It’s hip to be cheap as hotels democratize design

If you haven’t visited a college campus, secondhand store or seen “Crazy Rich Asians,” in which one of the central characters possesses a Jamba Juice freebie card, you may not have heard: Thrift is cool. In hospitality, that spirit has worked its way from Airbnb mania to spinoff hotel brands and independent properties that promise the travel equivalent of fast fashion.

“Cheap chic is in,” said Chekitan Dev, a professor of marketing at Cornell University’s School of Hotel Administration and the author of “Hospitality Branding.” “The cheap chic hotel brand trend is in line with tiny houses and other minimalist lifestyle trends that are sweeping the country.”

Among new hotel introductions heeding the thrifty hip movement, InterContinental Hotels Group just launched Avid, a new brand featuring well-equipped gyms, Chobani yogurt and Kind granola in the breakfast buffets, and rates from $80. The stylish London-based Hoxton hotels made their American debut this month with the Hoxton, Williamsburg in New York, with three restaurants, a rooftop lounge and bed linens from the Brooklyn label Dusen Dusen in $159 rooms. The style-focused consortium Design Hotels recently introduced a “luxe for less” collection with rooms under 200 euros, or about $233.

Bargains, of course, are relative to markets and perceptions. The hotel analytics firm STR identifies the average daily rate (known as A.D.R.) at hotels in the top 25 markets in the country over the past year as $130. That averages out places like New York, where annual A.D.R. is $240, along with Detroit at $104.

The democratizing-design trend dovetails with the rise of millennial travelers.

“At an early stage of their travel cycle, millennials have less money to spend and are extremely value conscious,” Prof. Dev said. “They will pay only for those items that give them pleasure, so boring design, bad technology and unnecessary amenities are out and thoughtful and minimal design, fast and free technology and useful amenities are in.”

But they’re not the only ones driving the trend, according to Richard Born, a principal at BD Hotels, which anticipated downsized rooms with its first Pod Hotel in New York in 2007. The five Pod Hotels in New York and Washington, D.C., draw travelers of all ages who tend to share an interest in style.

“It’s about price, but it’s not just about price,” Mr. Born said. “It’s about price, style, design and experience.”

Source: Unscripted Durham

Unscripted Durham

Thrifty Brands

Challenged by Airbnb, major hotel groups have been expanding their vertical portfolios downward on the price scale and introducing more updated affordable brands. In addition to Avid, newcomers include Moxy Hotels from Marriott, which embraces a party spirit. At the new Moxy Chicago Downtown, for example, the front desk is a bar, and rooms that look into other rooms across a courtyard come with message boards to communicate things like “Meet me in the lobby” to the voyeur across the way (rooms from $170).

The Dream Hotel Group introduced the playful Unscripted brand with its first Unscripted Durham in Durham, N.C., in a former 1960s-vintage motel with a rooftop pool and bar (from $129). It plans future openings in Belize and Mexico.

In Israel, Brown Hotels spun off the free-spirited the Dave — Son of a Brown in Tel Aviv, which recently hosted a tattoo artist pop-up shop (from $125). In Japan, Hoshino Resorts launched Omo earlier this year with minimalist design (from about $45).

Source: Hotel Eleven Austin

Tiny Rooms

Aiming to attract diverse travelers, some hotels offer a few tiny rooms at substantial savings.

Among 14 rooms, Hotel Eleven in Austin, Tex., offers two 230-square-foot “crashpads” starting at $159.

“When people come to Austin, they don’t really want to spend time in their hotel rooms,” said Mark Vornberg, the hotel’s co-owner and architect. “The crashpad was developed as a place to sleep. It still has to have a great bed and a great shower, but it doesn’t need a living room. The city is your living room.”

When the 612-room Moxy Times Square opened in New York last year, it introduced 19 crash pad rooms for $99 each (others from $149). The 120 square-foot crash pads can only be ordered from the menu of the rooftop bar, Magic Hour, after 11 p.m.

“Our team anticipated that many of our rooftop patrons would like to ‘take the elevator home,’ keep the party going and crash downstairs,” wrote Mitchell Hochbert, the president of Lightstone, which developed the hotel, in an email.

A hotel with a luxe-to-less price range may also better serve groups like wedding parties, where budgets can vary. The East Austin Hotel, opening in November with a courtyard pool, restaurant and rooftop bar, will house 75 rooms, including 13 “cabins,” or rooms with double beds and shared bathrooms on a single floor, starting at $99. The highest-end poolside suites start at $299.

“It’s all in one facility because the person that travels in a cabin this year may in fact want a poolside cabana next time,” said Jeff Trigger, the founder and president of La Corsha Hospitality Group, which owns the East Austin. “The people that are going to stay in our place want that eclectic style. They’re not coming to be in an environment where everybody is the same.”

Phoenix Hotel, San Francisco

Bargains by Design

A bargain in Jackson Hole, Wyo., in ski season, let alone a deal with decent design, is a winter unicorn. When I visited last January, rates at the slope-side Four Seasons Resort were $800, but in town, the 50-room Anvil Hotel, a newly redesigned 1950s motel, came close at $174. Double iron beds were dressed in Woolrich blankets and guests gathered around the rustic lobby’s wood-burning potbelly stove.

