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orbemnews · 3 years

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JPMorgan’s Chief Sees a Boom Coming Dear shareholders … The annual letter to shareholders by JPMorgan Chase’s chief Jamie Dimon was just published. The widely read letter is not just an overview of the bank’s business but also covers Mr. Dimon’s thoughts on everything from leadership lessons to public policy prescriptions. “The U.S. economy will likely boom.” A combination of excess savings, deficit spending, a potential infrastructure bill, vaccinations and “euphoria around the end of the pandemic,” Mr. Dimon wrote, may create a boom that “could easily run into 2023.” That could justify high equity valuations, but not the price of U.S. debt, given the “huge supply” soon to hit the market. There is a chance that a rise in inflation would be “more than temporary,” he wrote, forcing the Fed to raise interest rates aggressively. “Rapidly raising rates to offset an overheating economy is a typical cause of a recession,” he wrote, but he hopes for “the Goldilocks scenario” of fast growth, gently increasing inflation and a measured rise in interest rates. “Banks are playing an increasingly smaller role in the financial system.” Mr. Dimon cited competition from an already large shadow banking system and fintech companies, as well as “Amazon, Apple, Facebook, Google and now Walmart.” He argued those nonbank competitors should be more strictly regulated; their growth has “partially been made possible” by avoiding banking rules, he wrote. And when it comes to tougher regulation of big banks, he wrote, “the cost to the economy of having fail-safe banks may not be worth it.” “China’s leaders believe that America is in decline.” While the U.S. has faced tough times before, today “the Chinese see an America that is losing ground in technology, infrastructure and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals,” he wrote. “Unfortunately, recently, there is a lot of truth to this.” “The solution is not as simple as walking away from fossil fuels.” Addressing climate change doesn’t mean “abandoning” companies that produce and use fossil fuels, Mr. Dimon wrote, but working with them to reduce their environmental impact. He sees “huge opportunity in sustainable and low-carbon technologies and businesses” and plans to evaluate clients’ progress according to reductions in carbon intensity — emissions per unit of output — which adjusts for factors like size. Other notable news (and views) from the letter: With more widespread remote working, JPMorgan may need only 60 seats for every 100 employees. “This will significantly reduce our need for real estate,” Mr. Dimon wrote. JPMorgan spends more than $600 million a year on cybersecurity. Mr. Dimon cited tax loopholes he thinks the U.S. could do without: carried interest, tax breaks for racing cars, private jets and horse racing, and a land conservation tax break for golf courses. Some meta-analysis: This was Mr. Dimon’s longest letter yet, at 35,000 words over 66 pages. The steadily expanding letters — aside from a shorter edition last year, weeks after Mr. Dimon had emergency heart surgery — could be seen as a reflection of the range of issues top executives are now expected, or compelled, to address. HERE’S WHAT’S HAPPENING Toshiba considers a $20 billion takeover bid. The Japanese tech company said it had received a leveraged buyout offer from the private equity firm CVC Capital, sending its shares to a four-year high. Toshiba has had a series of scandals, and faces pressure from activist investors. Amazon, a notable tax avoider, backs higher corporate taxes. Jeff Bezos said that he supported raising the corporate rate to help pay for President Biden’s infrastructure plans — though he didn’t mention the White House’s proposed rate, 28 percent. Other corporate chiefs are privately criticizing the potential tax rise. The company behind the Johnson & Johnson vaccine mix-up has a history of errors. Emergent BioSolutions, which the U.S. relied on to produce doses by J.&J. and AstraZeneca, had a made manufacturing errors before. Experts worry this may leave some Americans more wary of getting vaccinated, even as Mr. Biden has moved up the eligibility deadline for U.S. inoculations. An electric aircraft maker sues a rival for intellectual property theft. Wisk, which is backed by Boeing and the Google founder Larry Page, said that former employees downloaded confidential information before joining Archer, a competitor. Archer, which is going public by merging with a SPAC run by Moelis & Company and which counts United Airlines as an investor, denied wrongdoing and said it was cooperating with a government investigation. A blistering start for venture capital in 2021. Start-ups set a fund-raising quarterly record in the first three months of the year, raising more than $62 billion, according to the MoneyTree report from PwC and CB Insights. That’s more than twice the total a year earlier and represents nearly half of what start-ups raised in all of 2020. Why is the Amazon union vote taking so long? Voting in the union election at an Amazon warehouse in Bessemer, Ala., ended on March 29, and counting began the next day, but the outcome is still unknown. What’s going on? It’s less about the number of ballots than how they’re counted. The stakes are high, for both Amazon and the labor movement. Progressive leaders like Bernie Sanders have argued a victory for the union, the first at an Amazon facility in the U.S., could inspire workers elsewhere to unionize. And Amazon is facing increased scrutiny for its market power and labor practices. Only a tiny portion of Amazon’s work force was actually eligible to vote. About 5,800 workers mailed their ballots to the Birmingham office of the National Labor Relations Board. Counting each vote involves two envelopes: one giving the worker’s name and, inside that, another sealed envelope containing an anonymous ballot. Handling them has been a painstaking process: Once Amazon and the union have gone back and forth over disputed voters, the N.L.R.B. counts the uncontested ballots anonymously and by hand, on a video conference open to reporters. This could start today. “Economic fortunes within countries and across countries are diverging dangerously.” — Kristalina Georgieva, the managing director of the I.M.F., on how the uneven rollout of vaccines poses a threat to the global economic recovery. Credit Suisse’s expensive mistakes After the 2008 financial crisis, Credit Suisse emerged battered by high-risk bets and promised to do better. A series of recent scandals suggests it hasn’t, The Times’s Jack Ewing writes. A recap of the Swiss bank’s troubles over the past year or so: A spying scandal that led to the ouster of Tidjane Thiam as C.E.O. Ties to Greensill Capital, the SoftBank-backed lender that has filed for insolvency and will lead to losses at the Swiss bank. Its involvement with Archegos, whose hugely leveraged stock bets went south, saddling the bank with a big hit. It could have been worse. Rules requiring banks to hold more capital helped prevent the Archegos meltdown from posing a systemic threat. Still, Credit Suisse is paying dearly for it, replacing a half-dozen top executives, forgoing executive bonuses and halting stock buybacks. Its current chief, Thomas Gottstein, is facing closer scrutiny as well. Credit Suisse’s troubles show that regulators must stay vigilant, critics say, as lenders chase profits in increasingly risky ways. The Swiss bank is “a straw in the wind that suggests there is a relaxation of risk management within banks because it is so difficult to make money on interest margins,” said Nicolas Véron of the Peterson Institute for International Economics. Who’s behind that corporate veil? The Treasury Department is introducing new rules on corporate transparency and it wants input. This week, it began a 30-day comment period on to-be-drafted regulations that would make it harder to obscure who controls a company. Among the details to be worked out are what entities should report and when; how to collect, protect and update information for a database; and the criteria for sharing with law enforcement. “We could not be more excited,” Kenneth Blanco, the director of the Treasury’s Financial Criminal Enforcement Network (FinCEN), told bankers recently. The U.S. has been under pressure to address its vulnerability to money laundering and financial crimes: In 2016, the international Financial Action Task Force gave the country a failing grade on transparency of company ownership. In 2018, banks and financial institutions began having to collect that information from clients to help law enforcement identify individuals. In January, Congress passed the Corporate Transparency Act, which requires businesses to report ownership to the government. New rules could make forming small businesses, special purpose vehicles and other closely held entities “significantly” more burdensome, said Steve Ganis of Mintz, an expert in anti-money laundering regulation. “FinCEN’s new regime will make things much more complicated for start-ups, where control and ownership are highly fluid,” he said. Public companies and many larger businesses would be exempt because they already face stricter scrutiny. THE SPEED READ Deals Flipkart, the Indian e-commerce company owned by Walmart, is reportedly planning to go public through an I.P.O. this year. (Bloomberg) Grab, the Singaporean tech giant, is near a deal to merge with a SPAC backed by Altimeter Capital at a $35 billion valuation. It would be the biggest-ever blank check deal. (FT) Fox sued the owner of FanDuel over the price of its option to buy a stake in the sports betting service. (CNBC) Politics and policy Tech Coinbase, whose direct listing is set for next week, said it collected more revenue in the first quarter this year than in all of 2020. (CNBC) The audio chat start-up Clubhouse is said to be raising funds at a $4 billion valuation. (Bloomberg) The S.E.C. accused an actor of running a $690 million Ponzi scheme built around false claims of deals with Netflix and HBO. (Bloomberg) Best of the rest We’d like your feedback! Please email thoughts and suggestions to [email protected]. Source link Orbem News #boom #chief #Coming #JPMorgans #sees

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loyallogic · 4 years

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Slow economic growth and brain drain ahead : what should be our strategy

This article is written by Ramanuj Mukherjee, CEO, and Kashish Khattar, Team LawSikho.

India’s economic growth, even before coronavirus hit, looked shaky and undoubtedly slowing.

Since demonetization and GST, Indian economy has continued to slow down year after year, for several years. While we hoped for a recovery, and going back to a high rate of growth as we were used to for the last 20 years, that hope seems all but dashed now.

Out of all major economies of the world, India is seeing the worst recession.

Some economists have been arguing that while India will definitely bounce back from this deep recession, we need to get used to moderate growth rates of 3-4% a year given that the government is signalling that it prefers a close economy instead of an open and global one.

Here are a few things that are happening:

There is widespread destruction of private capital. Private investments will be hard to bring back.

Foreign capital will not find India as attractive if the government pursues a closed economy (“atmanirbhar bharat”) policy. There would be some high growth sectors and businesses that will continue to attract foreign capital.

We will see tons of bankruptcies as the moratorium on insolvency proceedings through IBC is lifted.

In order to survive and benefit from government handouts, SMEs and businesses will remain subscale.

We are likely to see higher taxes soon as the central government is struggling to pay GST tax deficits to states.

Job growth in India will be poor. The brightest of Indian talent will have to start looking for jobs abroad once again.

15 million Indians are expected to be sent back to poverty.

Unprecedented number of young people are reaching working age at a time when job growth is slowest and jobs are in fact disappearing. This would influence politics in India in unpredictable ways.

Big companies with liquidity will consolidate and create sectoral monopolies while many competitors with a lot of debt on their balance sheets will shut down or get acquired.

It would be increasingly interesting for Indian businesses to service international markets rather than focusing on a slow domestic market. If you are in the service business, thanks to remote work culture you can serve a large international market from India. Outsourcing is likely to boom in the years ahead.

Is there any way we can go back to the earlier rates of fast growth that we enjoyed for decades?

The job of the government is clearly cut out. Fast reforms and hard work to attract foreign capital. Aggressive reforms may attract foreign investors at a time like this. There is enough capital in the world, but we need to show it will be a safe bet to invest in India, hassle free to do business here and that we are serious about economic reforms and growth. It may be politically difficult to do a lot of reforms in a time like this, but it will be more disastrous to not do anything.

Major areas of reform: labour laws, lower taxes, making land easily available for industries and investors, faster and cheaper dispute resolution process, allowing foreign law firms to practice transactional law in India (it’s a long standing demand of foreign investors), providing more staff and resources to courts and allowing expeditious online dispute resolution, easier permissions and licenses for building new projects, real estate and infrastructure development.

We need a massive cut down on corruption which acts as additional tax and turns away many conscientious foreign investors. Also, India has developed a reputation for crony capitalism, and the government needs to show it is fair to all businesses and investors and will not favour one over another.

The government has to disinvest aggressively and use the money it generates from selling assets to kickstart an investment cycle through massive government spending on education and public infrastructure.

Of course, the opposite approach is that of what India did till the 1990s, for the longest time since independence. We chose to keep our economy closed (another word is self-reliant) and lived with slow or moderate growth, a lot of poverty, a terrible job market. We may soon be doing this again.

What can we do as individuals?

One option is to leave India and work for economies that have the economic advantage.

The 70s, 80s and even a large part of 90s were marked by brain drain, as well-educated, smart Indians left India for greener pastures in advanced economies. This strategy worked for them.

Indian graduates used to be desperate to get out of the country somehow, but that changed later as Indian economy has been booming. Finding opportunities for growth at home has been easy.

If we see economic growth slowing significantly, we will see our top engineers, startup founders and scientists leave India for other countries once more. We can call it Brain Drain 2.0.

So yes, it is not a terrible time to think of taking your career international or go for that masters degree abroad. However, you may want to wait till the economy and job market begins to recover in your target country. In fact, you should decide which country you want to pursue your masters degree in based on how well they recover from the pandemic and recession caused by it. For instance, today South Korea and Japan look like far better places to go for higher education and consequently finding a job there, as opposed to the UK, which is reeling from a recession that is only slightly better than that of India.

