, the monthly inflation rate measured by the producer price index was negative, which could be transmitted to consumer prices in coming months. It isn’t surprising that, in a speech this month Federal Reserve Bank of Minneapolis President Neel Kashkari likened his colleagues’ concern about accelerating inflation to a “ghost story.” Why haven’t wages surged and inflation picked up despite the economy being in the ninth year of economic recovery, and the unemployment rate matching a 16-year low of 4.3 percent? Are the low inflation rates in recent months just a transitory factor resulting from...
Trump Is Said to Abandon Plan for Council on Infrastructure | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   89   0   0   0   0   0
(Bloomberg)—President Donald Trump will not move forward with a planned Advisory Council on Infrastructure, a person familiar with the matter said Thursday. The infrastructure council, which was still being formed, would have advised Trump on his plan to spend as much as $1 trillion upgrading roads, bridges and other public works. Its cancellation follows Trump’s announcement Wednesday that he was disbanding two other business advisory panels. Corporate chief executive officers this week had started to quit both the American Manufacturing Council and the Strategic and Policy Forum in protest over Trump’s remarks that appeared to confer legitimacy on white supremacists following a violent rally Aug. 12 in Charlottesville, Virginia. Trump had tapped New York developers Richard LeFrak and Steven Roth, whom he described as friends, to lead the infrastructure panel, which he established by an executive order on July 19. But he had not announced any formal appointments to it. Through a spokeswoman, LeFrak declined to comment. Roth didn’t respond to a request for comment. The council, which was supposed to have no more than 15 members representing real estate, finance, labor and other sectors, was designed to study and make recommendations to the president regarding the funding, support and delivery of infrastructure projects. Trump reignited controversy about his response to the violence in Charlottesville during a press conference on Tuesday that was supposed to be about his infrastructure plans. He signed an executive order this week that’s intended to accelerate the review and permitting...
Chinese Pullback Won't Dent Real Estate Prices, Brookfield Says
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   102   0   0   0   0   0
(Bloomberg)—Commercial real estate prices, hovering at record highs in the U.S. following a six-year boom, are sustainable even as Chinese regulators tighten restrictions on overseas investment, according to Brookfield Property Partners LP. There is enough capital pouring into real estate from multiple regions -- including Europe and the Middle East -- to counter any potential slowdown in Chinese investment, Brookfield Property Chief Executive Officer Brian Kingston said in a Bloomberg Television interview. While Asian buyers are often part of the equation, a global shift from low-yield fixed-income holdings to real estate will drive property values for the foreseeable future, he said. “There was a lot of headlines around how much capital was coming out of Asia,” said Kingston, a senior managing partner at Brookfield Asset Management Inc., the parent company of Brookfield Property. “The reality is it’s broad-based. It comes from a lot of places.” Price growth for U.S. commercial buildings such as office towers and apartment buildings has leveled off over the past year, according to research firm Green Street Advisors LLC, and a growing disconnect between buyers and sellers is putting a damper on new deals. In Manhattan, one of the biggest beneficiaries of a foreign-capital influx in recent years, transaction volume plunged 39 percent to $18 billion in the first half from a year earlier, according to the Real Estate Board of New York, a trade organization. Still, there have been a handful of blockbuster transactions. In March, Chinese conglomerate HNA Group Co. agreed to buy...