“We realize there are more and more travelers out there who can’t afford luxury but are looking for experiences that are in harmony with the environment in which they exist and those travelers shouldn’t be deprived of good design,” said Erik Warner, the lead partner at Filament Hospitality, which owns the Anvil. “You can provide good design without spending a lot of money.”

In many cases, vintage roadside motels have provided hoteliers affordable properties with interesting midcentury bones to spruce up. The hotelier Liz Lambert did her first, the Hotel San Jose in Austin, nearly 20 years ago. Her newest, the Phoenix Hotel in San Francisco, a former 1956 motor court lodge, originally renovated in the late 1980s and popular with touring musicians, plays on its recent past with vintage concert posters in its 44 rooms and a lobby modeled on a recording studio (from $185).

In Santa Ynez Valley in California, the Skyview Los Alamos — which started as the Skyview Motel in 1959 — reopened in April after a modern renovation brought wood floors, area rugs and vintage furnishings to its 33 rooms, some with outdoor showers and fire pits overlooking its vineyards.

Many refashioned motels don’t intend to be the destinations that many resorts aim to be. Built in 1963, the Astro in Santa Rosa, Calif., had fallen into disrepute when Liza Hinman and her partners, who also own the nearby restaurant Spinster Sisters, decided to buy it, renovate it in midcentury style and reopen the 34-room motel last year. Keeping the rooms affordable — they start at $156 — set the property apart.

“The hotel options in Sonoma County skew heavily to the luxury market,” said Ms. Hinman. “People coming to Santa Rosa for cycling or touring the microbreweries or for weddings, they didn’t necessarily want all the luxury. They wanted a great, clean, functional, fun place to stay while they went about their vacation.”

https://www.cnbc.com/2018/09/28/its-hip-to-be-cheap-as-hotels-democratize-design.html

For Multifamily, ‘This Is What People Care About,’ And It’s Not Amenities

When it comes to multifamily, whether baby boomer or millennial, top-of-market or affordable-only renters, they all crave the same major amenity: connectivity.

“Connectivity is really the main thing you need to be thinking about in the next generation of our products,” Gables Residential Chief Operating Officer Cris Sullivan said during Bisnow’s Multifamily Annual Conference Southeast last week. “When people come into leasing offices, what [do] they care most about? They’re walking around with their cellphones to see if they get a signal.”

Sullivan was part of a host of industry experts at the W Hotel Atlanta for the conference, where conversations ranged from amenities and renter perks to the struggles to cap construction costs and develop more affordable housing.

Amenities have become the weapon of choice on the front lines of luring renters to shinier, newer apartments fetching record rents. More than 900,000 new apartment units have delivered across the country in the past three years, the highest rate of new development since the 1980s. In Metro Atlanta alone, developers are competing to fill 9,000 new units this year.

The amenities arms race has led to features like terraced common rooms, specialized gyms, spas for dogs, and coworking facilities to attract millennials and baby boomers alike.

But despite that, some panelists said if you don’t have fast, reliable internet on the property, those amenities will be all for naught.

“That is what people care about,” Sullivan said. “They moved in, and [if] they can’t get high-speed internet and they can’t get connectivity, it really doesn’t matter what else you have in that building.”

RADCO Cos. CEO Norman Radow said the other critical amenity is common spaces. Renters pay attention when evaluating apartments to rooms where they can work and socialize.

“No one calls our leasing office and asks how high are your ceilings,” Radow said.

Mill Creek Residential Senior Managing Partner Chad DuBeau said those common area amenities need to have a feeling of being home for the renter, and be spaces that compel residents to use them. After all, the average cost to develop an amenity space is around $20/SF, DuBeau said.

“It’s not much about size anymore, but more about quality,” he said. “When you walk through that door, you need to be presented with a home.”

Other panelists spoke of how package pickup rooms are becoming critical and a growing user of space. Iotas Vice President Chad Summers said that there will need to be a change at some point where Amazon and other online retailers can deliver product right into the renter’s unit instead of a central storage area.

“Then you say to yourself, ‘Well, that is kind of creepy, letting a stranger into your room.’ And then I say, ‘Has anybody taken Uber?'” Summers said. “Because whether or not you have picked up a hitchhiker previously, now you’re letting strangers in the back of your car, or you are a stranger getting into the back of someone else’s car.”

https://www.bisnow.com/atlanta/news/multifamily/amenities-affordability-and-gen-z-among-the-concerns-facing-multifamily-93224

Compass, Now With Commercial Unit, Valued At $4.4B After Series F Round

Brokerage Compass is now worth $4.4B after a mammoth funding round led by SoftBank’s Vision Fund and the Qatar Investment Authority.

The firm raised $400M in a Series F round, Bloomberg reports. It is going to use that money to branch into other cities around the country and world, the firm told Bloomberg in a statement.  Wellington, IVP and Fidelity also participated in the deal, according to The Real Deal.

