Saks Fills First Floor With Handbags in Makeover

Saks Fifth Ave. is taking its cues from Broadway and Hollywood. The retailer yesterday previewed a reimagined first floor of its flagship store in Manhattan a few days after the opening of L’Avenue at Saks — an offshoot of a Parisian eatery beloved by movie stars and other celebrities — on the ninth floor.

“As part of the remodeling, the entire ground floor is now a sprawling handbag emporium featuring 50 brands that run the gamut from a $45 Saks tote to an exotic $49,500 alligator top handle bag from The Row. There are also 14 brands new to Saks, including bags from Celine and Bottega Veneta. … Exclusive products, a very important draw for department stores, are also included in the selection, with 100 bags being offered only at Saks,” reports Mario Abad for Forbes.

“The 53,000-square-foot ground floor was previously the beauty department (now housed in the second floor) and fine jewelry (which was moved to the lower level last year). In addition, a new Instagrammable rainbow-technicolor escalator designed by Rem Koolhaas links the lower, main and second floors,” Abad adds.

But “moving beauty, a category that is soaring, upstairs while devoting more space to handbags runs counter to some industry trends. U.S. retail sales of luxury handbags rose 2.6% last year to $7.56 billion, down from 9.2% growth in 2014, according to Euromonitor International Ltd.,” Suzanne Kapner points out for the Wall Street Journal.

“Handbags aren’t the status symbols they once were,” Luxury Institute CEO Milton Pedraza tells her.

“He said they have been displaced by shifting priorities, as consumers spend more money on experiences such as travel, food and entertainment in addition to wellness regimes such as spa treatments, Botox and SoulCycle classes,” writes Kapner.

That said, experience is what the new Saks is all about.

“When it comes to luxury retail, ‘I believe that stores and the physical … [are] theater,’ says Marc Metrick, president of Saks Fifth Avenue. ‘You can’t [just] open your doors with handbags there and win because then you’ll lose to the Internet. We need to create an emotional connection with our customers in a way that only the physical can do,’”  writes Charisse Jones for USA Today.

“Metrick likened the choice between shopping digitally and visiting the evolving Saks flagship to seeing the Broadway phenomenon ‘Hamilton’ in person or merely experiencing [it] online. ‘It’s like if “Hamilton” was streaming on Netflix,’ he says, ‘I’d still go see it live on Broadway … I’d never say let me just download the soundtrack.’”

As for L’Avenue at Saks, the “lavish offshoot of a celebrity magnet in Paris makes department-store dining feel like an extravagance,” Florence Fabricant writes for the New York Times. 

“Actress Jessica Chastain (in Roland Mouret’s Fortana dress from the Resort 2019 collection), fashion designers Joseph Altuzarra and Waris Ahluwalia, supermodels Carolyn Murphy and Joan Smalls, Elle editor-in-chief Nina Garcia, Olivia Palermo and Oscar de la Renta’s co-creative directors Laura Kim and Fernando Garcia were among the guests who joined Saks Fifth Avenue president Marc Metrick and fashion director Roopal Patel on Thursday night to christen buzzy Parisian restaurant L’Avenue’s first U.S. outpost at Saks Fifth Avenue in New York,” Laurie Brookins writes for The Hollywood Reporter.

“The ninth-floor restaurant, in ivory and beige by the designer Philippe Starck, has a varied menu: soups, salads (many with avocado) and dishes like vegan vegetable curry, tiger shrimp, crisp duck, rigatoni with morels, and Dover sole, some with an Asian accent. The floor below is a lounge for cocktails and light bites like spring rolls, caviar and smoked salmon. It’s called Le Chalet, and looks as if it were transported directly from St. Moritz,” Fabricant reports.

“I usually put myself on a social hiatus the week before my show, but L’Avenue in Paris is like the centrifugal force of the fashion community — not only during a fashion week, but also for the fabric shows, the whole industry is there,” Alice & Olivia creative director and CEO Stacey Bendet tells THR’s Brookins.

