Clockwise from top left: How corruption dogs Manhattan developments, a Turkish company accidentally ‘owns’ Grand Central, residential rents climb in Bay Area and a Miami development fights for its life in court.
Real estate funds just raised the most cash in a Q1 since 2008
Between January and March of 2018, $33 billion in new private real estate funds closed across the globe, a new report from research firm Preqin finds. That total is the largest first-quarter volume in a decade. The firm noted that it “expects these figures to rise up to 10 percent as more information becomes available,” adding that the first quarter total could eventually best the record $35 billion raised in the first quarter of 2008. [TRD]
Mortgage rate increases add substantial costs to homeowners
The average monthly mortgage payment is up 13 percent as of last month compared to the year before, Realtor.com data cited by the Wall Street Journal shows. Those rising rates pencil out to a $241-per-month increase on homes in the top 10 percent of the market and a $168-per-month increase across the board. Last month, in the first meeting chaired by new Chairman Jerome Powell, the Federal Reserve raised rates by a quarter of a percent to between 1.5 and 1.75 percent. Four additional quarter-percent increases are expected this year and three next year. [TRD]
Homeownership too expensive for growing number of Americans
More Americans feel that homeownership is out of their reach, according to a survey from Freddie Mac. Sixty-seven percent of respondents said they simply don’t have the money, up from 59 percent in 2016. Renters said they were better off financially, but not enough to keep pace with rising home prices. The Wall Street Journal pointed out that the numbers were collected in January and likely don’t reflect how the new tax bill further pushed people toward renting. [TRD]
MAJOR MARKET HIGHLIGHTS
Corruption and price gouging dog Manhattan developers
The web of subcontractors who help craft the New York City skyline regularly overbill their clients, often bilking for something like seven dumpsters when they just used four. Alone, it’s hardly noticeable, but taken industry-wide, the costs add up. Some of the city’s top general contractors have racked up millions in fines and penalties. To stop it, “the industry as a whole needs to own it, which it hasn’t done,” an ex-prosecutor said. [TRD]
30 Rock and Grand Central accidentally ‘owned’ by Turkish food company
A decade-old clerical error accidentally ceded ownership of New York’s famous 30 Rockefeller Center and Grand Central Terminal to a Turkish food company, the New York Post reported. The mix-up sprouted from Campbell Soup’s sale of its company Godiva, which has branches in both landmarks, to Istanbul-based Yildiz Holdings. Yildiz later filed tax documents saying it owned the buildings rather than just the shops within them. Thousands of dollars in bills from the city keep getting sent to Yildiz and have gone unpaid, the Post reported. [TRD]
Chicago industrial market surges forward
Chicago’s industrial sector has climbed into the ninth place of the nations most desirable markets, jumping six spots from the year before, according to Marcus & Millichap’s 2018 North American Investment Forecast. The demand is driven by a need for warehouse space in suburbs near expressways and the redevelopment of other industrial spaces for other uses. Average asking rents are expected to rise to $5.74 by the end of 2018, the report found. [TRD]
Bay Area residential rents climbed nearly 50 percent since 2010
The Bay Area saw the highest rise in multifamily rent of the nation in the past eight years, Bisnow reported. San Jose spiked at 51.1 percent with San Francisco at 48.6 percent. “These are pretty solid economies relative to some other places and some of these have really solid economic growth and job production,” an economist said. Areas up the west coast saw rises as well, like Seattle which is up 43.6 percent with rents averaging about $1,725. [Bisnow]
Veterans Affairs is looking for a developer for its massive LA housing project
The Department of Veterans Affairs is looking for a developer to finance, build and run a housing facility in West Los Angeles. The developer would potentially build more than a 1,000 housing units and then lease the land free of charge from the department. The project is part of its broader redevelopment master plan of the area. The VA will present its plan and take public comment on April 26. [TRD]
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