Compass has now raised a total of $1.2B and is planning to expand aggressively, according to the publication.

Compass, which was founded six years ago, launched its commercial division this summer. It has been on a hiring spree, picking up several big names in the residential and commercial brokerage world.It hire d former Eastern Consolidated Managing Director Adelaide Polsinelli to launch its investment sales division in August. Fellow Eastern alum Robin Abrams and her team — known as Abrams Retail Strategies — is building the firm’s commercial leasing and advisory services.

Compass also acquired Pacific Union International, a California-based brokerage this summer.

“Real estate is the largest asset class in the world,” co-founder Ori Allon said in a statement. “We are excited to bring Compass technology to international markets.”

https://www.bisnow.com/new-york/news/capital-markets/compass-valued-at-44b-after-series-f-round-93327

Look Out, WeWork: Landlords to Cut Middleman, Offer Coworking Themselves

Miami has finally shed its reputation as a place for people to retire. In the past 10 years, the city has seen an influx of people with bachelor’s degrees, and an entrepreneurial ecosystem has been evolving.

The arrival of new-to-market tenants has created an appetite for coworking space as the companies settle in, commercial real estate experts at Bisnow’s Miami State of the Market event last week said.

JLL Managing Director Alan Kleber said that one-third of new-to-market tenants are coworking companies, and the number of concepts and total locations is only expected to grow.

“Coworking is a huge change in the market, but it’s not what it appears to be,” Crocker Partners Managing Partner Angelo Bianco said. “It’s just subleasing space. You have to be careful when you say that’s absorbed; it increases competition for small suites.”

Bianco said that in some of Crocker’s buildings, “We hire a manager to have our own operated coworking location. [Coworking companies] were smarter than property owners. Now, we’re going to steal their ideas. Why would we allow somebody to make a profit on our space?”

Cushman & Wakefield Vice Chair Brian Gale said that for now, WeWork’s brand remains a strong attraction — “WeWork leased an entire building, then months later, IBM took the space,” he said, referencing a deal in Manhattan — but landlords are starting to copy the model for themselves.

“We are starting to see owners say, ‘Why can’t we?’” Gale said.

“You have some very smart operators that, on other people’s dime per se, came in and focused on the experience,” Kleber said. “We were focused on bricks and sticks. The occupiers create value. Tenants aren’t looking at just the rate per square foot.”

Bianco said Crocker Partners, which manages a $2B portfolio of office properties, is improving the user experience and has tweaked its model for buildings, reserving 60% of space for traditional fixed leases, 20% for swing space and 20% for coworking.

“I can’t think of a building in Brickell that doesn’t have a coworking operator,” Gale said.

Miami’s office market has been booming, and the experts agreed that the economic outlook looked healthy, though there is always room for worry.

Greenworks Lending principal Andrew Zech, whose company encourages sustainability through lending incentives, said that people are wondering about where the economy is in its cycle.

“There’s angst among the development crowd,” he said.  “Are we on the edge of this tipping point? Are we going to reach a moment where cranes pause in the air because financing has dried up and shrunk margins?”

Bianco, playing the role of optimistic developer, said he doesn’t see that happening in Miami this time around.

“I’ve been doing this for 25 years, and there is nothing out there that I’m really scared about, which scares me,” he said. “It’s the unknown that’s going to cause a correction to come into play.”

https://www.bisnow.com/south-florida/news/office/miami-state-of-market-bisnow-93136

Housing prices are resegregating the Bay Area, UC Berkeley study finds

The Bay Area’s soaring housing costs are pushing poor people into neighborhoods where poverty and racial segregation are on the rise, a UC Berkeley study published Wednesday found.

As a result, the region’s low-income families — particularly minority families — are increasingly cut off from relatives, their children may face worse health outcomes and parents’ commutes to work can dramatically lengthen.

UC Berkeley researchers tracked migratory patterns and demographic changes across the region from 2000 to 2015. They found that movements caused by housing costs are intensifying racial disparities among neighborhoods.

Many neighborhoods in San Francisco, Oakland, Berkeley and Richmond saw declines in black population while farther-out areas of the East Bay and beyond saw increases. Neighborhoods such as San Francisco’s Bayview and Oakland’s flatlands lost thousands of low-income black households; places like unincorporated Cherryland in Alameda County and eastern Contra Costa County saw influxes.

Neighborhoods with low pollution, high-quality schools and other resources have become increasingly inaccessible for African Americans, according to the report. The study was a project by UC Berkeley’s Urban Displacement Project and the California Housing Partnership, a nonprofit that advocates expanding affordable housing.

https://ethanburrell.github.io/CCI_Movement_Map/Final_to_send/Rent_Demographics_map.html

Interactive Map by: Ethan Burrell and Eva Phillips

“The housing market today is operating in the context of an architecture of segregation and vulnerability that was baked into cities and regions over a period of many decades,” said Dan Rinzler, a senior policy analyst with the group. “It’s more or less moving the pieces around to the detriment of people of color and low-income communities.”