Saks also recently announced that “Where Brains Meet Beauty,” a podcast hosted by Jodi Katz “featuring provocative conversations with beauty industry leaders,” will be recording monthly during live events on “Beauty on 2.” Saks opened the new 32,000-square-foot beauty space — “with a significant focus on experiences” — on the second floor of the flagship last May.

Speaking of experiences, New York Fashion Week kicks off this evening and runs through next Wednesday.

https://www.mediapost.com/publications/article/331583/its-all-about-the-experience-as-saks-fills-first.html

Mortgage Gift Letter: When Do You Need One?

Let’s say you’re ready to buy your first home — but your bank account isn’t. If you don’t have the down payment money, loved ones are allowed to help.

But you’ll need what’s known as a “mortgage gift letter.”

What’s a mortgage gift letter?

LDprod / Shutterstock
If you receive down payment money from a relative or friend, your lender will want to see a gift letter.

A mortgage gift letter is a form declaring that the down payment funds have been given to you as a gift.

It shows a mortgage lender that you’re under no obligation to return the money.

The lender wants to know that when you agree to make your monthly home loan payments, you won’t face the additional financial stress of having to pay back the donor. That could make you more prone to falling behind on your mortgage.

Mortgage lenders prefer that you owe on your house to them and no one else. A lender may require your donor to provide a bank statement to show that the person had cash to give you for your down payment.

The gift letter may allow the donor to avoid paying a hefty federal gift tax on the transfer. Without the letter, the IRS could tax the donor for up to 40% on the gift amount.

Mortgage gift rules and restrictions

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Mortgage gifting has several layers of rules.

Note that the tax agency puts other limits on money gifts from one person to another. In 2018, a family member can give you up to $15,000 a year without any tax consequences. The lifetime limit is $11.2 million.

Amounts exceeding the limits are subject to the up-to-40% gift tax.

For conventional mortgage loans, a down payment gift generally must come from a family member. Anyone in a special relationship with the homebuyer — such as godparents or close family friends — must provide evidence of the relationship.

When making down payments of less than 20%, gift-recipient homebuyers must pay at least 5% of the sale price with their own funds. The remaining 15% can be paid with gift money.

Down payments exceeding 20% may be paid totally with gift money.

Low-down-payment mortgages and gifts

The rules can be a bit different with low-down-payment mortgages.

For example, VA home loans, available to active members of the U.S. military and veterans, require no down payment. But the borrower may choose to make a down payment — and it can come entirely from cash gifts.

USDA mortgages, offered to homebuyers in rural and some suburban areas, also do not require a down payment. As with VA loans, USDA mortgages allow the option of making a down payment, and all of that money can come from gifts.

FHA mortgages offer down payments as low as 3.5% and flexible mortgage benefits. With an FHA loan, mortgage down payment gifts can come from both friends and family members.

Remember that any gift requires a gift letter to reassure your lender that you don’t owe the money!

https://moneywise.com/a/mortgage-gift-letter

‘Seniors Are to Blame for Housing Shortage’

Millions of senior citizens are staying in their homes longer than their predecessors in earlier generations, keeping homes off the market and making it more difficult for younger Americans to break into ownership.

According to an analysis from economists at Freddie Mac, 1.1 million homes have been “held off the market” by owners born between 1931 and 1941, and another 300,000 by those born between 1942 and 1947.

Another 250,000 homes are still being occupied by their baby boomer owners – those born between 1948 and 1958 – although most analysts believe there’s a big wave of boomer retirements ahead that may change the aging-in-place dynamic quantified so far.

Freddie’s economics team previously reported an overall shortfall of 2.5 million housing units across the country.