Remote work revolution and reskilling

The other thing we can do, which is perhaps much better in fact, is to take advantage of the remote work culture and find foreign jobs that we can do from India. This is already happening at a massive scale when it comes to technology. There is absolutely no job market slowdown for techies today as a huge number of large foreign companies are either setting up development centres in India or hiring Indian employees as remote workers. For instance, Walmart’s US delivery technology process is being managed by over 7000 Indian engineers sitting in Bangalore!

Not all companies are large enough to set up captive development centres in India, but they don’t have to either. They are now quite used to hiring and managing remote workers, which means they are happy to hire workers in India directly, without involving any third party outsourcing agency even!

Indian workers are cost effective for developing countries to hire remotely, and will drive down their personnel costs in a big way. However, we will be competing with other countries with English speaking capabilities and low wages such as Philippines, Bangladesh, South Africa, West Indies and Vietnam.

This means there will be tons of freelancing and remote work opportunities across the world that we can pick up on, as long as we learn languages and have the skills that are in high demand.

Even outside technology, there will be big demand for such remote workers in digital marketing, sales, design, writing and editing, accounting, management consultancy, telemedicine, architecture and even law.

This is the other kind of brain drain, where the skilled workers do not even have to migrate out of the country but they work for foreign enterprises while Indian businesses starve of talent and find it hard to hire or retain top talent.

With respect to legal work, there would be less traditional work, which is what most lawyers are accustomed to. Instead, there will be specialised litigation such as NCLT, competition law, etc. that will see big growth due to market conditions. We have written about the kind of legal work that we expect to increase in the months and years ahead over here. Beyond that, a large number of lawyers will have to reskill themselves to participate in the global legal market, assisting lawyers and SMEs from other countries in a remote work mode, failing which many lawyers will be reduced to poverty.

Language learning will be critical as well. Learning to speak and write good English will become very important to participate in this global remote workforce. It would make a great deal of sense to learn languages like Chinese, Japanese, Korean, German, French (France, Belgium, Switzerland and much of Africa), Portuguese (Brazil), Espanol (Spain and Latin America), Hebrew and Russian.

What should be done by businesses and law firms?

Irrespective of which way the economic wind blows, some businesses and law firms will continue to do well because of their focus and strategy. Here are some of the big market beating strategies one could pursue.

Specialise in areas where domestic demand is predictable

It is quite obvious that lawyers specialising in banking and finance laws as well as insolvency will be quite busy. Many of them are already very busy with restructuring of loans and advisory work, and later they will be busy with recovery, bankruptcy and insolvency proceedings.

Same for arbitration lawyers, once all the breached contracts are dragged to arbitration over the next 2.5 years (limitation period being 3 years).

Because of increasing consolidation and anti-competitive trends, I expect competition lawyers to remain very busy. Similarly, tax litigation is likely to pick up as the government pushes the taxman for more revenues.

There are bright spots in transactional law practice too, with specific sectors seeing a boom. Technology and media is likely to stay strong and continue to generate a lot of work for lawyers, as will real estate litigation though for entirely different reasons.

Government projects would also be a growth driver for law firms going forward.

We have written a lot about what we expect to do well, and hence I would stop here and just provide you some links:

7 things you can do if you are struggling to get a job in the post-COVID economy;

Rising to the occasion as we go deeper into a recession;

What is third party funding and why it may become important for post-COVID disputes practice in India;

How virtual hearings have turned the table in favor of younger litigators and exposed institutionalized inequality;

How lawyers can be more productive using Parkinson’s Law.

Get very good at business development, lead generation, conversion, client support and retention

A rising tide lifts all boats, so it has been easy for all businesses and law firms to do relatively well when the market was expanding. The reality is quite different now. Businesses with strong competitive advantages and differentiated services or products will do well now, while the rest will suffer a massive blow.

Law firms that do not have strong client pipelines, proven strategy for business development and lead generation, do not have good processes and defined practices to turn leads into paying clients, do not have strong client support processes or simply fail to retain older clients and get more referrals from them, are already feeling the pinch.

The only way to survive in times like these will be to develop strong lead generation and conversion practices, apart from efficient client support and retention strategy.

If you have not spent a lot of time thinking about and working on these things, it is high time you change that.

Create a strong professional culture in order to retain top talent

The only way to grow an organisation is to attract and retain top talent. This is only possible if you create a professional, objective, fair, rewarding and exciting work environment that people would like to be a part of.

Law firms like JSA, Induslaw and Trilegal have shown that professional law firms tend to grow much faster than family run or individual centric fiefdoms.

If you want to beat the brain drain, this looks like an inevitable choice.

Leverage global cost arbitrage and focus on prosperous international markets

Many emerging businesses will leverage the unprecedented global arbitrage opportunity that has opened up due to remote work going mainstream.

The legal industry has not seen much outsourcing except for by some very large companies and law firms. There is now a renewed interest and massive incentive to explore legal outsourcing models once more, although the older models are less likely to work this time.

We are more likely to see the rise of freelancing platforms, businesses that focus on SMEs in advanced economies or alternatively, tech-driven legal services that rely on cost effectiveness to lure end-users.

Countries like the UK and USA already have laws in place to support such initiatives and Indian lawyers, just like Indian techies, are in a great place to lead a digital legal outsourcing revolution.

Which companies will lead the way in the future, like Infosys or TCS did for the IT outsourcing industry?

Lobby for a more open Indian market and push for reforms of the legal sector

Indian lawyers and law firms really need reforms to get out of this economic mess with as little pain as possible. We need new phenomenons like class action, third party funding, online dispute resolution, online filing across courts for higher productivity, waves of investment and increase in the volume of work.

Failing this, prospects for the growth of the legal sector look quite bleak as major clients are struggling and would be really penny-pinching when it comes to footing legal bills.

Would our legal community and especially young lawyers be smart enough to read the writing on the wall?

How can Lawsikho help me to prepare for the challenges ahead?

The challenges of the current economic climate require lawyers to focus on a very new kind of legal work as compared to the traditional areas of law practice. Specialization in a lot of new practice areas will be critical for success in this economy.

Simultaneously, a lot more effort needs to be put in on legal practice development as well, alongside acquisition of skills.

We have built an array of courses that will help you to reskill and upskill so you can make the best of a very difficult situation.

If you are interested in corporate governance, you should check out the diploma in Companies Act, Corporate Governance and SEBI Regulations;

If you want to get that in-house counsel job, go check out the diploma in Business Laws for In-House Counsels;

If Industrial and Labour Laws interest you, go take a look at that diploma course;

The Intellectual Property, Media and Entertainment Laws will be booming in the coming times, if you’re inclined towards that career, check out that diploma course;

If you’re sure that your niche lies in M&A, Institutional Finance and Investment Laws (PE & VC transactions), go check out that course;

The Cyber Law, Fintech Regulations and Technology Contracts is in dire need of good young talent if that is what ticks for you, go check out that course; and

Every young lawyer should check out our diploma course in Advanced Contract Drafting, Negotiation and Dispute Resolution.

Check out our other executive courses which can be helpful:

We have a certificate course in Advance Corporate Taxation;

You can also check out this course for Insolvency and Bankruptcy Code;

If Trademark, Licensing; Prosecution and Litigation interest you, we have a course for that;

LawSikho also teaches Competition Law, Practice and Enforcement in a course;

Technology Contracts will be essential to every business in the future, you can check out that certificate course; and

Knowledge about Banking & Finance Practice: Contracts, Disputes & Recovery is essential for every BigLaw layer, you can check that out too.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

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bigyack-com · 5 years

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Mortgage Rates Below 1% Put Europe on Alert for Housing Bubble

PARIS — Europe’s economy is struggling to gain traction after years of anemic growth. But the rock-bottom interest rates meant to power a recovery are fueling a property boom that is creating a new set of problems.Money is so cheap — a 20-year mortgage can be had in Paris or Frankfurt at a rate of less than 1 percent — that borrowers are flocking to buy apartments and houses. And institutional investors, seeing a chance for lucrative returns, are acquiring swaths of residential real estate in cities across Europe. In some parts of Europe, said Jörg Krämer, the chief economist at Commerzbank in Frankfurt, valuations have already returned to or exceeded levels that preceded the Continent’s debt crisis a decade ago, igniting concerns that the property boom could end badly.“The risks are real, because negative interest rates in Europe are cemented,” Mr. Krämer said. “What’s important for the economy as a whole is to prevent the emergence of a dangerous new bubble.”Demand has surged in the five years since the European Central Bank pushed one of its benchmark interest rates below zero, a step never before tried on such a scale. Prices jumped at least 30 percent in Frankfurt, Amsterdam, Stockholm, Madrid and other metropolitan hot spots, and are up an average of over 40 percent in Portugal, Luxembourg, Slovakia and Ireland. That has made homeownership increasingly unaffordable for most anyone except high earners, while also driving up rents, pushing working class people farther from urban centers. A political backlash is unfolding as European mayors intervene in the market with rent controls, higher property taxes and subsidized housing programs.“It plays into a sense of social distress,” said Loïc Bonneval, a sociologist at the Max Weber Center in Lyon, a social research organization.While low rates helped produce a rebound in the eurozone, economists say the policies now appear to be doing more harm than good, clouding the bank’s efforts to reverse inequality. They have not resolved fundamental problems like weak business investment. Nor have they revived inflation — which helps lift wages — anywhere but in the housing market.“The dynamics have totally changed in a short period of time,” said Matthias Holzhey, the head of Swiss real estate at UBS and the lead author of an annual report on property price spikes in major global cities. In some parts of Europe, he said, “low rates are pushing real estate valuations into the bubble risk zone.”Financial authorities are on alert. In September, the European Systemic Risk Board, an arm of the European Central Bank that helps regulate Europe’s financial system, called on 11 countries including Luxembourg, Austria, Denmark and Sweden to pursue regulations and tax measures meant to rein in prices and promote housing affordability and availability.The Bundesbank, Germany’s central bank, said recently that real estate in German cities had been overvalued by 15 to 30 percent — in other words, that there is a bubble. The UBS survey cited Munich, Frankfurt, Amsterdam and Paris as cities at risk. And a study by the global accounting firm Deloitte & Touche cautioned that average house prices “will exceed pre-crisis levels” if the European Central Bank keeps interest rates at zero, as planned.Housing prices have risen sharply in the United States as well. But there, the boom has been driven by individual buyers, household debt has been held in check and lending standards have remained relatively tight — all factors that reduce the chance of another collapse. Moreover, while benchmark interest rates in the United States have been kept low, they were never negative — and have now been above zero for several years.Some economists say that the concerns in Europe are overblown and that prices are overvalued but not in a danger zone. For one thing, job creation from the economic recovery, however tepid or uneven, has expanded the ranks of creditworthy borrowers. And buyers are mainly living in properties or renting them out, rather than flipping them as happened before the crisis.The supply of urban housing, however, has failed to keep pace with the resulting demand. Disrupters like Airbnb have added to the crunch by converting residential properties into vacation stays. The result is a shortage of affordable housing, particularly in the rental sector, squeezing middle and low-income earners such as teachers, firefighters, nurses and retail employees who work in cities but cannot afford to live in them.The dynamics are worsening as deep-pocketed domestic and foreign investors pivot from focusing almost exclusively on commercial real estate to acquiring residential housing around Europe. Pension and insurance funds, which typically invest in government bonds, have found it impossible to make money off countries like Germany, where the interest rate paid is less than zero. That has driven them into real estate funds, which offer high returns in comparison to bonds.Rents and mortgages consume a quarter of monthly income on average, up from 17 percent two decades ago, according to data compiled by Housing Europe, a federation of affordable-housing groups. One-tenth of Europeans spend over 40 percent of their income on housing. The rates are sharply higher for the poorest households.“House prices have risen much faster than citizens’ incomes,” said Cédric Van Styvendael, the organization’s president. “It’s a problem for Europe.” Wages and salaries in the eurozone grew 2.7 percent in the three months to June in 2019 compared to a year earlier.The scarcity of affordable housing is fueling resentment and political strife. In Madrid and Barcelona, home prices have jumped more than 30 percent since 2016, pushing rents up as landlords sought bigger returns. Prime Minister Pedro Sánchez capped rents in Spain this summer at the rate of inflation, now 0.4 percent, limiting income for property owners.In Paris, where 70 percent of residents are renters, Mayor Anne Hidalgo imposed new rent controls. While rents are limited by strict housing regulations, they have risen 40 percent between 2000 and 2018. As property prices keep climbing — they recently broke a record of 10,000 euros on average per square meter, or about $1,000 per square foot, one of the highest prices in Europe — Ms. Hidalgo is taking other steps to prevent the city from becoming a “ghetto for the rich.” Her plans include building subsidized housing that families with modest incomes can purchase at half the market rate.Few places have felt the impact as sharply as Berlin. Since the fall of the Berlin Wall 30 years ago, workers, artists and students have increasingly been displaced by an influx of young professionals with families. But property prices and rents have skyrocketed in recent years as home buyers and investors double down.The city imposed a five-year rent freeze, the toughest in Europe, in the summer after rents jumped more than 50 percent in five years, and gave tenants the right to demand reductions if rents go too high. German real estate stocks have slumped since the ruling.For Kathrin Hauer, 39, the measures are urgent. She was a student nearly two decades ago when she became a tenant in a World War II-era building formerly owned by the East German government, on Schönhauser Allee, a central street. Ms. Hauer, who works as a costume and set designer for German theaters, was long happy with her $450-a-month apartment, which was bought by a small group of investors after Communism.Then in 2016, the building was sold to an investment company. Last December, right before a national law limiting rent increases was to take effect, the company announced major construction work that would raise rents on the low-income tenants by 250 percent. Ms. Hauer’s rent would surge above $1,500 a month, far more than she could afford.“This is meant to scare us to get out,” Ms. Hauer said.The tenants won an order from the city’s planning department to halt the renovations, which included large elevators, balconies and floor-to-ceiling windows. Soon after, in a move that tenants believe was a form of retaliation, Ms. Hauer said, the investors ordered all the trees in the interior courtyard to be razed, and hired a middleman to persuade tenants to agree to the renovations and accept buyouts.Itai Amir, the director of the company that now owns the building, would not comment for this article.Wibke Werner, the deputy director of Berliner Mieterverein, an association of Berlin renters with more 170,000 members, said that because of the low interest rates, investors were “betting on concrete gold.”“These investments are designed to optimize returns,” she said, “which means rising rents and the crowding out of low-income households.”In Denmark, which is not part of the euro but closely tracks E.C.B. monetary policy, benchmark interest rates have been negative for seven years. Seeking greater returns, some Danish pension funds are buying large holdings of prime real estate and new buildings to offer for rent. But rents have grown so high that the city is considering capping them, which could cut into those investments.At the same time, rates are so low that bargains being offered by banks are hard to pass up. In August, Jyske Bank of Denmark began offering 10-year fixed-rate mortgages at negative 0.5 percent interest before fees, meaning the amount outstanding on the loan will be reduced each month by more than the borrower has paid. Nordea Bank is offering 20-year loans at zero interest.While banks have stopped flooding mailboxes with credit card offers, a common practice before the debt crisis, offering ultracheap mortgage loans is a way of luring new customers.That has tempted borrowers in the Netherlands to go to extremes. While Dutch banks took steps to curb lending this year, Dutch households held mortgage debt of 527 billion euros ($584 billion) at the end of March — equal to nearly two-thirds of the Dutch economy.The Dutch central bank warned recently that “systemic risk” in the Dutch housing market posed the biggest threat to financial stability. A sudden fall in housing prices could be disastrous for households and banks, it said, because borrowers are overextended.With little room to maneuver, the European Central Bank recently called on politicians in euro countries to take bolder steps to prevent asset bubbles from growing.“This is all new territory,” Mr. Holzhey of UBS said. “Some caution is warranted because in the past, no one really forecast a house price crash,” he said.“Headlines always said prices are rising, but there’s no bubble,” he added.Until there was.Christopher Schuetze contributed reporting from Berlin, Jack Ewing from Frankfurt and Ben Casselman from New York. Alain Delaquérière contributed research. Read the full article