For instance, by 2015 in San Francisco, a low-income white family was three times more likely to live in a high-resource area than a moderate- or high-income black family, the research found. In Alameda County, low-income white households were seven times more likely to live in such a neighborhood compared to a wealthier black family. And in Contra Costa County, a low-income white family was 14 times more likely to live in a better-off neighborhood than a black family with moderate or high income.

“The disparities were shocking in some cases,” Rinzler said.

Miriam Zuk, director of the Urban Displacement Project, said the research was undertaken to look at granular, neighborhood-level changes. She said it was also important to break out various racial groups, rather than compare all people of color to white people.

“We talk about the reshuffling of people in spaces as if there are no consequences,” Zuk said. “There’s this trope of, ‘Oh, everyone is free to move where they want and maybe moving from a low-income area of the city to the suburbs is a good thing.’ What we see is that’s not happening. When people move, they are not necessarily moving to better-off places.”

Families that moved needed to use a higher share of their income to pay rent in their new home, the study found.

The analysis showed that across the Bay Area, a 30 percent increase in median rent in a given neighborhood corresponded with a more than 20 percent decrease in the number of low-income African Americans, Latinos, and Asians living there. The researchers found no significant relationship between rent increases and losses of low-income white households.

The research team drew from tract-level Census data, the annual American Community Survey and other sources. The study received funding from the San Francisco Foundation.

In three counties studied in the most detail — San Francisco, Alameda and Contra Costa — the researchers found “significant and uneven shifts” between 2000 and 2015 in the neighborhoods where low-income people of color lived. Demographic changes at the city level could be pinpointed to just a few neighborhoods where they were the most concentrated.

The Longfellow neighborhood in North Oakland, for instance, lost 400 low-income black households — more than any other in Alameda County — between 2000 and 2015, according to the study. Three East Oakland ZIP codes whose low-income Latino populations increased in that period saw the highest rates of child lead poisoning in the county.

In San Francisco, although the low-income Asian and Latino populations grew on an aggregate level, they decreased in historical cultural hubs such as Chinatown and the Mission.

The researchers found that Contra Costa County households that moved in 2015 tended to stay within the county, while those displaced from San Francisco usually settled somewhere else in the Bay Area.

But a large proportion of low-income families that moved out of their Alameda County homes left the region altogether: Black families often went to Stockton and areas of Contra Costa County, while Latino families primarily went to Tracy, San Jose and cities in San Mateo County, and Asian families typically went to parts of Santa Clara and Solano counties.

https://www.american-apartment-owners-association.org/property-management/latest-news/housing-prices-are-resegregating-the-bay-area-uc-berkeley-study-finds/

More 30 and 40 year olds need guarantors to rent in NYC

As New York City rents rise and wages remain mostly stagnant, it’s become even more difficult for individuals to afford to live here—at least not without some sort of help. That’s why if you are a student, recent grad, foreigner, or retiree, you’re likely to turn to a guarantor who can pay the rent in the event that you can’t.

However, these days, people seeking guarantors don’t fit the usual profile. Increasingly, people in their 30s and 40s are using guarantors when relocating to New York or simply moving to a new apartment.

From 2010 to 2017, NYC asking rents increased by 3.9 percent annually compared to a 1.8 percent annual increase in wages, according to StreetEasy’s 2017 Rent Affordability Report. And the Census Bureau reported this month that median household income reached $61,372 in 2017.

NYC landlords typically want renters who earn at least 40 times the monthly rent on an apartment. That means an individual earning the median wage can afford to pay just $1,534 per month—significantly below the median rental prices of $3,400 for Manhattan, $2,950 for Brooklyn, and $2,995 for Queens, according to the August 2018 Elliman rental report.

“We have seen a continuing increase in the issuance of guarantees by the Insurant Lease Guaranty Program in the last few years for this group of renters,” says Jeffrey L. Geller, vice chairman and chief operating officer of Insurent, a New York City lease guarantee company (and Brick Underground sponsor). This population may not have guarantors, who are required to earn 80 times the monthly rent and have excellent credit history, he adds.

Insurent’s criteria for U.S. individuals is a minimum annual income of 27.5 times the monthly rent, versus the 40 to 50 times required by NYC landlords, or cash or marketable securities of a minimum of 50 times the monthly rent and decent credit.

“We’ve definitely seen apartments double in costs from what they were 10 years ago and have not seen salaries double. People have to rely on the kindness of their family or sometimes even their bosses to get housing,” says Molly Franklin, a salesperson for Citi Habitats. “They’re making what used to be a livable income in New York, maybe $80,000-$90,000, but depending on the neighborhood, a studio can easily go for $2,500. Which is fairly high for a studio.”

What’s also changed is the increase in people who don’t have that IBM or Google job and who are working as independent contractors. “Proving income is doable, but the landlord wants to see one more step of security, a guarantor, because it’s projected income as opposed to an agreed-upon income,” Franklin says.

And these days, jobs can evaporate overnight. A couple of Franklin’s older clients needed a guarantor because they had decided to close their business, and this negatively affected their personal credit. Even though they had money because they were selling their house, their credit took a hit, “so it makes sense to have an ace in the hole if you can,” she says, adding that a colleague had an artist client in her late 50s/early 60s who also had to use a guarantor.