“We believe the additional demand for homeownership from seniors aging in place will increase the relative price of owning versus renting, making renting more attractive to younger generations,” Chief Economist Sam Khater said.

https://www.american-apartment-owners-association.org/property-management/latest-news/seniors-are-to-blame-for-housing-shortage-study-finds/

How accurate are Zestimates? Zillow awards $1M to trio for improving them

In Seattle, the typical Zestimate is off by 4.7 percent, which amounts to $35,000 on the median home. Data scientists from around the world competed to improve the algorithm and expect to get the median error rate down to about 4 percent.

Zillow’s estimate of a home’s value, called the Zestimate, can be powerful: Some homeowners track them like a stock, and when it gets to a certain point, they may decide to sell. Home shoppers gauge the estimate against the list price of a home. Others use it just to gawk at their neighbor’s home values.

But it’s far from perfect: In Seattle, the Zestimate is off by a median of 4.7 percent compared to the actual sale price, according to the company — a $35,000 difference on the typical house. Real-estate brokers have long complained that the numbers give sellers, in particular, a distorted view of their home’s true worth.

Now the Zestimate, that little number that appears at the top of every home’s Zillow page and updates daily, is in line to get more accurate.

On Wednesday, the Seattle-based company awarded a $1 million prize to the winners of a public contest to improve its algorithm. The winning team, three guys from Raleigh, Toronto and Morocco who teamed up despite never having met in person, came up with a way to beat Zillow’s own data scientists to a better estimate.

The contest started a year and a half ago with 3,800 teams from 91 countries and was narrowed down to 100 finalists last year. The teams were given seven years’ worth of data on a sample of millions of homes across the country, and were tested to see how closely their estimated values for each home matched up with the actual sale prices of homes that sold in the ensuing months.

Jordan Meyer, the American on the winning team, reduced his workload at his day job as CTO of an analytics company and poured about six hours a day into the contest, communicating with his teammates, Moroccan computer science professor Chahhou Mohamed and Canadian artificial intelligence startup founder Nima Shahbazi, on the messaging application Slack.

Meyer started by finding every data source he could — the exact longitude and latitude of houses could be used to determine the proximity to streets and therefore determine noise near the house. Slight differences in distance from a body of water could influence a home price by thousands of dollars. In the end each home had hundreds of different data points.

But the strategy that set them apart was trying wildly different algorithms and merging the ones that worked together to get the best blended average.

“It was extremely hard,” Meyer said in an interview. He called the process “relentless experimentation” and echoed Shahbazi, who said in a statement: “For every idea that worked, there were a hundred that didn’t work. But we kept going.”

Zillow has slowly improved its Zestimate from a median error rate of 14 percent when it started in 2006 to 5.7 percent when the contest began in mid-2017. It’s now down to 4.5 percent nationally (it’s higher in some cities and lower in others), and once the winners’ tweaks to the algorithm are incorporated, the company expects the error rate to dip to about 4 percent.

“We’re happy with the progress we’re making.” said Stan Humphries, Zillow’s chief analytics officer. “You’re going to get some way off. We do 115 million of these every day,” referring to the number of homes on Zillow with a Zestimate, “so yes, we get concerned when we’re off, and we’re committed to making them even more accurate. This is an important number. The implications of getting it right are really important.”

Humans are still better than machines. Homes nationally sell on average for about 2 percent less than the list price set by brokers, according to data from Redfin. Brokers have access to information that an algorithm often doesn’t — the Zestimate relies on publicly available data and voluntary input from homeowners, which can give an incomplete picture of a house.

“There are way too many factors for a certain algorithm to work,” said Sam Mansour, a managing broker with John L. Scott in Lynnwood. He said he constantly has to battle with clients who cling to their Zestimate. “I’ve been to homes and people say ‘my Zestimate is worth X amount,’ and I’m like, ‘no, no.’”

He said he’s also heard of homeowners who use their Zestimate, and the company’s one-year forecast of their home value, to justify how much they’d like to borrow against their home. (Zestimates aren’t used in official proceedings, like a home appraisal or a home-equity loan.)