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switchcheek14-blog · 5 years

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Is South Street's retail apocalypse coming to an end?

A downturn decades in the making

The boom-bust business cycle may point to a coming revitalization for the eastern blocks of South Street, but the corridor has a particularly persistent hole to dig out of. For several years, business owners and the local business improvement district have been trying to bring more customers to the street with mixed results, even as the national economy has improved and shopping districts in Center City have experienced a boom.

That’s partly a legacy of South Street’s previous renaissance in the 1970s, which began after older businesses fled to make way for a proposed expressway that was later called off. Cheap rent attracted artists’ galleries, rock clubs, and cafes, run and patronized by young people. Steinberg, who lived in Queen Village in the 1980s, said the youth-centered business model enlivened the corridor, but it didn’t support retail stability and resulted in an “incredible amount of turnover.”

The youthful crowds also caused a major image problem when some 50,000 revelers descended on the street for Mardi Gras in February 2001, leading to riots that made national news. They smashed windows, looted a dozen stores, and threw bottles at police, resulting in 100 arrests and a clampdown on Fat Tuesday celebrations in the years since. “That cast a negative shadow on South Street,” Steinberg said. “That doesn’t happen anymore.”

During the recession, scores of businesses closed and were not replaced for years, prompting some landlords to donate their storefronts to arts organizations for use as low-cost galleries and art studios. Anchor stores like Gap, Tower Records and Blockbuster shut down. The rise of online shopping took a toll. Meanwhile, shoppers began discovering other cool places to spend their time and money.

The variety of alternatives is something the street has “wrestled with over the years and still wrestles with,” said Michael Harris, executive director of the South Street Headhouse District business association. “Frankly, South Street used to be the only game in town, in the 80s and 90s. But the heat map moves, the areas of popularity move, so now you have Fishtown and North Liberties and East Passyunk.”

While the internet and changing shopping habits have challenged retailers everywhere, Center City’s retail market is booming. Some 2 million square feet of new retail space is in development from Vine to South streets, according to a 2017 report from Center City District, “expanding Philadelphia’s prime retail district and reactivating long-dormant downtown shopping streets.”

On Walnut and Chestnut streets west of Broad, the retail vacancy rate dropped below 5 percent last year, CCD said. The vacancy rate citywide hovered around 8 percent as of mid-2018, according to Collier’s International. Meanwhile, South Street struggles with a vacancy rate of 16 percent, nearly twice the citywide average, Harris said.

The loss of businesses on South Street is reflected in stagnant retail rents. Storefronts there rent for about $40 per square foot, well below the amounts charged in the core of Center City, according to a report by the real estate firm CBRE. That figure is almost unchanged from 13 years ago, while asking rates on Chestnut, Walnut and Market streets have risen steadily since then.

Yet with so many buildings vacant, rents should arguably be even lower. Landlords’ unwillingness to accept less profitable lease arrangements may explain why some spots remain empty for months or even years. A similar phenomenon is occurring in parts of Manhattan, where landlords are reluctant to lower rates despite a supposed retail apocalypse driven by online competition.

“There are people still expecting to get rents much higher than I think the street can support, so they’re holding out and holding properties vacant against the dream that has probably changed as retail is facing ever more pressure from the internet,” said Paul Levy, CCD’s chief executive and a resident of nearby Society Hill. “A lot of the property owners have made decisions to wait for certain types of tenants who may not be coming.”

South Street’s future may depend on embracing the model of the neighborhood main street. Levy, Harris, and the brokers agree that the best bet for the long-time tourist attraction may be catering to the affluent residents who have moved in over the last few decades.

“You’ve got incredibly strong market demand on either side of the street, from Society Hill and Queen Village, from Washington Square and from Bella Vista. This is not like a marginal commercial corridor struggling for businesses,” Levy said.

That would mean accelerating the street’s shift from its youth-oriented focus of the 1980s and 1990s, which depended on weekend visitors from around the region, to a balanced model that brings in more local shoppers on weekdays.

“Part of our challenge, and part of our opportunity, is that we have to service both the neighborhood and tourists,” Harris said. A recent survey of people on the street found visitors from 20 different states, he said. “We are a tourist destination and we want that to be a good experience for people, but at the same time we want to be serving all the neighbors that live around here, which are lots of families, and lots of people with disposable income. It’s kind of finding that balance of things that work for both. If you can get the right mix, both sets of consumers will be happy.”

An indication of what that could look like can be found right off South Street, on 4th Street’s Fabric Row, where boutiques, salons, cafes and restaurants like Hungry Pigeon thrive off a steady stream of local customers. One popular boutique, Moon + Arrow recently opened an offshoot shop, Little Moon + Arrow, catering to the organic-onesie-wearing, wooden-toy-playing children of their customers.

Nearby residents are particularly eager to see a grocery store fill the long-vacant storefronts of Abbotts Square. Ahold Delhaize, the Dutch company that owns Giant and other supermarket chains, reportedly leased space in the building in 2016 to open a smaller-sized, higher-end market, but the owner has encountered difficulties that have slowed redevelopment of the complex.

Harris and Steinberg said Ahold recently announced that the 16,000-square-foot market is coming soon. A spokeswoman for Giant Food Stores would not confirm a date or address for a new South Street store, but she said the company is planning to announce several new locations in Philadelphia in the coming months. A Giant Heirloom Market is set to open in December at 24th and Bainbridge, close to South Street West in Graduate Hospital.

The South Street Headhouse District already has Whole Foods and ACME at 10th Street, as well as Essene natural foods and two small markets on 4th Street. There’s also a small ACME on 5th Street in Society Hill.

Another prospective anchor business is the small-format Target proposed for 5th and Bainbridge, where buildings have already been demolished in preparation for construction of the store, a parking garage and apartments. Steinberg said a “highly regarded” national fast-food chain is also working on a deal to open a restaurant on South Street.

“That’s the kind of happening that gives us hope,” he said. “What we’re hoping happens is there are some stabilizing-type tenants that are looking [to occupy space] on the street, that may not have the funky panache that some of the other retailers have had on South Street, but add national stability, which make it a safer destination for retailers and adds more interest.”

Apart from individual anchor stores, what South Street needs are developers who gain control of several properties that are close to each other and pursue visions for cohesive, attractive shopping areas, Levy and Weiss said. Similar approaches worked well for East Passyunk, Frankford Avenue in Fishtown, and 13th Street in the Gayborhood, among other areas, they said.

To that end, Weiss’s firm is working on transactions with large investors who would acquire a whole portfolio of properties at once, he said.

“It will take some time to turn around,” he said. “It’s not going to be one landlord at a time. It will be larger, well-capitalized landlords who have a vision and patience to execute that vision, not to open another hookah shop.”

A promising development along those lines was the sale of several properties owned by New York developer Michael Axelrod to Midwood Investment & Development in 2016. Axelrod has reportedly owned more than 40 South Street buildings and kept many vacant for years, apparently holding out for high-profile tenants willing to pay higher rents. Since the sale, Midwood has started filling the spaces, including a former McDonald’s that was vacant for a decade but recently reopened as a nail salon.

“There are a lot of property owners who are willing and interested in negotiating [with prospective tenants],” Harris said. “There's no magic wand that suddenly cures it all, and the needle doesn't move as fast as I want, but I think there are a tremendous number of great restaurants and great retail down here that we want to remind people of.”

Source: http://planphilly.com/articles/2018/11/20/is-south-street-s-retail-apocalypse-coming-to-an-end

#read more #see more #check it out #interesting #learn more

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ladystylestores · 4 years

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A Silicon Valley for everyone – TechCrunch

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7am PT). Subscribe here.

Many in the tech industry saw the threat of the novel coronavirus early and reacted correctly. Fewer have seemed prepared for its aftereffects, like the outflow of talented employees from very pricey office real estate in expensive and troubled cities like San Francisco.

And few indeed have seemed prepared for the Black Lives Matter protests that have followed the death of George Floyd. This was maybe the easiest to see coming, though, given how visible the structural racism is in cities up and down the main corridors of Silicon Valley.

Today, the combination of politics, the pandemic and the protests feels almost like a market crash for the industry (except many revenues keep going up and to the right). Most every company is now fundamentally reconsidering where it will be located and who it will be hiring — no matter how well it is doing otherwise.

Some, like Google and Thumbtack, have been caught in the awkward position of scaling back diversity efforts as part of pandemic cuts right before making statements in support of the protesters, as Megan Rose Dickey covered on TechCrunch this week. But it is also the pandemic helping to create the focus, as Arlan Hamilton of Backstage Capital tells her:

It is like the world and the country has a front-row seat to what Black people have to witness, take in, and feel all the time. And it was before they were seeing some of it, but they were seeing it kind of protected by us. We were kind of shielding them from some of it… It’s like a VR headset that the country is forced to be in because of COVID. It’s just in their face.

This also putting new scrutiny on how tech is used in policing today. It is renewing questions around who gets to be a VC and who gets funding right when the industry is under new pressure to deliver. It is highlighting solutions that companies can make internally, like this list from BLCK VC on Extra Crunch.

As with police reforms currently in the national debate, some of the most promising solutions are local. Property tax reform, pro-housing activism and sustainable funding for homelessness services are direct ways for the tech industry to address the long history of discrimination where the modern tech industry began, Catherine Bracy of TechEquity writes for TechCrunch. These changes are also what many think would make the Bay Area a more livable place for everyone, including any startup and any tech employee at any tech company (see: How Burrowing Owls Lead To Vomiting Anarchists).

Something to think about as we move on to our next topic — the ongoing wave of tech departures from SF.