“It’s a broad swath of people now, it’s not just students anymore and not just international clients who haven’t built U.S. credit yet,” she says.

Some people using guarantors are in their 30s and are postponing owning because of economic conditions.

“Last year I saw a lot of parents contributing to down payments. This year, because of a lot of uncertainty, the [unknown] tax ramifications, and people waiting for the buyer’s market [to manifest], people have been holding off,” Franklin says, meaning their children will continue to rent a little longer.

Still, landlords are not backing down on their requirements, even in a softening market.

“In the multifamily segment, we’re seeing an issue with occupancy rates, where in certain metro areas [including New York], we’ve had to evict people for not paying rent,” says Jeff Holzmann, managing director of iintoo USA. “As a result, the management company imposed thresholds before offering a lease in the first place.”

Holzmann says that increasingly fewer people are able to meet the criteria of demonstrating annual income that is a certain amount times the monthly rent, so they’re asking for guarantors. “It’s a nationwide trend, but even in Brooklyn, we won’t give a lease unless an individual can meet the increased criteria.”

He adds that the leasing agents don’t like it because they make a commission each time they lease an apartment out, so the higher standards are inhibiting their ability to close deals. “But if you have tenants who can’t pay, you’ll quickly go out of business,” Holzmann says, adding that it’s an issue for people coming from other parts of the country.

“They’re professional, employed, yet overwhelmed by prices in New York City, which are very expensive,” he says. “Sometimes they’re squeamish about the demands. I’ve seen grown men literally cry when they have to produce all this evidence and guarantors. But in this city there are a lot of scammers and a lot of turnover, and you have to impose high standards.”

https://www.brickunderground.com/rent/older-tenants-needing-a-guarantor

Blackstone LP: looks to manage $1 trillion by 2026

Blackstone Group LP, the world’s largest manager of alternative investments such as private equity and real estate, said on Friday it could be overseeing $1 trillion in assets by 2026.

The firm currently manages $439 billion, a five-fold increase since it went public in 2007.

The ambitious target highlights how Blackstone, like many peers, is eager to take advantage of healthy investor demand for private equity and other forms alternative asset management.

There is, however, concern in the industry that fundraising will suffer when the next economic downturn comes, as it did in 2009 during the financial crisis.

“Now you may ask … have you tapped out? Are you hitting some ceiling? The answer to that is a definitive ‘no,'” Blackstone President and Chief Operating Officer Jon Gray said at an investor day event, the firm’s first since 2014. Gray was promoted earlier this year from head of Blackstone’s real estate division.

In a presentation, Blackstone said assets under management could hit $600 billion in the next two years or so, $800 billion in four to six years and pass $1 trillion in eight-plus years.

The outlook underscores comments by Blackstone Chairman and Chief Executive Stephen Schwarzman in July about the alternative asset management industry entering a fundraising “super cycle,” and his belief that Blackstone still has plenty of room to grow.

A growing asset base will boost the amount Blackstone earns from management fees, typically 1.5 percent to 2 percent of the assets it manages. These fees tend to be valued at a premium by investors because they are considered more stable than performance fees, Blackstone’s other main revenue stream.

In its presentation, Blackstone said it had a “clear path” in the next two years or so to achieve at least 50 percent growth in fee-related earnings.

Blackstone shares rose as much 5.1 percent, reaching $39.70, their highest since July 2015.

In January, Blackstone agreed to buy a majority stake in the Financial and Risk business of Thomson Reuters Corp, the parent of Reuters News, in a $20 billion deal. Reuters News will remain part of Thomson Reuters.

https://www.marketscreener.com/BLACKSTONE-GROUP-LP-51975/news/Blackstone-LP-looks-to-manage-1-trillion-by-2026-27298634/

Airbnb Wants SEC Rules Changed To Give Hosts Company Equity

Hospitality service Airbnb provides an online marketplace that allows users to rent out their houses, properties and spare rooms to travelers.

The service reported 29 million users in the U.S. and Europe in 2017, and 33 million so far in 2018, according to a study conducted by Statista.com.

What Happened

Airbnb sent a letter Friday to the Securities and Exchange Commission asking for clearance to grant equity to the company’s hosts, according to Axios.

This letter addressed the potential of revising a Securities Act rule to add the category of “gig economy worker,” since the private company is only able to grant equity to investors and staff.

Why It’s Important

If approved, the U.S. government would likely consider the tax implications of private stock transfer, on top of a revision of the Exchange Act, according to Axios.

According to the SEC website, Section 12(g) of the Exchange Act “establishes the thresholds at which an issuer is required to register a class of securities with the Securities and Exchange Commission.” Per the rule, an issuer is required to register a class of equity securities under the SEC if it has more than $10 million of total assets, or the securities are “held of record” by 2,000 or more people.

“Gig economy” positions have increased in prominence. According to an August Forbes study, 36 percent of Americans are employed in the gig economy — which amounts to 57 million workers.

