Commercial Real Estate Week In Review

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Includes: DRA, DRN, DRV, FREL, FRI, FTY, IARAX, ICF, IYR, JRS, KBWY, LRET, NRO, PSR, REK, RFI, RIF, RIT, RNP, RQI, RWR, SCHH, SRS, URE, VNQ, WREI, XLRE
by: Llenrock Group

CRE Week-in-Review for March 19th-25th

Marriott Back in the picture as Starwood Accepts its Higher Offer: After a tumultuous couple of weeks for Marriott International's (NYSE:MAR) acquisition of Starwood Hotels & Resorts Worldwide (HOT), the international hotel change is back on board with a recent offer valued at $13.6 billion.

Macy's Adds Real Estate CEO to Board to Help With Property Plans: As the department store chain is looking to sell some of its flagship stores in cities such as Manhattan, San Francisco, Chicago and Minneapolis, Macy's Inc. (NYSE:M) named Four Corners Property Trust Inc. (NYSE:FCPT) CEO Bill Lenehan to its board. A few months ago, Starboard Capital urged Macy's to capitalize on its properties which the activist investor estimates to be worth a good $21 billion.

Texas is Still Booming, Despite the Oil Bust: Despite the recent big drops in oil prices, eight out of the 20 U.S. counties that gained the most population last year were located in Texas. So what's so appealing about the lone star state? Cheap housing and zero state income tax as well as as low corporate taxes and lenient regulatory environment.

Minimum Wage Increases to Cost Industrial Space Users: According to a recent report by CBRE Group, an average $1 increase in wages leads to a $1 million increase in total annual labor spend for 500-employee facility or an increase of $2.08 psf in annual rent for a 500k SF industrial building. Minimum wages have been on an incline in 17 states since the beginning of the year.

Tech Slowdown Seen in San Francisco's commercial-Property Market: The tech-hub of the U.S., which had the lowest metro office vacancy rate at the end of 2015, is now experiencing the highest level of office subleasing since 2010 which is usually a tell-tale sign of downturns in the past. As tech start-ups begin to dwindle in size (or evaporate altogether), the amount of available office space from subleases in San Francisco jumped 46% from the end of the third quarter.

Analyst Views Oversupply, Not Airbnb, as Bigger Potential Threat to U.S. Lodging Sector: While 2015 was a record year for hotel room occupancy, average daily rates and revenue per available room, the 14.2% increase in the number of rooms under contract and 16.7% increase in projects currently under construction since February 2015 threatens the health of the lodging sector. It's the age old story of a slowing demand and speedy supply growth.

Portland Area Apartments Command Record Price: It was reported yesterday that a private investor, represented by Marcus & Millichap, acquired the Barclay Square Apartments in Woodburn, Oregon for $6.27 million - a record high transaction price for an apartment in Woodburn.