10 Must Reads for the CRE Industry Today (August 18, 2017) | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   100   0   0   0   0   0
10 Must Reads for the CRE Industry Today (August 17, 2017) Aug 17, 2017 10 Must Reads for the CRE Industry Today (August 16, 2017) Aug 16, 2017 10 Must Reads for the CRE Industry Today (August 15, 2017) Aug 15, 2017 10 Must Reads for the CRE Industry Today (August 14, 2017) Aug 14, 2017
In Primark, Experts See a Bright New Star for Mall Landlords | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   140   0   0   0   0   0
When Primark took over one floor in the former Sears anchor space at King of Prussia mall in November 2015, the retailer opened its doors just in time for Black Friday and that year’s holiday shopping season. That might have looked like a close call on the calendar, but the Primark store at King of Prussia quickly lived up to the potential of the rest of the chain. The chain also maintained its popular standing with shoppers at the Boston Downtown Crossing center, which opened in September 2015. For retail industry insiders, Primark has the retail savvy and sales prowess to live up to the excitement around its arrival in the U.S., sometimes dubbed the “Irish invasion.” “I think they can grow the footprint pretty fast,” says Jan Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, an equity research and financial management consulting firm specializing in retail. “Primark is at the intersection of cheap, fast-fashion and department store retailing.” In terms of how fast, Kniffen says the brand can expand to 300 stores in the U.S., which offers huge potential for an inpouring of revenue from the retailer. Primark, which hails from Ireland and is owned by the U.K.-based Associated British Foods, has already opened eight of its 10 currently planned stores. “Once the model is perfected and Primark is happy with it, I don't see any reason [it] cannot build 40 or 50 of those stores a year,” Kniffen says. “I think the developers would love...
Sliding Fundamentals | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   113   0   0   0   0   0
The outlooks for both occupancy rates and rents eroded considerably in this year’s survey compared to the past two years. Overall, 46.0 percent anticipate no change in regional occupancies over the next 12 months, while 22.3 percent expect occupancy rates to increase. (The percentage of respondents expecting occupancy rates to fall jumped up from 15.9 percent in 2016 and 8.9 percent in 2015). In addition, 31.7 percent expect occupancy rates to rise, a marked decline from the 41.2 percent who expected occupancies to rise in 2016 and 55.3 percent who said so in 2015. Respondent views on the national retail market were similar. Overall, the number expecting occupancy rates to rise nationally came in at 34.8 percent—down from 41.0 percent in 2016 and 61.9 percent in 2015. In addition, 27.3 percent this year said they expected no change (compared with 35.2 percent in 2016 and 25.9 percent in 2015). And the percentage expecting occupancies to fall nationally jumped to 37.9 percent—up from 23.8 percent in 2016 and 12.1 percent in 2015. The vacancy rate at U.S. regional malls stood at 8.1 percent in the second quarter 2017, up from 7.9 percent in the first quarter, according to Reis. For neighborhood and community centers, the vacancy rate was 10.0 percent in the second quarter, up from 9.9 percent in the first quarter. Respondents were also bearish on the outlook for rents. Almost one-quarter of respondents in this year’s survey (24.2 percent) said they expect rents to fall in the next...
Retail Real Estate Trends 2017, Part 4: Capital Sources Shying Away
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   84   0   0   0   0   0
There is some sense in the market that both debt and equity capital is becoming less available for retail properties than 12 months ago. On the equity side, 31.7 percent of respondents answered that it is less available while 36.5 percent said debt was less available. A plurality (40.5 percent, equity; 38.4 percent debt), said the availability was unchanged. Only 18.1 percent said that equity is more widely available and just 14.5 percent responded that debt is more widely available. In terms of specific financing aspects, respondents, not surprisingly, expect interest rates to rise. Overall, 69.7 percent answered that they expected rates to go up compared with 30.0 percent that said they would stay flat and only 2.3 percent that said they would decrease. More than half of respondents (55.1 percent) also expect an increase in the so-called risk premium, the spread between the 10-year Treasury rates and retail cap rates. When it comes to loan-to-value (LTV) ratios and debt service coverage ratios, most respondents (55.4 percent and 53.2 percent, respectively) expect things to remain the same. Only 20.1 percent expect LTV ratios to rise and 24.4 percent expect them to fall. For debt service coverage ratios, nearly two-fifths of respondents (38.5 percent) expect an increase, while 8.4 percent expect them to decrease. Research Methodology: In July, NREI emailed commercial real estate professionals requesting participation in an online survey about retail real estate. Overall, the survey received 410 responses, half of whom identified as Owner/Partner/President/Chairman/CEO/CFO. In addition, 42 percent of...
Retail Real Estate Trends 2017 Investor
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   136   0   0   0   0   0
The relentless rise of online sales and mounting struggles of brick-and-mortar retailers are taking their toll on retail real estate. The results from NREI’s third retail real estate survey reveal that retail operators, investors and developers show a marked turn compared from the previous two years. Sentiments on the outlook for cap rates, occupancies and retail rents all turned bearish. And respondents see retail as having the dimmest outlook of any of the major property sectors. Register below to download a full PDF version of the Retail Real Estate Trends 2017 Report.    
