10 Must Reads for the CRE Industry Today (June 19, 2017)

MarketWatch asks if San Francisco is facing a bubble. Co-working spaces begin to take off in suburban office buildings, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

1. Everyone’s Asking San Francisco: Can You See a Bubble if you’re in a Bubble? “The spreading grip of the technology sector on the San Francisco Bay Area means the boom reaches to every service sector that well-paid techies consume. But what that really means is that when a tech boom becomes a bubble, it’s a real-estate bubble, a restaurant bubble, a luxury-vehicle bubble, even a public-services bubble, writes Charles Hugh Smith.” (MarketWatch)
2. CoWorking Spaces Spread to the Suburbs“Communal co-working office spaces such as the ones offered by shared-office giant WeWork Cos. are red hot in big U.S. cities like New York. Now they are making inroads in the New Jersey suburbs. Co-working startup Vi Coworking LLC opened a site in June at a redevelopment project at Fort Monmouth, after finding success with a 5,000-square-foot co-working space it launched a little over a year ago at the Bell Works redevelopment.” (Wall Street Journal, subscription required)
3. Commercial Mortgages: Commercial Real Estate Values Are Peaking “Much like one of Tennessee’s state songs ‘Rocky Top,’ commercial real estate values are peaking and it is a little rocky at the top. It is not uncommon to read a headline reporting surging stock, gold or bond prices while simultaneously reading about investors’ fear that a great drop off is imminent. The same is true of commercial real estate. The more values surge, somehow, there is greater fear that a cliff is right around the corner.” (Richmond Times Dispatch)
4. Office Oversupply Looms, but Global Economies Look Solid, Commercial Real Estate Economist Says “As the world’s economies rebound, developers have embarked on a construction spree that will create a “scary” amount of office space, says Kevin Thorpe, global chief economist at commercial real estate brokerage Cushman & Wakefield. Some 700 million square feet of office space is under construction worldwide, and Thorpe fears an oversupply. ‘This massive wave of supply is absolutely going to create pain in the world’s office sector,’ Thorpe said Thursday at the National Association of Real Estate Editors’ conference in Denver.” (Chief Investment Officer)
5. Architect Rafael Vinoly Talks About 432 Park Avenue, New York “Architect and former Wallpaper* Awards judge Rafael Viñoly worked with the developer team, Macklowe Properties and the CIM Group, to produce the design for an impressive 96-story high slender structure, featuring elegant 10ft by 10ft square windows. In this short film (below), Wallpaper* catches up with Viñoly in his studio in New York to hear the thinking behind New York’s tallest skyscraper—as well as the tallest building in the Western Hemisphere—behind One World Trade Center.” (Fortune)
6. 3 Big Reasons Why Amazon Needs Whole Foods “Amazon has been trying unsuccessfully to break into the grocery industry for 10 years. It launched AmazonFresh in Seattle in 2007 to see if it could persuade consumers to buy bananas online the same way they buy toothpaste online. While AmazonFresh has expanded to Los Angeles and San Francisco, it hasn’t really caught on across the country.” (CNBC)
7. Women in Business Q&A: Heidi Burkhart, President and Founder, Dane Real Estate“Heidi Burkhart is the President and Founder of Dane Real Estate. Burkhart formed Dane, an affordable housing real estate brokerage, in 2008 when she was 26. Today the company has facilitated the closings in excess of 11,000 affordable housing units and over $1.5 billion in transactions. Dane has had tremendous success rehabilitating properties nationwide but focuses heavily on the New York City area.” (Huffington Post)
8. Can Airbnb Professionalize Without Losing the Personal Touch? “Airbnb was born under the banner of the “sharing” or ‘on-demand’ economy, and much of its immense brand cachet was built on travelers’ desire to ‘belong’ rather than just be tourists. But as the company works to standardize customers’ experiences across an array of different rentals, the company might be eroding some of the warmth that set it apart from traditional hotels.” (Fortune)
9. Tax Developments Could Place Chill on Real Estate Deal Flow “Commercial real estate deal makers are facing a potential tax change that could severely impact profits, and even place a chill on commercial real estate investment overall. Taxes on carried interest, the profits secured by general partners, have been stable at 20 percent since the 1990s. Now, there are proposed changes in the works that, if enacted, could see that tax raised to 39.6 percent, almost doubling the tax general partners pay on investment profits. Some fear this change could place a chill on deal makers’ willingness to make bold investments in new projects.” (Commercial Observer)
10. Queens Landlord Demands Tenants Prove Their Immigration Status or Face Eviction“Prove you’re a citizen — or get out. A letter from a Queens landlord to tenants of a Corona building raises the threat of eviction to anyone who can’t show they’re in the U.S. legally. The notice, sent to residents of all 23 apartments at the corner of 42nd Ave. and Junction Blvd. last week, demands each leaseholder appear at the building’s management office with photo ID, Social Security card, ‘proof of your status in US (Green card or Passport)’ and proof of employment.” (New York Daily News)