Where will VCs follow founders to now?

In this week’s staff survey, we revisit the remote-first dislocation of the tech industry’s core hubs. Danny Crichton observes some of the places that VCs have been leaving town for, and thinks it means bigger changes are underway:

“Are VCs leaving San Francisco? Based on everything I have heard: yes. They are leaving for Napa, leaving for Tahoe, and otherwise heading out to wherever gorgeous outdoor beauty exists in California. That bodes ill for San Francisco’s (and really, South Park’s) future as the oasis of VC.

But the centripetal forces are strong. VCs will congregate again somewhere else, because they continue to have that same need for market intelligence that they have always had. The new, new place might not be San Francisco, but I would be shocked just given the human migration pattern underway that it isn’t in some outlying part of the Bay Area.

And then he says this:

As for VCs — if the new central node is a bar in Napa and that’s the new “place to be” — that could be relatively more permanent. Yet ultimately, VCs follow the founders even if it takes time for them to recognize the new balance of power. It took years for most VCs to recognize that founders didn’t want to work in South Bay, but now nearly every venture firm of note has an office in San Francisco. Where the founders go, the VCs will follow. If that continues to be SF, its future as a startup hub will continue after a brief hiatus.

It’s true that another outlying farming community in the region once became a startup hub, but that one had a major research university next door, and at the time a lot of cheap housing if you were allowed access to it. But Napa cannot be the next Palo Alto because it is fully formed today as a glorified retirement community, Danny.

I’m already on the record for saying that college towns in general are going to become more prominent in the tech world, between ongoing funding for innovative tech work and ongoing desirability for anyone moving from the big cities. But I’m going to add a side bet that cities will come back into fashion with the sorts of startup founders that VCs would like to back. As Exhibit A, I’d like to present Jack Dorsey, who started a courier dispatch in Oakland in 2000, and studied fashion and massage therapy during the aftermath of the dot-com bubble. His success with Twitter a few years later in San Francisco inspired many founders to move as well.

Creative people like him are drawn to the big, creative environments that cities can offer, regardless of what the business establishment thinks. If the public and private sectors can learn from the many mistakes of recent decades (see last item) who knows, maybe we’ll see a more equal and resilient sort of boom emerge in tech’s current core.

Insurance provider Lemonade files for IPO with that refreshing common-stock flavor

There are probably some amazing puns to be made here but it has been a long week, and the numbers speak for themselves. Lemonade sells insurance to renters and homeowners online, and managed to reach a private valuation of $3.5 billion before filing to go public on Monday — with the common stockholders still comprising the majority of the cap table.

Danny crunched the numbers from the S-1 on Extra Crunch to generate the table, included, that illustrates this rather unusual breakdown. Usually, as you almost certainly know already, the investors own well over half by the time of a good liquidity event. “So what was the magic with Lemonade?” he ponders. “One piece of the puzzle is that company founder Daniel Schreiber was a multi-time operator, having previously built Powermat Technologies as the company’s president. The other piece is that Lemonade is built in the insurance market, which can be carefully modeled financially and gives investors a rare repeatable business model to evaluate.”

(Photo by Paul Hennessy/NurPhoto via Getty Images)

Adapting enterprise product roadmaps to the pandemic

Our investor surveys for Extra Crunch this week covered the space industry’s startup opportunities, and looked at how enterprise investors are assessing the impact of the pandemic. Here’s Theresia Gouw of Acrew Capital, explaining how two of their portfolio companies have refocused in recent months:

A common theme we found when joining our founders for these strategy sessions was that many pulled forward and prioritized mid- to long-term projects where the product features might better fit the needs of their customers during these times. One such example in our portfolio is Petabyte’s (whose product is called Rhapsody) accelerated development of its software capabilities that enable veterinarians to provide telehealth services. Rhapsody has also incorporated key features that enable a contactless experience when telehealth isn’t sufficient. These include functionality that enables customers to check-in (virtual waiting room), sign documents, and make payments from the comfort and safety of their car when bringing their pet (the patient!) to the vet for an in-person check-up.

Another such example would be PredictHQ, which provides demand intelligence to enterprises in travel, hospitality, logistics, CPG, and retail, all sectors who saw significant change (either positive or negative) in the demand for their products and services. PredictHQ has the most robust global dataset on real-world events. Pandemics and all the ensuing restrictions and, then, loosening of restrictions fall within the category of real-world events. The company, which also has multiple global offices, was able to incorporate the dynamic COVID government responses on a hyperlocal basis, by geography, and equip its customers (e.g., Domino’s, Qantas, and First Data) with up to date insights that would help with demand planning and forecasting as well as understanding staffing needs.

Around TechCrunch

Extra Crunch Live: Join Superhuman CEO Rahul Vohra for a live Q&A on June 16 at 2pm EDT/11 AM PDT Join us for a live Q&A with Plaid CEO Zach Perret June 18 at 10 a.m. PDT/1 p.m. EDT Two weeks left to save on TC Early Stage passes Learn how to ‘nail it before you scale it’ with Floodgate’s Ann Miura-Ko at TC Early Stage SF How can startups reinvent real estate? Learn how at TechCrunch Disrupt Stand out from the crowd: Apply to TC Top Picks at Disrupt 2020

Across the Week

TechCrunch

Theaters are ready to reopen, but is America ready to go back to the movies? Edtech is surging, and parents have some notes When it comes to social media moderation, reach matters Zoom admits to shutting down activist accounts at the request of the Chinese government

Extra Crunch

TechCrunch’s top 10 picks from Techstars’ May virtual demo days Software’s meteoric rise: Have VCs gone too far? Recession-proof your software engineering career The complicated calculus of taking Facebook’s venture money The pace of startup layoffs may be slowing down

#EquityPod

From Alex:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

After a pretty busy week on the show we’re here with our regular Friday episode, which means lots of venture rounds and new venture capital funds to dig into. Thankfully we had our full contingent on hand: Danny “Well, you see” Crichton, Natasha “Talk to me post-pandemic” Mascarenhas, Alex “Very shouty” Wilhelm and, behind the scenes, Chris “The Dad” Gates.

Make sure to check out our IPO-focused Equity Shot from earlier this week if you haven’t yet, and let’s get into today’s topics:

Instacart raises $225 million. This round, not unexpected, values the on-demand grocery delivery startup at $13.7 billion — a huge sum, and one that should make it harder for the well-known company to sell itself to anyone but the public markets. Regardless, COVID-19 gave this company a huge updraft, and it capitalized on it.

Pando raises $8.5 million. We often cover rounds on Equity that are a little obvious. SaaS, that sort of thing. Pando is not that. Instead, it’s a company that wants to let small groups of individual pool their upside and allow for more equal outcomes in an economy that rewards outsized success.

Ethena raises $2 million. Anti-harassment software is about as much fun as the dentist today, but perhaps that doesn’t have to be the case. Natasha talked us through the company, and its pricing. I’m pretty bullish on Ethena, frankly. Homebrew, Village Global and GSV took part in the financing event.

Vendr raises $4 million. Vendr wants to help companies cut their SaaS bills, through its own SaaS-esque product. I tried to explain this, but may have butchered it a bit. It’s cool, I promise.

Facebook is getting into the CVC game. This should not be a surprise, but we were also not sure who was going to want Facebook money.

And, finally, Collab Capital is raising a $50 million fund to invest in Black founders. Per our reporting, the company is on track to close on $10 million in August. How fast the fund can close its full target is something we’re going to keep an eye on, considering it might get a lot harder a lot sooner.

And that is that; thanks for lending us your ears.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

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heartfelthotinhouston · 5 years

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Shortage of workforce housing!

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Shortage of workforce housing! Liana Silva, a public school teacher, had a running joke with friends during last year’s mayoral election: If she ever ran for the position, her platform would focus on affordable housing for teachers. “I feel like it should move beyond the joke stage and a candidate should officially take it up,” she said this week during her lunch break at Cesar Chavez High School, where she teaches 12th grade English. “Housing is getting more and more expensive.” Silva, a single mom who lives with her fourth-grade daughter at friend’s house in the greater East End, is among the countless Houstonians who struggle to find housing they can afford. These include public school teachers, hospital workers and early-career police officers and firefighters who make too much to qualify for rental assistance but not enough to afford apartments or homes without roommates or in neighborhoods near their jobs. Shortage of workforce housing! Houston’s struggles with housing affordability worsened as the city’s economy boomed in the years following the Great Recession. But its problems have been overshadowed by those of higher-priced markets where the affordability crisis has become so acute that major employers are grappling with their role in finding a solution. In Silicon Valley, Google, Facebook and Apple have pledged at least $1 billion each to build affordable housing. In Denver, one hospital has begun building housing for both low-income employees and homeless patients. In the Permian Basin, officials in New Mexico have suggested building housing specifically for teachers and their families in Carlsbad, where the fracking boom has led to a housing shortage. Houston, long trumpeted for its affordable housing costs, has not been immune from the squeeze. According to Zillow, the median rent for a Houston-area apartment would take up 44 percent of a starting teacher’s salary, well above the rule of thumb recommending households spend no more than a third of their incomes on housing. The starting salary for a teacher in the Houston Independent School District is $54,369 annually. Shortage of workforce housing! “As home price growth outstrips wage growth, occupations such as teachers, first responders and restaurant workers struggle to afford to live in the communities they serve,” real estate listing company Trulia wrote in a recent report about housing costs. On HoustonChronicle.com: East End is roiled as mixed-income housing plans advance Silva would like to own her own home on the east side, but prices are rising quickly and she’s not ready to buy. She knows the suburbs are an option but dreads the idea of a long commute. When she took her teaching job in 2016 she was living on the west side of town and it took her 45 minutes to get to work in the morning and sometimes more than an hour and a half to get home at night. “As a single parent, it was a quality of life issue,” Silva said. “I was picking up my daughter at 6 p.m. Everybody was cranky and tired. It was a hard year.” Market opportunity To landlords catering to working Houstonians with moderate incomes, residents like Silva are hot prospects. The owner of the Hammerly Oaks apartment complex in Spring Branch recently started offering a 5 percent discount to teachers, nurses, police officers, firefighters, students and veterans. The promotion could amount to more than $550 per year for a two-bedroom unit.Renters aren’t the only ones to benefit. “From an apartment owner standpoint, you want to pull in a good quality resident. Those people have good, stable jobs, so it’s a win for both sides,” Bruce McClenny, president of Houston-based ApartmentData.com. While Houston has a generous supply of so-called Class C apartments — generally considered to be properties built within the last 30 years with limited amenities and original appliances and fixtures — demand for these units has risen, especially in urban neighborhoods where developers have demolished older, more affordable complexes for new, upscale buildings. For example, in the urban area encompassing Montrose, the Heights and Highland Village, renters paid an average of $1.71 per square foot per month, 45 percent more than the overall Houston average, according to fourth-quarter data from the commercial real estate firm CBRE. In such neighborhoods, affordable apartment complexes are growing harder to find. The dynamic has led investors to buy portfolios of aging apartments with low rents, betting that the demand for such housing will outpace supply. Many are renovating those properties and raising rents. To understand the powerful boost renovations can have on rents, just look across the street from Hammerly Oaks, the apartment complex with the discount for educators and first responders built in 1983. There you’ll find Zocalo, a two-story complex built in 1978. But while Zocalo is older than its neighbor, it was recently renovated and units rent for as much as $1,325 for a two-bedroom. Hammerly Oaks, on the other hand, charges $625 to $1,050 for one- and two-bedrooms, according to Apartments.com. “It’s happening every day where companies are buying that type of product and saying we’re going to refurbish it and raise rents $70 to $100,” McClenny said. “It’s better quality housing, but they’re paying more for it.” While workforce housing can be a sound investment, for Swapnil Agarwal, the owner of Hammerly Oaks, it’s personal. When he moved to Houston from India as a teenager, his family lived in apartments on his father’s blue-collar salary. He launched his business in 2014 specifically to buy and renovate older multifamily complexes with the aim of improving options for families such as his own. Karya Property Management, which he also runs, operates the buildings. The company now has 66 properties across the country accounting for roughly 20,000 units. In Houston it is offering the 5 percent special at all of its 42 complexes with a combined 12,000 units. The average rent across all of its properties is $850 a month. Developers take note Workforce housing has become a hot commodity in part because most multifamily construction has focused on luxury apartments. While the number of high-end apartments has boomed, the pool of housing considered affordable for workforce housing has shrunk to its lowest level in 20 years nationally, according to Marcus & Millichap, a commercial real estate firm. It expects workforce apartment rents to increase 4.3 percent over 2020, compared with 3.3 percent for higher-end apartments, the company wrote in a multifamily investment forecast released last week. The focus on luxury, however, is starting to fade. On HoustonChronicle.com: Looped In, a podcast all about Houston real estate “Today, investors are not wanting us to build the nicest, most expensive properties,” Stan Levy, chief operating officer of apartment developer Morgan Group, said this week at an annual meeting of the Houston Apartment Association. “What they want is an attractive basis allowing more people to afford the rents.” The company recently purchased a multifamily property near the Texas Medical Center that it is converting to a mixed-income complex though a program with the Houston Housing Authority. Half of the units will be reserved for people who earn no more than 80 percent of the area median income — or $61,050 for a four-person household. “We feel like we’re doing something good for the city,” Levy said. “It’s important that people with mid-level incomes can live close to where they work.” Similar developments adding to Houston’s workforce housing stock are under way. In the shadow of downtown, where tens of thousands of new units have sprung up in sleek new towers, a Cleveland-based developer recently started construction on a 300-unit complex that will have 50 percent of its units set aside for renters making between 60 percent and 80 percent of the area median income. “There’s a lot of demographics covered there, but firefighters, teachers, police, city workers, county workers, nurses are really your core workforce group that tends to fall in the 60 to 80 percent range,” Alastair Jenkin, NRP’s vice president of development, said. In Houston, a starting firefighter makes $43,528 a year, 67 percent of Houston’s median household income of $65,394. NRP has developed low-income housing in Houston with the help of tax credits, but this is its first mixed project, which is also being developed in partnership with the Houston Housing Authority. Grass is Greener in Houston While workforce housing has grown tight in parts of Houston, it could be worse. McClenny of Apartmentdata.com, which tracks market trends in cities throughout the southern United States, said Houston’s workforce housing supply isn’t as low — nor are its units as expensive — as many other markets. In Austin, for example, the average rent for a Class C unit is $1,131. In Houston, it’s $807. Across the Houston region, workforce apartments make up around 31 percent of the market and have a 9 percent vacancy rate. “That’s almost 18,500 units that could be occupied at what we would consider an affordable level,” McClenny said. Class C rents were flat last year, too, while the more expensive Class A and B rents were up 2.3 and 3 percent, respectively. And Nitya Capital is not the first or only company to offer discounts to public workers. McClenny, whose company also tracks landlord specials and promotions, said just over a third of the 2,830 apartment complexes the company surveys reported offering discounts to teachers, police and fire personnel. Some of those deals though are limited to police officers in exchange for working off-duty shifts at their complex. While McClenny isn’t overly concerned about a workforce housing shortage for Houston on the whole, he recognizes that it’s gotten harder to find moderately priced housing in neighborhoods close to downtown. “If you work there and are looking for affordability,” he said, “it’s rare.” That is all for today folks from the Heartfelt & Hot In Houston Blog, make it a great day! The inspiration for today’s edition came from this original article: https://www.houstonchronicle.com/business/article/Landlords-offer-discounts-amid-high-housing-costs-15011859.php If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit: https://www.zillow.com/lender-profile/BillRappMortgageViking http://www.homesforheroes.com/affiliate/bill-rapp-1 https://www.billrapponline.com/ https://twitter.com/BillRappRE https://caliberhomeloans.com/wrapp https://onlineapp.caliberhomeloans.com/?LoanOfficerId=21493 https://mortgageviking.billrapponline.com https://highcostarea.billrapponline.com https://commercial.billrapponline.com https://doctorvideo.billrapponline.com https://doctorvideo.billrapponline.com https://sba.billrapponline.com/ https://veteransvideo.billrapponline.com https://fha203h.billrapponline.com https://privatemoney.billrapponline.com https://rei-investor.billrapponline.com https://manufacturedhousing.billrapponline.com https://www.youtube.com/channel/UCsF3Rh4Akd1OAOAgTmzgqQg Read the full article