Mansour said the biggest factor a computer can’t track is the emotional appeal of a home, which can vary wildly from buyer to buyer and is a primary driver in how much people offer. And certain attributes that get plugged into algorithms are going to be weighed differently by various buyers — a large lot might appeal to some, but to others, it just means extra yard work.

Sometimes Zillow is really off — the median error rate of 4.5 percent nationally means half of home values are wrong by more than 4.5 percent.

Zillow says about 1 in 8 Zestimates winds up being wrong by at least 20 percent. That includes the 2016 home sale made by Zillow CEO Spencer Rascoff — who sold his Seattle home for 40 percent less than his Zestimate. In some counties where public data isn’t great or there aren’t many homes, Zestimates don’t exist, or the median error rate can be above 10 percent.

Zillow is the most-clicked real estate site in the nation and was the first to offer a home-value estimator, but these days other websites like Redfin and realtor.com also offer their own home-value estimates.

The winners of the prize agreed to split their $1 million share evenly. As for what Meyer will do with his cut?

“I’ll be investing in real estate for sure,” he said.

https://www.seattletimes.com/business/real-estate/how-accurate-are-zestimates-zillow-awards-1-million-to-trio-for-improving-them/

Amazon’s Threat to Back Out Shocks NYC Real Estate

Bill Montana was schmoozing with real estate brokers Thursday at an industry event in New York, talking about the biggest deal in years: Amazon.com Inc.’s decision to build a major campus in Queens.

By the next morning the euphoria had evaporated. Reports the tech giant was reconsidering its plans amid a fierce public backlash sent a jolt through the real estate community that was pinning their hopes on a significant pickup in activity.

“You gotta be kidding me!” Montana, a senior managing director at brokerage Savills Studley, said when reached by phone Friday. “Amazon would be exceedingly foolish to actually pull out of this deal.”

After a highly publicized search for a second headquarters, Amazon in November announced it was splitting the expansion between the New York neighborhood of Long Island City and Northern Virginia’s Crystal City. The company touted upwards of 50,000 jobs that the deal would create, while the real estate industry salivated over prospects for massive office developments.

They didn’t account for Alexandria Ocasio-Cortez, the 29-year old freshly elected congresswoman, and other New York politicians who slammed the subsidies the city and state offered. That whipped up a political firestorm that may now be calling the deal into question.

“It would be somewhere between a terrible shame and a devastating loss,” said Michael Cohen, tri-state region president at brokerage Colliers International Group Inc. “It’s not the end of the world, but it’s a self-inflicted wound that will possibly send the signal to others that might have wanted to follow in Amazon’s footsteps.”

Citigroup Inc. said in November it would move about 1,100 employees from its One Court Square building in Long Island City to make room for Amazon. The building’s owner, Savanna, said at the time it had entered into a letter of intent with the tech giant to lease about 1 million square feet. Savanna founder Christopher Schlank declined to comment on Amazon’s reported reconsideration.

Euphoric Offers

“A lot of euphoric offers have come in for buyers that wanted to be in the area,” said Adelaide Polsinelli, a broker at New York City-based Compass. “People made serious bets on Amazon being there, and there’s not much of a local office market there right now.”

Polsinelli said she’s been contacted by about 20 new buyers showing interest in seeing properties in Long Island City. She said some owners raised prices as much as 20 percent after Amazon’s initial announcement, but expects values to be challenged if the company goes elsewhere.

Without a boost from Amazon, the number of condominium sales in Long Island City will probably slow, said Patrick W. Smith, a Stribling & Associates broker. Since Amazon announced its plans, homebuyers had signed 132 contracts in the neighborhood as of Feb. 3, his data show, up from 40 signed in the same period a year earlier.

“We have to expect that if Amazon did pull out of this deal altogether, that sales velocity might go back to the pre-Amazon number,” Smith predicted.

For now, people are trying to assess whether it’s all just a bargaining tactic. Amazon has used the threat of slowing down its growth to win policy concessions in Seattle, where it’s headquartered and employs tens of thousands of workers.