What’s Next

Airbnb follows companies such as Juno and Uber that have also asked for revisions to SEC rules.

“Airbnb is a community-based company and we would be nothing without our hosts,” Airbnb CEO Brian Chesky told Axios. “We would like our most loyal hosts to be shareholders, but need these policies to change in order to make that happen.”

https://www.benzinga.com/sec/18/09/12390454/report-airbnb-wants-sec-rules-changed-to-give-hosts-company-equity

Blackstone investor day webcast

Investor Day held in New York on September 21 at 8 am. Weblink: https://event.webcasts.com/starthere.jsp?ei=1210642&tp_key=c16604f955

https://thefly.com/landingPageNews.php?id=2792225

Starwood Property initiated with an Overweight at JPMorgan

Starwood Property initiated with an Overweight at JPMorgan. JPMorgan analyst Richard Shane started Property Trustwith an Overweight rating and $23 price target. The analyst sees the company benefiting from its “superior funding costs” and resources from Starwood Capital Group.

https://thefly.com/landingPageNews.php?id=2793578

Amazon Reported Building Multistory Distribution Centers All Over US

True to form, Amazon is at the forefront of a new era of logistics. The e-commerce giant and most valuable brand in the world is working on opening several multistory distribution centers in the U.S., according to several reports.

Though no centers have been publicly confirmed as meant for Amazon, reporting across the country has connected the tech company to four nearly identical plans, each for a four-story warehouse totaling around 2.5M SF.

In the Milwaukee suburb of Oak Creek, Wisconsin, plans have been approved for one such distribution center on a 75-acre site in Ryan Road Business Park, which will also contain 47.2K SF of office space, the Milwaukee Business Journal reports. That facility, code-named Project Arrow until Amazon is announced as a tenant, will be developed by Hillwood Development. Hillwood is also the developer for the same sort of center in the Raleigh-area town of Garner, North Carolina, the News-Observer reports.

Amazon purchased a 64-acre plot in Landings Logistics Center in Bakersfield, California, through an LLC, and Kern County Administrative Officer Ryan Alsop confirmed that its planning a 2.5M SF center there as well, Bakersfield.com reports.

The Minneapolis-area town of Brooklyn Park, Minnesota, is getting a center of the same size, but no such confirmation has been given for the plan code-named Project Hotdish. The Minneapolis Business Journal reports that Amazon will be occupying that facility, which will be developed by Indianapolis-based Scannell Properties.

All four centers will employ between 1,000 and 2,000 people, and at least the Oak Creek and Garner facilities have received government subsidies for those jobs. In Garner, Amazon will immediately become the town’s biggest employer, surpassing the local school district that employs 800 people.

Modern distribution centers tend to require such high clearances and so much truck activity that multistory buildings have not made financial sense in the past, but in urban areas like Atlanta and New York where space is so tough to come by and access to the population center is so important, developers have started to make it work.

Amazon’s centers seem to be of a different sort, located as they are in suburban areas. The square footage and height are both greater than what has already been in the pipeline, in keeping with Amazon’s seemingly unending quest to be the world’s biggest force in retail and logistics.

https://www.bisnow.com/national/news/industrial/amazon-multistory-distribution-centers-planned-92978

Next big thing at Willets Point could be a large parking lot

Long-contested economic development site is supposed to sprout housing, but the city and developers filed preliminary plans to pave over it

Associated Press

Bunt: Delta may have found an alternative to Citi Field parking for contractors working on its new LaGuardia terminal.

The justification for razing a collection of small businesses in Willets Point, Queens, as part of an economic development project a decade in the making was that the land needed to be cleaned of its toxic soil and would better serve as a mixed-use site.

Earlier this year, however, the city and a development team that included the owners of the New York Mets drew up plans to use publicly owned Willets Point property for parking lots that would appear to benefit the Wilpon family’s baseball team and an unrelated renovation project at LaGuardia Airport. But the proposal would leave the contaminated ground beneath it untouched, official documents show.

The parking plan was never acted upon, although officials left open the possibility of pursuing it. Doing so would raise questions about the city’s priorities for the site, and it would mark a shift in what the land was supposed to be used for when it was rezoned in 2008.

New beginnings

In February, Mayor Bill de Blasio announced the city would go back to the drawing board after the state’s Court of Appeals struck down an earlier version of the Willets Point plan that involved building a shopping mall on parkland. The development team—The Related Cos. and Sterling Equities, the real estate arm of the Wilpon family—would build a 1,100-unit affordable-housing complex on 6 acres of city-owned property. A task force of elected officials and community stakeholders would come up with suggestions on what to build on the remaining 17 acres of public land.

“It’s time to jump-start Willets Point, and we are doing that by building more than a thousand homes for seniors and families struggling to make ends meet,” the mayor said in a statement accompanying the announcement.

But just a month later, the developers notified a state agency overseeing soil remediation at Willets Point that they planned to build parking within the area delegated to the task force, according to documents obtained by Queens filmmaker Robert LoScalzo through a Freedom of Information Law request and provided to Crain’s. A roughly 6.5-acre swath of city-owned land would be paved over with three lots housing 665 parking spots and a large open space.