#CommercialMortgageBroker #CommercialRealEstateBroker #CRE #ForSaleinHoustonHeights #HeartfeltandHotInHoustonBlog #HousesforSaleinHouston #HoustonRealEstateNews #MortgageBroker #MortgageViking #SBASpecialist #SunRealtyHouston

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vincentvelour · 5 years

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Caroline Baker on venture capital trends and the lure of Southeast Asia

11/26/2019

By John Bostwick, Head of Content Management

Trade tensions, Chinese debt reduction and other factors have led to a 90 percent drop in Chinese investment into the U.S. over the last couple of years. Despite this decline, venture capital in the United States continues to be popular, with U.S.-based VC firms raising over $28 billion in the first half of 2019. That’s up nearly 10 percent from the same period last year.

The U.S. has of course long dominated the global VC market, but as the drop in Chinese investment into the U.S. shows, venture capital is undergoing profound global shifts. One area of dramatic VC-investment growth is Asia itself. According to an article in the Nikkei Asian Review, “Asia could overtake North America as the global centre for venture capital funding as early as next year.” The article cites a study indicating that five years ago, North American funds outstripped their Asian counterparts by $169 billion. That gap has narrowed to $74 billion and counting.

Caroline Baker has been well-positioned to witness these changes over the past decade. She began her career at PwC in their asset management practice, with stints in Montreal, Sydney, London and Singapore. She went on to become CFO of Chandler Corporation, an investment firm with $5 billion of private equity and real estate investments, primarily in Asia. In 2014, she became Vistra’s managing director of the Alternative Investments division for Asia, and the global lead for private equity. She's based in Singapore.

How long have you been providing services to venture capital firms, and how do you help them?

We have been working with VC firms for many years, but in particular for the past four years, since the VC boom in Asia started. We provide full fund administrative and corporate secretarial services, as well as deal-structuring support. We can also work with the investee companies of the VC funds, ensuring they stay compliant — which is extremely important for the fund managers!

In what significant ways has the global VC landscape changed in recent years?

It’s becoming much more mainstream. Until recently, the VC market was a bespoke asset class. Now, more and more established fund managers are entering the space, and many entrepreneurs themselves are becoming venture capitalists.

The market has grown immensely in Asia in particular. We are seeing more entrants into the market, and a variety of fund sizes are being launched, from $20 million for first-time fund managers to over $200 million for more experienced ones. Part of the growth comes from local government encouragement. Singapore for example has launched a new venture capital fund managers’ regime to make it easier to set up a VC fund.

Are there certain countries you encourage firms to operate in and certain countries you routinely caution them about?

In Southeast Asia there are many emerging markets that can deliver excellent growth, but are difficult to do business in, such as Vietnam, Indonesia and Myanmar. We don’t want our clients to miss the opportunities associated with these markets, so we encourage them to exercise due care and fully understand the risks before committing. We have offices and partners in many locations in Southeast Asia, so we have lots helping hands for fund managers to speak to.

China is now the second-largest venture capital market in the world, with over 3,500 VC firms. Over the course of your own career, how has China’s rise in this area affected the marketplace and how you do business?

Being in Asia, we have really seen the landscape shaped by China. The opportunity in that market is incredible, but it’s also remarkable the way that China has entered other Asian countries. The amount of money invested is obviously transformative, but they also bring their own way of doing business. We have had to be cognizant of how to work with Chinese investors and embrace their way of operating.

After an all-time high in 2016, Chinese foreign direct investment has declined for two years due in part to tightening regulations and liquidity in China. How has this decline affected your own business over the last couple of years?

We have seen fund launches that were focused on China flag somewhat due to fundraising difficulties, however this seems to be compensated by capital from other sources entering Southeast Asia. We are seeing increasing demand from European and even U.S. investors in the region.

According to Preqin data, VC investment into China was down 77% in the second quarter of 2019 compared to Q2 2018. Why do you think some investors are less enthused about going into China than they were just a year ago?

The U.S. trade war is definitely having an impact on investment into China, as are worries about slowing growth. I think investors may be in a bit of a "wait and see" pattern right now, but my view is that this is temporary, and China is still a strong long-term bet.

China’s Foreign Investment Law was passed this year and goes into effect January 1, 2020. The law addresses foreign investors’ concerns over Chinese requirements to share technology with Chinese companies and the fact that foreign companies often have restricted access to China’s market. The law and related concerns speak to the fact that China is very different from many VC target countries. What are some of the pitfalls of China that foreign investors often don’t consider when targeting Chinese companies?

The first is administration. It is not easy to do business in China, and even after all the due diligence is complete and you decide to make an investment, there is still a lot of work to make it happen. The second pitfall is access to information. You may not be able to get the information that would typically be provided by your investee companies in other jurisdictions. Finally, deal access may not be as easy to come by as in other countries. In China, it’s often driven by relationships.

In light of the U.S.’s increased scrutiny of Chinese investment, where do you think China-based VC firms are likely to turn?

We see these firms looking to Southeast Asia — Indonesia and Vietnam in particular.

Vulcan Capital, the investment house of the late Paul Allen, recently opened an office in Singapore that plans to invest in Singapore, Indonesia and Vietnam. Why do you think U.S. investors are attracted to Southeast Asian countries?

One major factor is ease of doing business. Singapore for example is typically ranked at or near the top of global ease-of-doing business rankings, and it’s close to many large emerging economies. It’s also a first-world country and an incredible place to live.

Southeast Asia is also attractive because of its emerging middle class and sizable populations, along with less competition for deals relative to more traditional markets. All of these factors together represent a huge opportunity for investors.

Have you noticed any significant recent trends in the types of industries that are attracting investors?

We are definitely seeing a trend towards green investing, typically green backed by tech. There are some really interesting innovative products out there that leverage tech to provide impactful green products.

Do you find that VC investors are investing in companies at an earlier or later stage than in previous years?

We are seeing VCs invest earlier and earlier. As the market heats up and competition to get into certain companies increases, we are seeing VCs take smaller stakes earlier than ever. They may do this across multiple, very early-stage companies in the hope that one of them will succeed.

A Pitchbook report released this month found that VC investments committed to female-founded startups have grown more than eight times in the last decade. Have you seen this trend reflected in the Asian market?

We are seeing an increase in female founders, but it remains still by far a small portion of the market. However, with every step and with every success these numbers are growing!

What’s the most memorable thing anyone’s said to you about working in the VC market?

Generally speaking, it’s memorable when they talk about their investment returns! The numbers really can be mind-boggling. We also learn a lot from the actual investments our clients make, which often give us a glimpse of the newest trends before they become widespread.

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jambrass0-blog · 5 years

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The 7 Best Books About the Financial Crisis

The global financial crisis of 2007-09 wasn’t unprecedented or unpredictable. It was the logical consequence of a sharp increase in credit supply, which led to a corresponding boom in borrowing and inflated prices for assets most easily used as collateral: housing and sovereign bonds. Lending standards and other limits on indebtedness can fall only so far, however. Once the endpoint is reached, the process begins to reverse, and the leverage accumulated during the boom amplifies that reversal into a catastrophe.

The best books about the crisis explain this process. In different ways, they illuminate our understanding of what happened and provide the intellectual framework for making future crises less painful.

First on our list are Misunderstanding Financial Crises: Why We Don’t See Them Coming (2012) by Gary B. Gorton, and The Bankers’ New Clothes: What’s Wrong With Banking and What to Do About It(2013) by Anat Admati and Martin Hellwig. Both focus on the core questions of what financial firms do, why they fail, and why it matters for everyone else. The key insight from their work is that most of what we call “money” is actually short-term debt backed by risky assets. At any time, savers can try to convert their deposits to cash and force banks to sell their assets, probably at a loss. This is inherently unstable.

For Gorton, the question is why financial crises are rare. His answer is that the state normally protects the value of banks’ short-term debts, which ensures that the value of money is “insensitive” to new information. Deposit insurance, for example, means that most savers don’t need to worry about the health of their bank. Panics occur when savers feel unprotected. To Gorton, the crisis of 2007-09 was caused by the government’s failure to recognize that repurchase agreements and other parts of the financial system had effectively become “banks” and required the same explicit and expansive government guarantees as traditional lenders.

Admati and Hellwig agree with much of Gorton’s analysis but come to the opposite conclusion. The problem, to them, is that protecting bank creditors with government guarantees makes risky bets obscenely profitable. This is a large but hidden subsidy paid to bankers by taxpayers. Worse, the subsidy gets bigger as banks take more risk. The crisis was therefore caused not by insufficient guarantees, but the widespread belief that the guarantees already existed. For Admati and Hellwig, limits on bank leverage are a necessary complement to Gorton’s proposal for additional government support. Shareholders, rather than the state, should be primarily responsible for protecting bank creditors.

The flip side of the financial sector’s excessive lending in the run-up to the crisis was an enormous increase in borrowing. This is the focus of Atif Mian and Amir Sufi in House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It From Happening Again (2014). The sudden shift in credit supply in the 2000s meant that Americans with the lowest credit scores in the worst neighborhoods were disproportionately likely to experience the biggest increases in indebtedness. The extra borrowing boosted house prices as well as spending on everything from cars to home renovations. During the boom, Las Vegas, Phoenix, Miami, and other bubbly metros grew more than places that missed the bubble, such as Texas, with its constitutional restrictions on home-equity extraction. However, they fared far worse after house prices peaked in 2006.

