Editors’ Weekly Roundup May 27 – May 31
With the Federal Open Market Committee scheduled to meet June 11-12 and with mixed signals around inflation and economic activity, news that offers a clue about the Federal Reserve’s current thinking will be of great interest. As a case in point, a report on the latest Beige Book survey from the Fed ranked at the top of the past week’s most-read stories on Connect CRE.
Fed Beige Book Cites “Rising Uncertainty and Greater Downside Risk”reported that although most of the central bank’s 12 districts saw a modest expansion of economic activity during the six weeks prior to the survey’s publication, conditions varied across industries. In particular, the Fed noted that commercial real estate activity softened during the period amid supply concerns, tight credit conditions and elevated borrowing costs.
Within CRE, one sector that has undeniably seen headwinds over the past few years has been office, and the second most-read story for the week ending June 1 provided an example. Comerica Bank Tower, one of Dallas’ tallest office towers, is now under the control of its former lender.
As reported in Slate Takes Over Comerica Bank Tower,the likely future of the 60-story office property is conversion to a mixed-use destination. In executing on that plan, the new owner, Slate Asset Management, will receive assistance from Stream Realty Partners.
The Wall Street Journal reported last week that the City of Chicago is implementing the most generous incentives program in the U.S. to developers looking to reposition downtown office buildings for residential use. Connect CRE’s third most-read story of the week bore out that thesis.
Chicago City Council Approves $158M for Downtown Projectsreported that two office-to-residential conversions totaling 571 apartment units will receivetax-exempt housing revenue bonds to aid in financing. Two other office towers are expected to receive similar assistance.
However, Chicago is hardly unique in repurposing surplus commercial properties into residences. According to a RentCafe report that was the basis for the past week’s fourth most-read Connect CRE story, California Has 14K Apartment Conversions in the Pipeline.
Not surprisingly, Los Angeles leads the state in terms of conversion projects in the pipeline. Somewhat more surprising is that it now leads the U.S. as well, knocking Manhattan and its older-than-average office stock into second place.
On the subject of replacing the old with the new, the top five for last week was rounded out with the news that the first Buc-ee’s family travel center will give way to the largest to date. Titled First Buc-ee’s to Be Replaced by Newer, Bigger Store,the story reported that the new Buc-ee’s in Luling, TX will span 75,000 square feet. Launched in 2003 with the original Luling store, the chain now operates about 50 locations across Texas and eight other states, primarily in the South.
Mailing on Saturday, and therefore beyond the scope of this weekly roundup, the latest edition of Weekender is highlighted by a story that looks at change and evolution more broadly. It’s derived from a CBRE report titled ‘‘Shaping America’s Cities,” and if you’re not already receiving Weekender, you can sign up for it here.