In May, when the city council was planning a vote on a new tax on large employers to fund homeless services, Amazon said it was halting work on one office tower and considering subleasing another space it intended to occupy downtown. After the threat, local officials scaled back the tax before passing it. Amazon and other area businesses then mounted an effort to overturn the measure at the ballot box. The city council scrapped the tax about a month later.

“The report is probably just a trial balloon being floated to scare people in New York to fall into line,” said Tom Stringer, who works on corporate relocations as a managing director at BDO Consulting. But, he said, “I can tell you definitively that numerous state agencies are watching this closely and are in contact with Amazon and are looking for a chance to poach it.”

https://www.bloomberg.com/news/articles/2019-02-08/-you-gotta-be-kidding-me-amazon-threat-shocks-nyc-real-estate

Amazon Reconsidering Plan to Put Campus in New York

Amazon.com Inc. executives are re-evaluating a planned campus in New York City, people familiar with the matter said, turning up the heat on local officials who have rallied opposition to giving billions of dollars in tax incentives to one of the world’s most valuable companies.

The discussions at Amazon have caused leading government officials in New York who support the project to worry that Amazon may abandon its plan to bring 25,000 jobs to Long Island City and $2.5 billion in investment, according to a government official.

Any change would be a stunning reversal after the company’s public yearlong search for a new headquarters drew bids from more than 200 locales across the country, courting the online retailing giant with billions of dollars in tax incentives.

Amazon executives are deliberating whether to delay some of the initial phase of investments to get the project started, according to one of the people familiar with the discussions. The internal talks haven’t progressed to deciding whether to relocate future jobs or the campus, this person said.

The recent change in conversation at Amazon accelerated after Monday’s nomination of New York state Sen. Mike Gianaris, a vocal opponent of the deal, to a state board that would allow him to veto the development plan, people familiar with the matter said. Mr. Gianaris needs to be approved for the post by Gov. Andrew Cuomo.

The governor and New York Mayor Bill de Blasio, fellow Democrats who have often clashed, agreed on wooing Amazon to New York with up to $3 billion in state and city tax incentives. On Friday, Mr. Cuomo reiterated his support for the deal for Amazon as he warned that local opponents could derail the project.

An Amazon spokeswoman said in a statement the company was working hard to demonstrate it could be a good neighbor with additional commitments such as computer-science classes and workforce training.

Amazon’s change in thinking was first reported Friday morning by the Washington Post.

In January last year, the company narrowed its list of possible sites for its second headquarters to 20 from 238 applicants, and spent months crunching the numbers.

In September, executives decided to split the campus in half and in November said would go to New York and Virginia. Virginia’s governor signed legislation approving its incentive plan for Amazon earlier this week.

Local officials in New York have questioned everything from the project’s impact on transportation to neighborhood gentrification and Amazon’s opposition to unionization.

Government officials working with Amazon in New York have seen the pace of progress slow, a person with knowledge of the process said. Officials are concerned the slowdown indicates a shift in company thinking, the person said.

“The drumbeat of opposition, even though it’s clearly not widespread, is making Amazon say, ‘Do we really need this?'” one government official said.

Members of the New York City Council have required Amazon executives to testify at two hearings on the proposed 4-million-square-foot Queens campus. Legislators used the proceedings to air concerns about development impacts and the incentive package. Another council hearing is scheduled for Feb. 27.

Other opponents include the Retail, Wholesale and Department Store Union — which is trying to organize workers at an Amazon warehouse on Staten Island — as well as U.S. Rep. Alexandria Ocasio-Cortez and Mr. Gianaris, both Democrats who represent Long Island City.

Mr. Gianaris has repeatedly said the current deal to lure Amazon should be scrapped. “If they want to threaten that they won’t come here without it, that’s their decision. But we shouldn’t allow ourselves to be extorted,” he said Friday.