The reason is that, like banks, people with low credit scores and high debts are extremely vulnerable to falling asset prices. Going ZIP Code by ZIP Code, Mian and Sufi show how everything from spending on cars and furniture to employment at restaurants and grocery stores was affected by differences in borrowing during the bubble. They also persuasively argue that the government failed by focusing its response on restoring the banking system to health rather than addressing the financial situation of the Americans who would have wanted to borrow and spend. While the book focuses on the recent U.S. experience, Mian and Sufi’s subsequent research corroborates the universality of their findings across time and other countries. (See Other Voices.)

The debt bubble was also accompanied by rampant fraud. Alarmingly, the fraud didn’t stop after 2008. This important and underappreciated story is ably told by David Dayen in Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud (2016). In the aftermath of the bust, mortgage-servicing companies, often owned by the big banks, foreclosed on millions of defaulting borrowers, often at the expense of first lien creditors who would have preferred making loan modifications. The servicers didn’t have the capacity or the desire to fill out the paperwork properly, so they often resorted to forging documents signed by the implausibly productive “Linda Green.”

Sometimes, this led to foreclosures on homeowners with current mortgages, and even on homeowners who had no mortgage debt at all. The judicial system proved remarkably forgiving of these “clerical errors.” Eventually, the U.S. government collected fines from the servicers, but it did little to punish the perpetrators of these large-scale thefts. Dayen’s account mixes detailed explanations of the mortgage-securitization process with vivid accounts of the human cost of the bubble and bust.

All of these books leave readers wondering why the global debt boom happened where and when it did. Michael Pettis answers these questions in The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy (2013). He starts with a simple but profound insight: While all income comes from someone else’s spending, many people spend either more or less than they earn. Those who spend more cover their deficit by selling assets, while those who spend less than they earn have a surplus that is necessarily used to accumulate assets. As a result, “Japanese interest rates, Spanish real estate bubbles, American mortgage derivatives, and copper mining in Chile are all part of a single system.”

Problems arise when decisions in certain countries distort behavior elsewhere. Pettis focuses on the consequences of the surpluses in China and Germany, which he convincingly argues were caused by insufficient domestic spending. The Chinese government’s development strategy focused on transferring household wealth to businesses, which depressed purchasing power that could have been used to buy more imports. Meanwhile, the German elite’s preoccupation with “competitiveness” led to wage stagnation. The resulting surpluses forced corresponding deficits and debt bubbles upon the few countries that tolerate capital inflows from abroad, until the debts became unbearable or the capital flows reversed. Pettis sees the crisis as the first step in the resolution of these “global imbalances,” which remain a threat to global peace and prosperity.

Adam Tooze’s Crashed: How a Decade of Financial Crises Changed the World (2018), and Martin Wolf’s The Shifts and the Shocks: What We’ve Learned—and Have Still to Learn—From the Financial Crisis (2014) are the most comprehensive single-volume accounts of the global crisis and its aftermath. Tooze, recently interviewed by Barron’s, wrote a detailed narrative history, while Wolf focuses on the implications for economic thought and policy making.

Tooze’s history is centered on the global structure of the financial system and the political implications of these international connections. Banks based in Europe borrowed and lent trillions of dollars in the U.S. German regional banks were at least as important as the traditional Wall Street firms in fueling America’s housing debt bubble. Meanwhile, American banks, through their operations in London, were heavily exposed to Europe. Tooze convincingly argues that the subsequent euro crisis wasn’t a separate event from 2008 but the natural consequence of these links.

His history is enriched by his focus on geopolitics. While central banks in countries of strategic importance to the U.S., such as Korea and Mexico, got relatively unrestricted access to cheap dollar loans from the Federal Reserve during the crisis, the Russian central bank would never get dollars from the Fed to support its financial system so soon after the invasion of Georgia. The European Central Bank’s treatment of borrowers in the Baltics, Hungary, and Poland reinforced domestic attitudes that they were second-class Europeans who couldn’t depend on the West. Perhaps the most fascinating section of the entire book is Tooze’s explanation of the Ukraine crisis and its connection to 2008.

To Wolf, the crisis and the subsequent weak recovery were intellectual failures. Politicians are always shortsighted, and bankers cannot be blamed for responding to the incentives established by governments. Academics and technocrats, however, made two profound errors. First, they ignored the possibility of trouble before the crisis. Soaring indebtedness was of no concern as long as home ownership and asset prices were rising. Second, their response to the downturn was often counterproductive. Economists claimed high unemployment was caused by an abundance of workers with “zero marginal product.” They wrongly warned that inflation was imminent. And they argued that governments should tighten their budgets even though inflation-adjusted interest rates were at the lowest levels in generations.

Wolf’s conclusion is that much of what economists believed to be true back in 2007 should be discarded in favor of ideas from outside the mainstream, or ideas that had been long forgotten. Unfortunately, events since his book’s publication suggest things may have to get worse before they can get better.

Follow @M_C_Klein

Write to Matthew C. Klein at [email protected]

Source: https://www.barrons.com/articles/the-7-best-books-about-the-financial-crisis-1536355267?mod=rss_barrons_this_week_magazine

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orbemnews · 4 years

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Short-Sellers Fear for the Future Wall Street’s skeptics are suffering Short-sellers have long been some of Wall Street’s most reviled villains. But the recent “meme stock” frenzy — in part, a concerted effort to squeeze such investors — has left many fearing for their livelihoods, The Times’s Kate Kelly and Matt Goldstein report. Short-sellers have been battered by the bull market. Hedge funds that primarily bet against stocks were down 47 percent over the past year. “Short-sellers have been beaten up and left for dead on the side of the road,” said Jim Chanos, the investor who famously bet against Enron ahead of its collapse. Now they are worried about new challenges: The GameStop frenzy shows that internet-enabled herds can bet en masse on companies, driving up their stock price and saddling shorts with huge losses. “I see dead hedge funds,” one user posted in a Reddit forum. Washington lawmakers are holding shorts up as potential market manipulators. “We must deal with the hedge funds whose unethical conduct directly led to the recent market volatility,” said Representative Maxine Waters, a Democrat, the head of the House Financial Services Committee who will oversee a Feb. 18 hearing on the meme stock mania. Crowded trades and a bull market have “destroyed what’s left of short-sellers,” said Marc Cohodes, a veteran investor. Some worry about their personal safety, too. Fahmi Quadir, who runs a $50 million hedge fund, shares her GPS coordinates with a colleague. And Gabe Plotkin, whose Melvin Capital was specifically targeted by Reddit traders, had to hire security after his family was threatened. HERE’S WHAT’S HAPPENING A setback in the fight against Covid-19. South Africa halted distribution of AstraZeneca’s coronavirus vaccine after a preliminary study showed that it had limited effect against the coronavirus variant first identified in the country. President Biden presses for a huge stimulus measure. The president defended efforts to pass a $1.9 trillion package with only Democratic votes, rejecting calls for smaller proposals. In related news, Democrats plan to unveil a $3,000-per-child cash payment. Democratic senators propose rewriting a tech legal shield. The “SAFE TECH Act,” proposed by Senator Mark Warner of Virginia, would establish limits to websites’ immunity from legal liability on user-posted content. It has encountered resistance from groups that say smaller tech platforms could be hurt more than giants like Google and Facebook. SoftBank’s Vision Fund posts a huge quarterly gain. The Japanese company’s tech investment fund reported an $8 billion profit in its latest quarter, thanks to portfolio companies like OpenDoor and DoorDash going public. SoftBank as a whole reported an $11 billion profit, surpassing estimates. The best of the Super Bowl. Sure, Tom Brady solidified his status as the greatest quarterback of all time as he led the Tampa Bay Buccaneers to a blowout victory over the Kansas City Chiefs. But let’s talk about the ads, which included pleas for unity (Bruce Springsteen for Jeep), nostalgic weirdness (Timothée Chalamet as the son of Edward Scissorhands for Cadillac) and just plain old weirdness (Toni Petersson, the C.E.O. of Oatly). Andrew’s favorite: Jason Alexander, in a manner of speaking, for Tide. Where do you get your financial advice? As lawmakers and regulators investigate the meme stock frenzy, they are taking a closer look at online forums and social media accounts. Treasury Secretary Janet Yellen said yesterday that she wanted to “make sure that investors are adequately protected.” Disclosures and disclaimers are in focus. The trader known as “Roaring Kitty” put a disclaimer on his popular YouTube videos about GameStop, recommending that potential investors consult an adviser before acting. But an analysis of more than 1,200 TikTok videos by 50 “StockTok” influencers found that 14 percent encouraged users to make trades without a disclaimer, according to the cryptocurrency trading platform Paxful. Those videos, some of which were flagged by TikTok as “misleading,” have garnered 28.4 million views. Regulators have been here before. During the dot-com boom, the S.E.C. kept tabs on chat rooms for signs of manipulation, as in the case of Jonathan Lebed, a teenager who posted messages touting stocks he owned. In September 2000, he settled with the agency by agreeing to pay back $285,000. There’s an ETF for that: The asset manager VanEck is starting a fund that scours Twitter, forums and blogs for stocks with a lot of online buzz. “The elements in the new system consist of central computers, an automatic communications network and desktop terminals.” — On this day 50 years ago, the Nasdaq booted up the first electronic stock exchange, which The Times called “the most revolutionary innovation in the history of the over-the-counter market.” Microsoft’s president talks politics After the Jan. 6 riot in Washington, companies have been rethinking their political donations, as we detailed this weekend. Microsoft, which has given hundreds of thousands of dollars in recent election cycles to Republicans who went on to challenge the certification of votes after the storming of the Capitol, said late last week that it would cut them off. In the first in-depth interview about the decision, Microsoft’s president, Brad Smith, spoke with Kara Swisher on the “Sway” podcast. One donation came as a particularly unpleasant surprise, Mr. Smith said, referring to a gift to Senator Josh Hawley, who led Republican efforts to question the election result. “When I learned in January that that donation had been made in the early part of December, it did not bring an enthusiastic beginning to my morning,” said Mr. Smith, who leaves day-to-day decisions in this area to the company’s PAC department. Microsoft has redefined its PAC policies. Mr. Smith said the company would now more explicitly consider issues like whether politicians “are good for democracy.” There is still a place for the corporate PAC, Mr. Smith argued. Although the point of a corporate PAC is up for debate, “I think we have one for good reasons,” he said. Those reasons, namely, are because crucial matters of privacy, security and competition are “going to be decided in the world of politics.” The serial SPAC sponsor Alec Gores strikes another deal The blank-check company Gores Holding VI is acquiring Matterport in a deal that values the real-estate technology company at $2.3 billion. The merger also includes a cash infusion of $640 million. Alec Gores was early to the SPAC game, notably with his firm’s 2016 deal for Hostess. The firm also boasts the biggest SPAC deal to date, taking United Wholesale Mortgage public last year in a deal worth more than $16 billion. Gores Holding raised its seventh SPAC last month, helping January set a record for SPAC fund-raising, with blank-check I.P.O.s worth nearly $26 billion. Today’s deal was the first by Gores since Justin Wilson and Ted Fike joined from Softbank’s Vision Fund, suggesting a tech shift for the firm’s SPAC business. Matterport makes spatial data technology that helps create 3-D visualizations of properties like homes and event spaces. The week ahead Corporate earnings continue to come in better than expected, defying initial forecasts of another pandemic-fueled decline and forcing analysts to upgrade their expectations. Blue-chip companies hoping to keep the streak alive this week include: Fox, KKR and Twitter on Tuesday; Coca-Cola, G.M. and Uber on Wednesday; and AstraZeneca, Disney and PepsiCo on Thursday. Bumble is scheduled to make its market debut midweek, and is predicted to raise about $1 billion in an I.P.O. that values the online dating company at around $6 billion. And finally, the second impeachment trial of former President Donald Trump starts on Tuesday. Will Biden curb the ‘curse of bigness’? The Biden administration must choose between taking a progressive view of antitrust regulations, using the law to rein in or break up big companies; sticking with the laissez-faire approach that critics say has led to extreme concentration; or trying to find some middle path. The pressure on the president from the left comes from those who argue that a tougher approach simply hearkens to the past, when the authorities recognized what Louis Brandeis, who went on to become a Supreme Court justice, called the “curse of bigness” in the early 20th century. “Monopoly power is a causal factor in our most serious economic challenges,” states a new report from the American Economic Liberties Project, an antimonopoly nonprofit, shared first with DealBook. The group argues for a new-old ideological regime that reins in consolidation, proposing dozens of actions for the Justice Department, F.T.C., F.C.C., Congress and many other official bodies. “This is a major project,” the group’s executive director, Sarah Miller, said. The need to “reject old ideological underpinnings” is a unifying theme throughout the report, she added. “There is not just one silver bullet.” A new lens is needed, Ms. Miller said. For decades, antitrust reviews have employed a “consumer welfare standard” that examines mergers for economic efficiency, mostly focused on the effect a deal has on prices. But people aren’t just consumers — they are also workers, voters, entrepreneurs and community members. In practice, Ms. Miller argues, as industries consolidate, consumers sometimes pay less for products, but wages also stagnate and entrepreneurship falters. “America’s concentration crisis did not emerge in the Trump years,” but it deepened during this time, according to the report. The group compiled a downloadable database of more than 1,300 significant mergers during the Trump era, noting that “basic, usable information” about M.&A. is mostly unavailable to the public. THE SPEED READ Deals In SPAC news: Elliott Management is reportedly considering raising $1 billion for a blank-check fund; SoftBank is seeking $630 million for two SPACs; and Danny Meyer, the founder of Shake Shack, is planning to raise $250 million for a fund. (WSJ, Bloomberg) Oatly, the maker of plant-based dairy products, is reportedly seeking a $10 billion valuation in its I.P.O. (Bloomberg) Politics and policy Donald Trump’s efforts to contest the 2020 presidential election have cost federal, state and local governments an estimated $519 million. (WaPo) Tech Best of the rest Bill McGlashan, the former TPG executive embroiled in the college admissions scandal, will plead guilty to two charges. (Bloomberg) Jeff Immelt accepts some blame for G.E.’s stumbles — but offers a lot of excuses, too. (NYT) Clawing back pay for misconduct is hard, so some companies are forcing top executives to set aside share grants for at least a year, even after they vest. (WSJ) We’d like your feedback! Please email thoughts and suggestions to [email protected]. Source link Orbem News #Fear #Future #ShortSellers

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cokeisrael4-blog · 5 years

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Is South Street's retail apocalypse coming to an end?