How to get security in a modern real estate portfolio
News Canadian Real Estate Magazine   August 18, 2017   91   0   0   0   0   0
With geopolitical risks increasing and equity valuations looking stretched, more investors are implementing real estate investment strategies into their portfolios.Achieving decent returns and broad diversification is increasingly challenging in the modern investment landscape and it is of little surprise that more Canadians are boosting their exposure to real estate assets. “Because real estate does not move in tandem with other markets, real estate investments provide a prudent third facet of portfolio diversification beyond exchange-traded assets,” says George Lawton, CEO, North American Home Finance Inc. “Traditionally, investors have been able to choose from a variety of real estate investment vehicles ranging from residential income properties to real estate investment trusts (REITs), limited partnerships, syndicated mortgages and mortgage investment corporations.” These traditional investment vehicles have served investors well up until recently, but as the world and its economies changes, so too should the way people invest.In the modern market, it’s unlikely that these traditional strategies meet every investor’s specific requirements, risk tolerance and differing priorities. “In response to those needs, real estate bonds are evolving to provide more options with unique elements that expand the potential of real estate investment,” Lawton says.“SKYIRE’s next-generation real estate bonds provide growth participation as well as mortgage security.In addition to the rate of return on the bond, bondholders also benefit from the profits generated
LaSalle Investment Management’s Rich Kleinman Talks about the Outlook
 
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Canadian Real Estate StreetSmartREI   August 18, 2017   102   0   0   0   0   0
With the unemployment rate at 4.3 percent, the U.S. office market is enjoying a long expansion cycle[1]. A dramatic shift in workplace preferences, however, has changed the way office tenants use space and elevated their expectations about building amenities. These changes are driving office owners and investors to reposition older assets to compete with new office projects coming to market. NREI asked Rich Kleinman, managing director of research and strategy for LaSalle Investment Management, the fourth largest U.S. office owner with 47,644,390 sq. ft. of office space[2], how the current office market is impacting LaSalle’s assets and what changes the company is making to attract tenants with a young workforce to its office buildings. NREI: Which markets does LaSalle Investment Management focus on? Rich Kleinman: We invest nationally and are looking everywhere. We are buying in markets with upside, where construction hasn’t ramped up and where rents are still [below] our estimates of long-term trend rents growth in those specific markets. NREI: How has the recent job growth impacted occupancy across your company’s office assets?  Rich Kleinman: Every asset and market is different. Up until the last 12 months, demand has filled new supply delivered, but vacancy has flattened out over the last year. Demand is still positive and strong enough to fill vacancy in most buildings, but office has headwinds restricting absorption. For instance, open floor plans have higher density than traditional office space, with less space allocated per employee. Law...
The best way to invest money mid-long-term
News Canadian Real Estate Magazine   August 17, 2017   150   0   0   0   0   0
Real estate is the favoured investment vehicle, according to a recent study, beating out many other popular options. Real estate is king, according to a poll by Bankrate.com, with 28% of respondents in its latest Financial Security Index poll saying it’s the best choice to invest money for 10 years or more. “If you have a long time horizon, you will win in real estate,” Abhi Golhar, a real estate investor who owns and rents out single-family homes, said in the report.   Real estate investing beat out cash (23%) by a slight margin and the stock market (17%), gold (15%) and bonds (4%) by more significant margins. It should be noted that the results are based on American investors;however, considering how many real estate investors and home owners south of the border were burned in the wake of 2008’s recession, the results are very significant. They certainly point to long-term positive sentiment about investing in real estate. Still, real estate investment does have its detractors. “One study by professors at the London Business School found that housing returned only 1.3 percent per year after inflation from 1900 to 2011, while stocks tended to perform more than four times better,” Bankrate said of the study.“Homes are costly
Alberta housing sector resurgent thanks to Edmonton and Calgary
News Canadian Real Estate Magazine   August 17, 2017   150   0   0   0   0   0