The notification suggested that the lots would be used by Delta Air Lines, which is launching a massive undertaking to replace its terminal at LaGuardia. Finding a place for the airline’s contractors to park has been an issue ever since Delta’s terminal project was announced.

While Delta said in a public document last year that it had reached an agreement with the Mets to use Citi Field parking to fill the need, paving new lots in Willets Point would serve the same purpose. It would leave parking at the Amazins stadium untouched—a win for the franchise—and would corroborate reports from 2016 that officials were eyeing space in the Iron Triangle to aid the airport’s redevelopment.

“It is heartbreaking that hundreds of businesses were ejected from these 23 acres, and yet none of the promised benefits of doing that have come to pass after 10 years,” said LoScalzo, who is working on a documentary about Willets Point. “Instead it seems the city has drifted over to other priorities.”

Deal or no deal

The developers said they are focused on building the affordable housing, while Delta and the city stressed that there is no deal to build the interim lot.

The airline “is investing $3.9 billion to rebuild LaGuardia Airport, and as part of the construction, Delta is working collaboratively with the community to address parking concerns,” a spokesman said. “To date, no agreement has been reached with the city of New York.”

The administration said it is still open to the idea because it could alleviate congestion during the airport project and would not affect the timeline at Willets Point.

“Under no circumstances would the city be party to an arrangement that could delay or jeopardize the development of Willets Point,” a spokeswoman from the city’s Economic Development Corp. said in a statement.

Moving forward with the proposal would require submitting final plans to the state, a spokesman for the Department of Environmental Conservation said, and would likely prompt questions from community stakeholders about whether additional approvals would be needed and whether the parking lot would delay development in Willets Point.

The latter seems possible since the LaGuardia terminal is not expected to be completed until 2026. The task force is expected to submit its final recommendations this month.

Eugene Kelty, chairman of Queens Community Board 7, said he could support temporary parking at the site under the right conditions.

“My problem with the city of New York is their definition of temporary,” he said, citing an interim tow pound in northern Queens as an example. “Twenty years later, it’s still temporary.”

http://www.crainsnewyork.com/real-estate/next-big-thing-willets-point-could-be-large-parking-lot

WeWork tops JPMorgan as No. 1 New York tenant as coworking booms

WeWork Cos said it surpassed JP Morgan, the biggest U.S. bank, as the largest tenant of Manhattan office space, a milestone highlighting growing demand for flexible leases.

WeWork, a provider of co-work spaces with flexible leases that now has more than 50 locations in Manhattan, said in a blog post on Monday it signed a lease for 258,344 square feet at 21 Penn Plaza. The move makes it the largest private occupier of office space on the island with more than 5.3 million square feet.

JPMorgan, the largest U.S. bank by assets, has 5.2 million square feet, according to brokerage Cushman & Wakefield.

Flexible space accounted for 12 percent of Manhattan leasing activity in the first six months of the year, according to brokerage CBRE, and WeWork was responsible for about half of that as companies in search of extra space embrace coworking. Flex space providers sign long-term leases with a landlord and then rent the leased space to clients on a short-term basis.

Coworking’s appeal has become more mainstream across the United States, not just in New York. Mall operator Macerich Co in August announced a partnership with Industrious to roll out flexible workspaces in its portfolio of high-end U.S. shopping centers.

WeWork’s torrid growth has not gone unnoticed. Brookfield, one of the world’s largest property owners, plans on offering flexible space in most of the 1,000 office buildings it owns globally.

“Anybody that’s not thinking about it now and not doing it risks being road kill,” said Kevin Danehey, global head of corporate development at Brookfield Properties.

“From an owner’s perspective, this isn’t something where we’re just seeing this as a trend but as something that’s core to how we’re viewing the operation of our assets,” he told a Rethink conference about the future of the office two weeks ago.

https://www.marketscreener.com/JP-MORGAN-CHASE-COMPANY-37468997/news/JP-Morgan-Chase-mpany-WeWork-tops-JPMorgan-as-No-1-New-York-tenant-as-coworking-booms-27279967/

Freddie Mac Launches Lending Program for Affordable Housing

Freddie Mac has launched Non-LIHTC Forwards, a lending program intended to push the development of workforce-housing properties. The program is specifically geared toward affordable housing which isn’t subsidized with low-income housing tax credits. Freddie Mac VP Dave Leopold states that the program “helps borrowers manage interest rate risk.” A property is eligible for Non-LIHTC Forwards if at least 80% of its units are leased to tenants who earn less than 100% of their geographic area’s median income. Freddie Mac has already committed to issuing $150 million in loans as part of the program and it has an additional $80 million under application.

https://www.infabode.com/hubs/general-us-residential-market/hub_posts/77898?inf=n-qm5KLBgZy6dQ&utm_medium=email&utm_source=digest

Cal. Tops National Poverty Rate As Prime Demographic Plans ‘Exodus’ From State

Despite efforts by state legislators at creating a socialist utopia, California still has the highest poverty rate in the nation at 19%, despite a 1.4% decrease from last year according to the Census Bureau.