A downturn decades in the making

To that end, Weiss’s firm is working on transactions with large investors who would acquire a whole portfolio of properties at once, he said.

Source: http://planphilly.com/articles/2018/11/20/is-south-street-s-retail-apocalypse-coming-to-an-end

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kristinastorey27 · 6 years

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Industries That Thrive Even When the Economy Falters

Image by geralt on Pixabay

Recent history has shown that economic bubbles burst and cash booms go bust. Though the economy is doing well right now, it is helpful to look toward the future.

For those interested in opening up a new business, here are a few safe bets in the event of an economic downturn.

Law Firms

During the last recession, firms that specialized in bankruptcy, foreclosures, and debt collection were in high demand. What’s more, even a commercial real estate lawyer can find plenty of work when the economy sours.

This is because, generally speaking, people don’t hire lawyers when times are good. They tend to seek legal counsel during the less-than-ideal chapters of their lives. While it may seem vulturous to count on this as a source of income, lawyers provide a vital service to the community.

Therefore, so long as you’re doing your absolute best to represent your clients, there’s nothing wrong with viewing the practice of law as a recession-proof way to earn a good living.

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Accounting Firms

No matter how hard hit the economy gets, the government will always collect taxes. For this reason, certified public accountants, whether self-employed or part of a firm, will always have to field tax questions. Clients will continue to turn to them to stay updated on guidelines and changes.

Additionally, accountants are a vital part of any internal audit. During a recession, the need for audits spike. That’s because companies try during these times to assess their waste and create leaner budgets.

Lastly, accountants can help determine financial risk. This becomes especially important in times of economic stagnation. It’s no surprise that accounting practices for sale tend to get bought up rather fast.

Education

During the last recession, the number of people returning to school increased. Young people decided to apply to graduate school or extend their undergraduate studies until the job market rebounded. Workers needed to brush up on new skills or change careers entirely.

Some funds for education tended to dip because of changes in property value and budget cuts. However, institutions of higher education did well during the recession. The government continued to guarantee student loans and financial aid. Displaced workers and the institutions that served them were given access to grants and other funds.

Given the fact people seek higher education when times are good as well, it’s safe to say that for-profit colleges are a secure business. This is especially the case considering the cost-effectiveness of online education options, which have become incredibly popular in recent years.

RELATED ARTICLE: ONLINE DEGREES THAT WILL ENHANCE YOUR SKILLS AS AN ENTREPRENEUR

Health Care

Regardless of the economy, people get sick. Though no job is recession-proof, nurses and other highly skilled medical professionals are always needed.

With this in mind, those who wish to start a business may want to seriously consider the medical field. Urgent care clinics, specialist medicine, and the countless products and services needed in the healthcare industry offer plenty of business opportunities for those with an entrepreneurial streak.

Choose an Industry That Will Stay Strong in Any Economy

We’re all hoping the economy stays strong. But what goes up is sure to come down. Given the inevitability of a recession at some point in the future, those who wish to start a business would be wise to focus on an industry that remains in demand in good times and bad.

The post Industries That Thrive Even When the Economy Falters appeared first on Business Opportunities.

from Business Opportunities http://www.business-opportunities.biz/2019/02/28/industries-thrive-economy-falters/

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alfredrserrano · 6 years

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(Over)supply and demand: What Miami’s condo glut could mean for multifamily rents and development

(Illustration by Maciej Frolow)

Tour the Panorama Tower overlooking Biscayne Bay, with its “porte cochere,” poolside cafe, wine tasting rooms, pet spa and home theaters, and you might think that you’re sampling Miami’s latest glitzy condominium offering.

Rising nearly 900 feet, Florida East Coast Realty’s project is the tallest building in the state. But unlike many of the other towers that dot Brickell, the Hollo family’s development firm decided to build rentals. It even tapped Fortune Development Sales, a top condo sales and marketing firm, for the leasing assignment, and targeted trendy and hip Miamians — “Brickellistas.”

Banking on the city’s population growth, its hunger for big corporate tenants and homeownership’s diminishing prominence in the American Dream, FECR and other developers have bet that Miami, like New York, will become a city of renters. They’re building top-shelf product and wooing the prosperous with a playbook they’ve adapted from their condo-building counterparts. But their approach could directly threaten condo investors, who are increasingly looking to generate income by putting their units on the rental market. In Miami-Dade County, nearly 2,200 leases have been signed on the so-called “shadow rental market” so far this year, data from Integra Realty Resources show, up from fewer than 100 shadow rentals in 2014.

In the face of increased competition from rental developers with newer product, a central tenet of buying a unit for investment — renting it out — is being challenged. And while large rental landlords are able to adjust prices in the event of oversupply or a downturn, individual condo owners, dealing with a myriad of fees and taxes, have less wiggle room on pricing, meaning they could be shut out.

“Owning a condo and renting it,” said Manny de Zárraga, the Miami-based co-head of HFF’s National Investment Advisory Group, “is not a great business.”

Apartment therapy

So far, developers’ big bet on luxury multifamily projects seems to be paying off. Panorama is leasing out at rents that range from $2,500 a month for a one-bedroom to over $6,700 for a three-bedroom. More than half its 821 units are leased out, according to Jerome Hollo, president of FECR.

Comparable properties have also done well. Recently built Class A apartments in Miami-Dade saw net operating income grow 74 percent between 2015 and 2017, according to The Real Deal’s analysis of county figures.

That the sector is posting such numbers despite a large supply bump says a lot. Since 2014, more than 20,000 Class A apartment units have come to market in Miami, according to a TRD analysis of data from Integra, which creates residential reports for the Miami Downtown Development Authority. Yet asking rents have only climbed.

“When we went through the last real estate crash, the sales prices of residences went down,” said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. “But rentals never did.”

All that supply, however, is expected to eventually push rents down. That’s especially true for Miami because, unlike other cities in the Southeast such as Charlotte or Atlanta, it still lacks giant corporations with their well-heeled workers — RIP Amazon HQ2 — to anchor its rental market. Couple that with foreign and out-of-state condo investors who are now dumping their units on the rental market, and some experts sense that something’s got to give.

Calixto García-Vélez, who oversees FirstBank Florida, said he is barely doing any new construction lending for Class A Miami apartment buildings. On top of the new product coming to the market, the banker said, condo rentals will flood the renter pool, which will temporarily drive down rents. The market will be fine in the long term, he thinks, but as rents drop, so will the bank’s lending activity to this asset class.

“Condos that were for sale are now being put in rental pools,” García-Vélez added.

New data provides a look at just how pronounced this trend is. So far this year, 2,175 shadow rental leases — contracts between a condo owner and tenant — have been signed in Miami-Dade, up 60 percent year over year, according to Integra. The number of condos on the shadow market today would then represent about a fifth of the total units delivered this cycle — nearly 11,200, according to an analysis by ISG Miami of the condo development hotbeds in Miami-Dade east of I-95, Fort Lauderdale, Hollywood and Hallandale Beach.

This could be bad news for condo owners because there are a lot more apartments to compete with these days, said Anthony Graziano, a principal at Integra. In Greater Downtown Miami alone, of the more than 24,000 multifamily units in the pipeline this cycle, roughly 11,000 units have been delivered or are under construction, he said.

And while major rental landlords generally have a fair bit of flexibility built into their pricing and can adjust rents in the face of a spike in supply or other challenges, condo owners — burdened with property taxes, homeowners’ association fees and special assessments — can’t be as nimble, putting them at risk of losing the price-conscious renter.

Condos are clearly more expensive. A conventional apartment is renting out for $2.07 a foot, while a condo rental is leasing at $3.28 a foot, according to MLS and CoStar data compiled by Integra.

For a luxury condo market that reportedly already has a years-long oversupply of inventory, this could produce a mass selloff, some skeptics say, or — at the very least — a steep drop in prices.

“It’s a day of reckoning for [condo] owners,” said Peter Zalewski, a principal with the Miami real estate consultancy Condo Vultures and an investor in the bulk-condo market.

Deal flow

Depending on pricing, demand and ability to build, investors and developers will often toggle between the multifamily and condo asset classes.

While some bankers like FirstBank Florida’s García-Vélez have become more skeptical about funding new Class A-rental projects, developers have found themselves with plenty of options ever since the Federal Reserve relaxed rules on commercial lending this year. Apartments generally cost less to build than condos, allowing for potentially healthier profit margins, said Brett Forman, CEO of Trez Forman Capital Group, a commercial mortgage lender.

“What people fail to realize is that the supply that is being delivered is catching up with demand,” said Peter Mekras of Aztec Group, a real estate investment and merchant banking firm. Mekras believes that much of the forthcoming product will compensate for the post-crisis slowdown in supply, which stemmed from developers’ inability to get financing.

But Jim Costello of Real Capital Analytics feels the Federal Reserve’s move came at the wrong time.

“Money may be coming in on the debt side,” Costello said, “but if the tax burden is so high on developers and it’s hard to find the labor, you can’t build a building with debt alone.”

Lenders on such deals tend to be large banks or insurance firms. In Miami-Dade, Wells Fargo ranked as the top multifamily lender this cycle, with over $500 million in deals since 2014, according to a TRD analysis of large loans.

On the condo side, things are quite different. It took Two Roads Development over a year to land a $138 million construction loan from JPMorgan for Elysee, a 57-story tower it’s building in Miami’s Edgewater neighborhood. Many condo developers beginning construction now are largely self-funding their projects, as is the case with Missoni Baia, an Edgewater project being built by Vlad Doronin’s OKO Group and Cain International, and Okan Group’s Okan Tower, a hotel and condo project planned for Miami’s Arts & Entertainment District. Others have looked to Bank OZK, an Arkansas-based bank that has become the Miami metropolitan area’s most aggressive condo lender, with more than $1.2 billion in construction loans from 2013 through 2017, according to the company’s annual reports. This represented over a quarter of the dollar volume of all condo construction loans made in the area during that time.

Gables Columbus Center is among the crop of rental buildings competing directly with the shadow market.

And while the luxury condo sales market is in a funk, Class A South Florida multifamily properties are still fetching top dollar in the investment-sales market. In July, Gables Residential sold a rental complex called Gables Aventura to an asset management arm of Deutsche Bank for $149 million, or $372,500 per unit. And Related Group hopes that Icon Las Olas, its luxury rental tower in downtown Fort Lauderdale, will fetch at least $500,000 a unit, or $136 million.

That may be because many of the bigger investors aren’t necessarily sprinting after fat returns. Institutional players, such as Mill Creek Residential or Greystar Real Estate Partners, tend to make decade-plus bets and aren’t as impacted by short-term fluctuations in rent.

“They will be patient,” said HFF’s de Zárraga.

A condo by any other name …

In 2013, Miami was experiencing a post-crisis development boom. Luxury condos were launching left and right, especially in Brickell, a corner of Miami that has become a U.S. hub for Latin American financial services companies. Top developers such as Ugo Colombo, Related Group and Swire Properties set their sights on the area for their trophy condo projects. By the end of 2016, Brickell had 17 condo projects with over 5,500 units in the pipeline, according to an ISG report. Many of these units were being sold to foreign investors, some of whom then sought to rent them out on the shadow market.