With the petroleum-centric Albertan economy gradually making a comeback, the province’s real estate sector is growing more and more tempting for buyers and investors alike—and nowhere is this more evident than the resurgence in the Edmonton and Calgary housing markets, according to industry observers. “For both Edmonton and Calgary, there are great buying opportunities right now, but there’s no rush,” Real Estate Investment Network (REIN) CEO Patrick Francey told Next Home.“That’s the good news.You’re finding the properties that cash-flow in a single-family would have preferably come from basement suites.Anything that’s in the $400,000 to $500,000 range is still very strong, but ultimately, there are good opportunities to buy.You’ve got to look for the deals, but they exist.And there are cash-flow opportunities, especially in single-family uptown suites.” Culling data from the Canada Mortgage and Housing Corp.along with latest provincial information on employment, population, and wage growth, Next Home noted that Edmonton and Calgary properties currently offer the best returns for investors who “buy, hold, and rent”. Edmonton benefited from being hardier than other provincial markets, according to local real estate professionals “The Edmonton market has been a real head-scratcher the last little while,” according to Tom Shearer of Royal LePage Noralta Real Estate, Edmonton.“Investors keep asking me, ‘When is the big drop going to happen, so I can buy
10 Must Reads for the CRE Industry Today (August 17, 2017) | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 17, 2017   91   0   0   0   0   0
10 Must Reads for the CRE Industry Today (August 16, 2017) Aug 16, 2017 10 Must Reads for the CRE Industry Today (August 15, 2017) Aug 15, 2017 10 Must Reads for the CRE Industry Today (August 14, 2017) Aug 14, 2017 10 Must Reads for the CRE Industry Today (August 11, 2017) Aug 11, 2017
Considerations in Monetizing Retail Real Estate Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 17, 2017   135   0   0   0   0   0
It is no secret that brick-and-mortar retailers are facing unprecedented headwinds. The headlines are filled every day with the latest updates on faltering sales and diminished fortunes. In this tumultuous environment, the real estate these ubiquitous retailers occupy may be a critical resource in fending off the competitive onslaught. The c-suites of many retailers are populated by executives who rose through the operational ranks. They have a keen understanding of consumer behavior and extensive expertise in what it takes to attract shoppers to their stores. To them, real estate is where their brands sell sweaters, cheeseburgers or grocery items. In this respect, real estate has traditionally been viewed as an operating asset that needs to be in the right location and projects the appropriate brand image to potential consumers. Given the increasingly competitive retail environment, retail c-suite executives would be well-served to shift their thinking and begin viewing real estate as a financial asset rather than just an operating location. Whether the retailer owns or leases their real estate, there are financial strategies related to those locations that could help them weather the current storm.   Retailers that own much of their real estate have far more financial options. The starting point toward identifying the most appealing path is to conduct a thorough assessment of what the owned portfolio is worth. That figure typically centers on the value of the locations as ongoing operations. But with commercial real estate values now at all-time highs[1], the valuation analysis must be...
Millennials to heavily impact real estate
News Canadian Real Estate Magazine   August 17, 2017   156   0   0   0   0   0
Gen-Y is a massive cohort that is overwhelming interested in breaking into the real estate market – but will affordably challenges and impactful mortgage rules allow them to? “Facing challenges their baby-boomer parents never encountered, peak millennials are confronted with significant obstacles that vary depending on where they live,” Phil Soper, president and CEO, Royal LePage, said.“While finding employment in our largest urban markets, Toronto and Vancouver, is relatively easy compared to other areas of Canada, buyers face limited inventory and high home values in these regions.Where prices are more affordable, job markets can be more uncertain. “The pent up demand for housing from millennials is enormous, with only a third of this large demographic currently owning a property and an overwhelming majority desiring to be homeowners.” According to a new report from Royal LePage, the number of Canadians aged 25-30 is projected to increase 17% in 2021 compared to 2016.And that cohort will have massive purchasing power. “Whether they choose to buy or rent, peak millennials will inevitably shape the housing market due to their sheer volume,” Soper said.“We expect demand from this demographic to put additional pressure on entry-level housing and investment properties being used to supplement the limited inventory of purpose-built rental buildings.” The desire to own a home is strong among
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