National Cheat Sheet: Real estate industry braces for steel tariffs, Uber founder takes the reins of a real estate startup … & more

National Cheat Sheet: Real estate industry braces for steel tariffs, Uber founder takes the reins of a real estate startup … & more

Friday, March 23, 2018

Clockwise from top left: 80 acres at the Armed Forces Retirement Home in D.C. could be redeveloped, Sam Zell has harsh words for retail real estate, Chicago’s new flagship Apple store is for sale, and Travis Kalanick is driving into real estate.

Real estate industry braces for tariffs as steel prices climb
President Trump’s tariffs on steel and aluminum imports are already having an impact on the commercial real estate industry, as steel prices have climbed around 10 percent nationwide. Some projects are including a “steel tariff contingency” in their budgets, according to Paul Rohrer, a real estate partner at Los Angeles law firm Loeb & Loeb. Trump announced the 25 percent tax on foreign steel and 10 percent tax on aluminum earlier this month. [TRD]

Uber founder takes the reins of a real estate startup
Travis Kalanick, the founder and former CEO of Uber, is now the CEO of Los Angeles-based City Storage Systems, a startup that focuses on repurposing distressed real estate. His new fund, 10100, invested $150 million in the 15-person company. Under Kalanick, City Storage will focus on parking, retail and industrial properties that “will need to be repurposed for the digital era,” Kalanick wrote on his Twitter account. [TRD]

Fed raises short-term interest rates
The Federal Reserve voted to raise short-term interest rates by a quarter of a percent and it signaled that at least two more hikes would be coming later on this year. At new Federal Reserve Chairman Jerome Powell’s first meeting, the Fed decided to raise its benchmark rate to between 1.5 and 1.75 percent. [TRD]

Zillow begins charging builders for listings
Zillow Group has begun charging homebuilders and their agents in the Promoted Communities program for listings on its sites, including Zillow.com and Trulia, Inman reports. Homebuilders with more than 150 closings per year or more will be required to pay a monthly fee, which will vary by location. [TRD]

Retail real estate is a “falling knife” according to Sam Zell
Retail real estate is still a dangerous proposition — like a “falling knife” — Sam Zell, the chairman of Equity International Group and Equity Residential told Bloomberg. With more retail space per person than any other country, the United States has ended up with “an enormous number of obsolete shopping centers,” he said. Toys “R” Us, which recently announced plans to close all of its stores, used to thrive in those places, he pointed out. [TRD]

Reform of expiring EB-5 rejected by “moneyed” New York developers, Grassley says
Republican Sen. Chuck Grassley blamed “Manhattan real estate moguls” and their “moneyed interests” for rejecting a plan to reform and extend the EB-5 visa program for five years. In a series of tweets, the Iowa Republican said that he and Sen. Bob Goodlatte of Virginia worked out a “compromise” but it would not be included in the next federal funding bill. Grassley didn’t name names, but Related Companies and the U.S. Immigration Fund have lobbied against the reform package. [TRD]

MAJOR MARKET HIGHLIGHTS

Miami’s condo developers are waiting for the next cycle to build 
Developers are planning the next batch of supertall towers to be built in Miami, even as there’s more than four years’ supply of luxury condos for sale now. Top architects and attorneys are already being hired and sales teams are being assembled as the builders wait for the next cycle of development to begin. [TRD]

LA tower finds a tenant for penthouse offices after nearly three decades
A fellow developer will be the first tenant in the 15,000-square-foot penthouse office space at Indivest Inc.’s Center West tower in Westwood — nearly 30 years after its construction, CoStar reports. Hotel developer Irongate Capital Partners will lease the top spot in the 23-story building. The space sat vacant since the building was completed in 1990. [TRD]

Landlord to sell Chicago’s new flagship Apple store for an expected $170M
Walton Street Capital is putting Chicago’s new flagship Apple store up for sale, and the building could net them as much as $170 million. The 20,000-square-foot store on Michigan Avenue opened on October 20, about two weeks after Walton Street bought the property in a $360 million deal that included a 35-story office building next door. Apple has a 15-year lease on the location. [Chicago Tribune]

Military retirement campus offering 80 acres in Washington DC for development
The Armed Forces Retirement Home in northwest Washington, D.C., is planning to lease 80 acres of its 284-acre campus for a potential 4.4 million square-foot mixed-use development. The federal agency is consulting with JLL and the General Services Administration on the process. The remainder of the campus will remain as a community for retired military members. [Bisnow]

Houston’s real estate ready to build on strong job growth
Better than expected job numbers in the Houston area at the end of 2017 have the region poised for strong real estate growth, a report from local real estate valuation firm Deal Sikes & Associates found. Beating its initial estimates by 37 percent, the Houston region added 62,900 jobs in 2017, according to the Texas Workforce Commission. The strong economic activity should lead to single-family and multifamily home construction, the Deal Sikes & Associates report found. [Houston Chronicle]


Source: The Real Deal