Poverty and income figures released Wednesday reveal that over 7 million Californians are struggling to get by in the second most expensive state to live in, according to the Council for Community and Economic Research‘s 2017 Annual Cost of Living Index.

And while California has a “vigorous economy and a number of safety net programs to aid needy residents,” according to the Sacramento Bee, one out of every five residents is suffering economic hardship – which is fueled in large part by sky-high housing costs, according to Caroline Danielson, policy director at the Public Policy Institute of California.

“We do have a housing crisis in many parts of the state and our poverty rate is highest in Los Angeles County,” she said, adding that cost of living and poverty is often highest in the state’s coastal counties. “When you factor that in we struggle.”

Silicon Valley residents in particular are leaving in droves – more so than any other part of the state. Nearby San Mateo County which is home to Facebook came in Second, while Los Angeles County came in third.

“They’re looking for affordability and not finding it in Santa Clara County,” said Danielle Hale, chief economist for realtor.com.

It’s not just housing prices driving the exodus, of course. Punitive taxes – more than twice as much as some other states, are eating away at disposable income. Nearby Arizona’s income tax rate is 4.54% vs. California’s 9.3%, while the new tax bill may accelerate the exodus.

As Michael Snyder of the Economic Collapse Blog pointed out in May…

Reasons for the mass exodus include rising crime, the worst traffic in the western world, a growing homelessness epidemic, wildfires, earthquakes and crazy politicians that do some of the stupidest things imaginable.  But for most families, the decision to leave California comes down to one basic factor…

Money.

Mass Exodus

As you may or may not be aware, we’ve mentioned the flood of various types of Californians fleeing the state for various reasons; be it wealthy families who want to keep more of their income safe from the tax man, or poor residents leaving the Golden State because they are being crushed by the high cost of living.

To that end, the Orange County Register notes a significant outmigration of people in their child-raising years – as the largest group leaving the state, some 28%, are those aged 35 to 44. 

According to IRS data from 2015-2016, the latest available, roughly half of those leaving the state make less than $50,000 per year, while roughly 25% of those leaving make over $100,000.

What did the OC register conclude?

Thanks to unaffordable housing, California’s moderate wage earners are going to have to leave the state, while only the wealthy and the impoverished residents will remain.

But the big enchilada in California — by far the largest source of distortion in living costs — is housing. Over 90 percent of the difference in costs between California’s coastal metropolises and the country derives from housing. Coastal California is affordable for roughly 15 percent of residents, down from 30 percent in 2000 and 30 percent in the interior, from nearly 60 percent in 2000. In the country as a whole, affordability hovers at roughly 60 percent.

…

Over time these factors — along with prospects of reduced immigration — will impact severely the state’s future. California is already seeing its population aged 6 to 17 decline. This reflects a continued drop in fertility in comparison to less regulated, and less costly, states such as Utah, Texas and Tennessee. These areas are generally those experiencing the biggest surge in millennial populations. –OC Register

And according to ULI, 74% of California millennials are considering an exodus.

Where to? 

As we noted in June, these are the top 10 California counties that people are leaving, and where they’re headed (via the Mercury News):

1. Santa Clara County

Out of state destinations: Arizona, Nevada, Texas and Idaho

In state destinations: Alameda, Sacramento, San Joaquin, Santa Cruz and Placer counties

2. San Mateo County

Out of state destinations: Arizona, Nevada, Texas and Washington

In state destinations: Alameda, Contra Costa, Santa Clara, Sacramento, and San Francisco counties

3. Los Angeles County

Out of state destinations: Nevada, Arizona, and Idaho

In state destinations: San Bernardino, Riverside, Ventura and Kern counties

4. Napa County

Out of state destinations: Arizona, Idaho, Nevada, Florida and Oregon

In state destinations: Solano, Sonoma, Sacramento, Lake and El Dorado counties

5. Monterey County

Out of state destinations: Arizona, Nevada, and Idaho

In state destinations: San Luis Obispo, Fresno, Santa Cruz, Sacramento and San Diego counties

6. Alameda County

Out of state destinations: Arizona, Nevada, Idaho, and Hawaii.

In state destinations: Contra Costa, San Joaquin, Sacramento, Placer, and El Dorado counties

7. Marin County

Out of state destinations: Nevada, Arizona, Oregon and Idaho.

In state destinations: Sonoma, Contra Costa, Solano and San Francisco counties

8. Orange County

Out of state destinations: Arizona, Nevada and Idaho

In state destinations: Riverside, Los Angeles, San Bernardino, San Diego and San Luis Obispo

9. Santa Barbara County

Out of state destinations: Arizona, Nevada and Idaho.

In state destinations: San Luis Obispo, Ventura, Los Angeles, Riverside and Kern counties

10. San Diego County

Out of state destinations: Arizona and Nevada

In state destinations: Riverside, San Bernardino, Imperial, Orange County and Los Angeles

https://www.zerohedge.com/news/2018-09-13/california-tops-national-poverty-rate-key-demographic-plans-exodus-state