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- Office tenants gobble up cheap Oakland buildings – San Francisco Business Times
Blanca Torres reports:
Terra Nova Trading Co. and the Greenlining Institute are the latest businesses and nonprofits to buy their own office buildings in Oakland.
During the past few years, several entities have snapped up historic, Class B real estate. Dane Hooks, a broker with Cassidy Turley, said the main driver is that prices are relatively affordable at close to $100 per square foot.
“Most of the owner/users have been nonprofits that see available Class B buildings as a great opportunity to own their own building and be blocks from BART,” he said.
- City: Odor from Sriracha chili plant a nuisance – San Jose Mercury News
LOS ANGELES—The maker of Sriracha hot sauce is under fire for allegedly fouling the air around its Southern California factory.
The city of Irwindale filed a lawsuit in Los Angeles Superior Court Monday asking a judge to stop production at the Huy Fong Foods factory, claiming the chili odor emanating from the plant is a public nuisance.
City officials say residents have been complaining of burning eyes, irritated throats and headaches and that some people have had to leave their house to escape the smell.
- Obama’s Quiet Bull Market Charges Past Reagan-Era Gains – Businessweek
Roben Farzad writes:
There is new evidence of how disproportionately Fed policy has helped wealthy institutional investors and investment banks. Private-equity giants fueled with tens of billions of low-rate dollars are, en masse, acquiring homes that people cannot afford to buy, turning around to renting them out at fat, leveraged margins. Blackstone (BX) is leading hedge funds, buyout shops, and real-estate investment trusts in raising $20 billion in Wall Street-arranged financing to purchase at least 200,000 homes to list for rent. The credit arbitrage is just too compelling for the institutions that can access it.
The flip side of the ledger is that it’s now harder for a median-income household to afford a median-priced home in all of the top 25 U.S. markets, according to Bankrate. Households can afford a home in only eight of the country’s 25 largest metro areas, down from 14 last year. While home prices rose on average nearly 16 percent over the past year, incomes rose by just 3 percent.
That may all be, but who else was going to restart the economy?
The Fed has a dual mandate to get employment up and keep inflation in check. It also only has so much power, only so many tools. It can’t force Congress to undertake needed fiscal spending.
Could it have done things differently in regulating the banks, in taking over the banks, in getting more money to Main Street and into consumers’ hands rather than Wall Street’s? Yes, but it would have been a huge battle with Congress to do any of that. Lobbyists would have been at every member’s door clamoring to stop the banks from having to bear the brunt of the banks’ own errors that caused the crash.
Anyway, at least the REIT’s are publicly traded. The big all-cash buyers have stimulated the market. Most of them are renovating the properties they’ve purchased, and maintaining them, and installing qualified renters. It may not be the best national approach, but it’s better than nothing.
What we need are more and better-paying jobs and plenty of new construction to increase supply to lower prices and to keep rents reasonable and affordable.
Renting gets a bum rap. There are clear advantages in renting for the right reasons. Not everyone is cut out to own. Not everyone’s job and other circumstances make him or her a suitable homeowner.
What’s your view?
- Sam Zell on Marriage, Multi-Family and Single-Family Real Estate – MoneyBeat – WSJ
Sam Zell’s interesting observation: David Benoit reports:
… Mr. Zell said the continued trend to defer marriage until later in life has proved a boon to apartments and condos across the country, and to his own company, Equity Group Investments. He called that “perhaps the most significant” factor in keeping multi-family as the strongest investing area in commercial real estate ….
- Testosterone Pit – Home – The Smart Money Denies They’re The Smart Money As They [Frantically] Sell Their Crown Jewels Before The Bubble Blows Up
The cynical pessimist, is he right?
… 2013 is shaping up to be a huge year for sellers: “Property-related IPOs, including REITs, real estate operating companies and mortgage trusts, have had their biggest year since 2004 by money raised,” Bloomberg reported, based on data it compiled.
Slightly higher interest rates, slightly less abundant liquidity, or an economy that might sink slightly deeper into its quagmire would pose serious risks to these highly leveraged projects. So the pressure is on for the Fed to keep the bubble going long enough to let the “smart sellers” unload their remaining shares at peak valuations and slip them surreptitiously via conservative-sounding mutual funds or ETFs into the portfolios, retirement funds, and 401(k)s of the working folks.
And the Fed, perhaps seeing its handiwork incomplete with this many IPOs and so much smart money up in the air, decided to abandon its taper considerations in September. It might keep printing money until the great rotation from private equity and hedge funds to retail investors and retirement funds has been accomplished. Once tucked away in these portfolios — we’ve seen how that worked in 2000 and 2007 — some stocks will decompose slowly, others will blow up rapidly, which is not to say that there might not actually be a winner in that group that will make patient investors some money years down the road. That one stock will then be held up as example of why all of this always works out if you just hang on to it long enough.
We don’t read the Fed that way. We think Ben Bernanke really thinks the economy can, and will, recoup value, not that we fully agree with how the Fed has been going about attempting to stimulate that into happening.
We think the 2007-8 crisis should have been handled the way the S&L crisis was before it.
- Apartment Trends Q3 2013 | ReisReports
Excellent food for thought: Reis VP of Economics & Research, Dr. Victor Calanog, writes:
… a lot of landlords are losing pricing power because rent levels have exceeded historic norms. All of our markets are boasting historic highs for rent levels. Asking and effective rents grew by 0.9 and 1.0 percent this quarter, respectively. It’s interesting to note that the quarterly year-to-date average for 2013’s three quarters is actually lower than that of 2012. We are seeing some kind of moderation in the ability of landlords to raise rents. What’s happening here? When it comes to a weak job market a lot of tenant wages haven’t risen all that much. And though a weak single family for sale housing market has forced a lot of households into the apartment market, one wonders, given the recovery of the housing market recently, whether there is going to be some kind of ebbing in demand for multifamily, at least for places like Buckhead or Northern Virginia.
What’s happening to markets overall are things are very tight for the apartment sector, but our outlook is that we expect vacancies to rise in the near term. We expect vacancies to start rising because of higher supply growth.
- RSA Replay: The Metropolitan Revolution – YouTube
It starts out slowly; but once Bruce Katz, vice president of the Brookings Institution, gets on a roll, it really covers lots of ground and gets the juices flowing.
One thing’s for sure, he has no visible signs of pre-dementia. Remembering all the questions asked of him and in detail was pretty impressive.
On Wednesday 30 October Bruce Katz, vice president of the Brookings Institution, described how innovation in cities and metropolitan areas is driving social, economic and political change on a national scale. The event was chaired by Matthew Taylor.
For more information about the event go to the RSA event page https://www.thersa.org/events/our-events /the-metropolitan-revolution-how-cities -and-metros-are-fixing-our-broken-politi cs-and-fragile-economy