Mr. Cuomo hasn’t said if he would approve Mr. Gianaris’s nomination to the state’s Public Authorities Control Board.

The governor this week has restated his support for Amazon before gatherings of business and civic leaders in Manhattan and on Long Island. The new campus will help diversify the state economy and create thousands of good-paying jobs, the governor said.

In a speech to a Long Island business group Friday, Mr. Cuomo blamed Democrats in the state Senate for jeopardizing the Amazon deal.

“It is a very small nucleus, and it’s a very small group of politicians who are pandering to the local politics,” Mr. Cuomo said. “It would be a tremendous loss.”

“The mayor fully expects Amazon to deliver on its promise to New Yorkers, ” Mr. de Blasio’s spokesman, Eric Phillips, said in a statement.

The company has recently battled with Seattle, where the city council passed a new homeless tax before reversing the decision. Amazon has slowed its development there to a crawl as a consequence of the political issues and hostile environment, according to a person familiar with the matter.

The vocal political critics in New York came as something of a surprise to Amazon executives, according to some of the people, although the company believes support among local residents is generally strong.

https://www.marketscreener.com/AMAZON-COM-12864605/news/Amazon-com-Reconsidering-Plan-to-Put-Campus-in-New-York-27985554/

Lehigh Valley Among Top Emerging Industrial Markets

With the national industrial market experiencing its longest growth mode ever—positive absorption for 35 consecutive quarters—a handful of rising stars have emerged, including Lehigh Valley. The market, located in northeast Pennsylvania, has taken a spot on Colliers International’s 10 emerging U.S. industrial markets to watch in 2019.

Lehigh Valley’s designation as an emerging U.S. industrial market for the second year came as no surprise to the real estate services firm’s local experts. “The market’s been expanding steadily and interest from occupiers has been growing steadily for the last five years,” Michael Zerbe, senior managing director with Colliers International, told Commercial Property Executive.

Experts’ predictions for the Lehigh Valley industrial market in 2018 came to fruition. Positive net absorption continued for the sixth year in a row, with 4.6 million square feet of occupancy gains. Additionally, in the face of 3.2 million square feet of new additions to the inventory, the overall vacancy rate was just 4.5 percent.

Location plays a major role in the Lehigh Valley industrial market’s success. The area is within easy reach of numerous logistics hubs. It’s roughly an hour’s drive from Philadelphia International Airport, one of the U.S.’s 20 largest cargo airports and is served by Lehigh Valley International Airport, which has been ranked the fastest-growing cargo airport in the country. Lehigh Valley is in close proximity to Interstate 78 and the New Jersey Turnpike, as well as the ports in New Jersey, New York, Philadelphia and Wilmington, Del.

“We’re Inland Empire East,” Zerbe stated, comparing Lehigh Valley to one of California’s top industrial markets. “California is about product coming in and we’re about it going out. We’re closest to one of the greatest population densities in the country. We can service New England better than Jersey because we don’t have to circle around New York City.”

Lehigh Valley continues to have appeal for users and investors alike. With options for expansion and a premier position for reaching customers, the market has an increasingly strong configuration of large retailers, wholesalers and third-party logistics providers.

As for investors, they remain attracted to the ongoing demand for industrial product, as well as the yield opportunities. The market closed 2018 with 4.4 million square feet of product under construction. And there’s more to come, although developers will face greater competition as available land sites dwindle. As a result, Colliers expects builders to begin pursuing the redevelopment of older facilities and predicts that the geography of the Valley will expand to accommodate additional development projects.

With Lehigh Valley flying high on the radar of industrial property users and investors, Colliers believes the area will remain in growth mode this year. “Lehigh Valley is now roughly 67 million square feet in market size and has been growing at 8 percent per year. And there’s been a lot of construction and absorption—20 million square feet over the last four or five years,” Zerbe said. “There’s no reason to think that trend is going to slow. We expect similar growth patterns.”

https://www.infabode.com/hubs/general-us-industrial-market/hub_posts/91579