With condo developers like Jorge Pérez and Jeff Soffer rising to aristocratic status in a city that reveres builders, apartment developers wanted in.

Players such as FECR, ZOM Living and Property Markets Group believed that Miami would become a national economic hub that could command high rents. They sought to create amenity-rich product and corresponding services that would cater to this future market.

Gables Columbus Center, a 200-unit apartment building that was completed in downtown Coral Gables this year, offers a resort-style pool deck, 24/7 concierge, electric car charging station, business lounge and gym. Micah Conn, development director with Gables Residential, said the project, which is about 40 percent leased, is now competing with the shadow condo market.

“We have a professional staff trained at managing and leasing,” he said. “In Miami, there’s a very big investor profile. Getting your toilet fixed or your refrigerator repaired — these kinds of things might take weeks if your owner is out of the country.”

Alex Miranda of One Sotheby’s International Realty has been working and living in the Midtown Miami apartment complex since Joe Cayre’s Midtown Equities, the original developer, completed the first residential building there in 2007. Midtown 6, 7 and 8 (all separate projects) are underway and will add competing rental product to a market with a large condo supply. Consider, for example, that Related Group recently completed the four-tower Paraiso District in nearby Edgewater, bringing about 1,400 new condos to the area.

Inventory is “getting a little bit out of control,” Miranda said, adding that “it’s a lot easier to live as a renter in a rental building.”

The last time a condo building is updated is typically when the developer completes it. Once homeowners’ associations take over, “the first thing they cut is amenities” to keep costs low, Conn added.

“The age of the product gives us the advantage,” he said.

One-night stands

Where condo owners could have a leg up over apartments is in the short-term rental market. The rise of platforms like Airbnb, HomeAway and VRBO has led some investors to ditch traditional 12-month leases and focus on lucrative quickie deals.

Orlando-based ZOM completed Solitair Brickell this summer.

Some developers are emphasizing this opportunity. Aria Development Group and AQARAT are building YotelPad, a hotel and 208-unit condo building in downtown Miami with zero rental restrictions. Buyers there are free to rent their units out themselves, on websites like Airbnb or through the Yotel program. (If they do use the building’s management system, owners would have to commit to a set period of time.)

“It was definitely an intentional differentiating factor,” said David Arditi, a principal at Aria. “It’s something buyers find appealing.”

Sarah Elles Boggs, who works in condo sales at Douglas Elliman, said that end-user buyers are now dominant in the market, and they value the ability to move in quickly after closing. As a result, condos being used as traditional rentals have become trickier to sell.

“I’ve noticed a distinct increase in days on market if it’s a rental and it’s selling to an end user,” Boggs said.

Which is where short-term rentals could come in. At Canvas, a 513-unit condo set to begin closings in January, the market demanded the short-term rental option “from day one,” said Ron Gottesman, a principal at the developer, NR Investments.

NR is allowing furnished units to be rented for a minimum of 30 days at a time. Gottesman said that his main concern with allowing short-term rentals was that Canvas is one of a few dozen condo buildings in Miami to have Fannie Mae approval, and short-term rental activity could affect buyers’ ability to get home loans.

And now that the development is 90 percent sold, Gottesman is focusing on attracting end users, not investors.

“Buyers have their own thoughts about how short-term rentals are going to work,” he said. “They can make a lot of money. [But] I don’t think the buyers understand what it means; it’s intensive management,” he continued, adding that “when the end user is really buying, this is a healthy market.”

from The Real Deal Miami https://therealdeal.com/miami/issues_articles/oversupply-and-demand/#new_tab via IFTTT

#The Real Deal Miami

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juditmiltz · 6 years

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(Over)supply and demand: What Miami’s condo glut could mean for multifamily rents and development

(Illustration by Maciej Frolow)

“Owning a condo and renting it,” said Manny de Zárraga, the Miami-based co-head of HFF’s National Investment Advisory Group, “is not a great business.”

Apartment therapy

“When we went through the last real estate crash, the sales prices of residences went down,” said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. “But rentals never did.”

“Condos that were for sale are now being put in rental pools,” García-Vélez added.

Condos are clearly more expensive. A conventional apartment is renting out for $2.07 a foot, while a condo rental is leasing at $3.28 a foot, according to MLS and CoStar data compiled by Integra.

For a luxury condo market that reportedly already has a years-long oversupply of inventory, this could produce a mass selloff, some skeptics say, or — at the very least — a steep drop in prices.

“It’s a day of reckoning for [condo] owners,” said Peter Zalewski, a principal with the Miami real estate consultancy Condo Vultures and an investor in the bulk-condo market.

Deal flow

Depending on pricing, demand and ability to build, investors and developers will often toggle between the multifamily and condo asset classes.

But Jim Costello of Real Capital Analytics feels the Federal Reserve’s move came at the wrong time.

“Money may be coming in on the debt side,” Costello said, “but if the tax burden is so high on developers and it’s hard to find the labor, you can’t build a building with debt alone.”

Gables Columbus Center is among the crop of rental buildings competing directly with the shadow market.

“They will be patient,” said HFF’s de Zárraga.

A condo by any other name …

With condo developers like Jorge Pérez and Jeff Soffer rising to aristocratic status in a city that reveres builders, apartment developers wanted in.

Inventory is “getting a little bit out of control,” Miranda said, adding that “it’s a lot easier to live as a renter in a rental building.”

“The age of the product gives us the advantage,” he said.

One-night stands

Orlando-based ZOM completed Solitair Brickell this summer.

“It was definitely an intentional differentiating factor,” said David Arditi, a principal at Aria. “It’s something buyers find appealing.”

“I’ve noticed a distinct increase in days on market if it’s a rental and it’s selling to an end user,” Boggs said.

And now that the development is 90 percent sold, Gottesman is focusing on attracting end users, not investors.

from The Real Deal Miami https://therealdeal.com/miami/issues_articles/oversupply-and-demand/#new_tab via IFTTT

#The Real Deal Miami

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nimaidevelopers18-blog · 6 years

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Proficiently built commercial projects in Dwarka Expressway

Commercial projects in Delhi-NCR have boomed to great heights in last decade post the corporate globalization. Companies from around the world started to open their branches in the capital city of India and soon as the space ran out, the properties got efficiently stretched to NCR. It was around the time when nation was building itself geographically to have better interconnection with in the states through expressways. Nimai Developers have several ventures around the country that are escalating the growth of real estate sector on a whole another level. Nimai deals with both residential and commercial properties and our commercial projects in Dwarka expressway are spellbinding. The architecture is the paramount of urban infrastructure and the buildings have large spaces in them so that people can run their firms with as much number of employees they want.

The size of a firm is always tangible and bets are on the increasing part hence you would want a big space where you can flourish as much as you do. Also, shifting the base of a commercial complex can be a big task that might not suit the reputation as much but a Nimai property can easily solve all of it. Our commercial complexes have enough vacuum in it that your firm would not have to look anywhere for all the facilities you may require as our properties are equipped with highly sophisticated exterior, interior and technological advancement. In today’s day and age, space is getting smaller but Nimai decided to marry the new world of ultra-technological gadgets and the old world charm of massive spaces to create perfect cosmoses. Our commercial properties in Dwarka expressway are equipped to house a lot of companies with in the complex and the ownership of spaces will be allotted to keep each firm separately sustainable behind their own walls and floor. Over a period of many years, Nimai Developers have built a reputation of being one of the most trusted and reliable builders in the market and each of our property comes with a seal of massive reliance.

Nimai has branched out all over Delhi-NCR and have wonderful commercial office space in Gurgaon which is practically the hub of corporates. Gurgaon has one of the most commercial spaces at one point in the whole country and the property of Nimai clearly stands out. Our space in Gurgaon is highly celebrated and tremendously acknowledged by some fantastic firms out there who have grown on our cement or willing to. Nimai Developers have been in the real estate business for many years and we are proud to say that we understand the pulse of this nation. Constantly being relevant to any kind of architectural change in the society and pioneering some of it has made us one of the biggest firms in the country.

#real estate #business #commercial project #commercial property #service #flat #apartment

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stephendmoreno1967-blog · 6 years

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Memphis downtown boom fueled by riverfront city's rich history

Adaptive reuse of breweries, bakeries, and warehouses have brought new life to Bluff City.

As Southern cities like Charlotte, Austin, and Nashville continue their record-setting pace of development and expansion, many have overlooked the building boom taking place in Memphis, Tennessee.

Best known for its rich music history and its pivotal role in the civil rights movement, the riverfront city has seen a real estate rebirth. More than $13 billion in revitalization projects has reshaped Memphis's downtown over the past four years, and, according to Cushman & Wakefield/Commercial Advisors, tourism grew 13 percent between 2012 and 2017. The city's Main Street trolley line relaunched in April.

Earlier this summer, New York-based real estate firm Townhouse Management announced plans to rehabilitate an abandoned 37-story high-rise, 100 North Main, as part of a deal that would bring 500 luxury residential units, a new Loews Hotel, and roughly $1 billion of commercial and residential development to a sleepy stretch of downtown. Along with the $225 million One Beale project, a multi-use hotel, retail, and office project on the riverfront, it promises to reshape downtown.

“It's a great city, and it's underinvested,” says Arlene Maidman, executive co-chair of Townhouse. “This project can help revitalize an entire downtown.”

While a project featuring significant investment from an out-of-town firm, 100 North Main, has grabbed headlines, in many ways, the high-rise rehab plan is indicative of the deliberate development transforming Memphis. And it's also just the latest big-name project adding to the magnetism of this mid-size city of roughly 652,000.

Jamie Harmon

Jaime Harmon

Developed in part with local groups such as the Crosstown Collaborative, the building now includes a vibrant web of neighbors, small businesses, non-profits, artists, and even Crosstown High School.

Other signature developments recently completed or in the works-Crosstown Commons, an abandoned 1.5 million-square-foot Sears distribution facility turned “vertical village”; the $55 million reimagining of an Amtrak station; the recent redevelopment of the Tennessee Brewery building, which includes 700 new apartments; and the conversion of an old Wonder Bread factory into residences-have focused on adaptive reuse.

Local developers and planners haven't thrown up cookie-cutter, contemporary glass towers, says Tommy Pacello, a former planner and current president of the Memphis Medical District Collaborative. Since the second-tier market has been slower to ramp up post-Recession, developers have had to be more thoughtful, deliberate, and thrifty, leading to an outsize focus on adaptive reuse.

“We've been figuring out how to do good urbanism without spending a lot of money,” says Pacello. “We're more about rehabbing our buildings, not gold-plating them.”

A sprawling city redefines growth

As Terrence Patterson, former president of the Downtown Memphis Commission, once said, “we don't aspire to be Charlotte or Nashville or Austin or Atlanta. We aspire to be a better Memphis.”

A big part of building that better Memphis is rethinking what growth means. For decades, development here has equaled sprawl. According to Pacello, the city's population grew by 4 percent between 1970 and 2010, while annexation of nearby suburbs and towns expanded its area by 55 percent. At roughly 324 square miles, Memphis was nearly twice the size of Detroit, with roughly the same population, and new developments sprang up along its periphery.

Like many large cities riven by the midcentury urban planning paradigm, the seeds of Memphis's current wave of redevelopment were planted in the late '70s and early '80s. Significant flight from the central city in the '60s and early '70s, especially after Martin Luther King Jr.'s assassination, deflated downtown.

Townhouse Management

A rendering of 100 North Main.

But starting in the late '70s, downtown started a comeback with the redevelopment of the city's famed Beale Street as a center for musical tourism, the establishment of the DMC, and the construction of Harbor Town, a New Urbanism-style development on a former sandbar in the Mississippi River called Mud Island. The reopening of the historic Peabody Hotel in 1983 added a “neighborhood living room” to a recovering city core.

Decline created the conditions for a resurgence, said Jennifer Oswalt, current president of the DMC. The city couldn't rely on the same “eds and meds” formula-leaning on schools and health districts-to bounce back, like Pittsburgh. Instead, says Oswalt, a group of dedicated local real estate investors, including Henry Turley, whose firm developed Harbor Town, Belz Enterprises, which helped restore the Peabody Hotel, and Billy Orgel, who rehabbed the Tennessee Brewery, placed bets on a re-established downtown.

“We began to open up apartments downtown, because we thought it was important to repopulate downtown with average people,” says Turley.

How projects like Crosstown redefined Memphis

Ever since Memphians and others began returning downtown-first a trickle, and now a flood-the city has densified. This rise in new residents and businesses has attracted large corporate relocations. ServiceMaster, which moved its corporate headquarters downtown, will eventually employ 1,200, according to the company.

Memphis's history as a river port and shipping hub, and its outsize supply of warehouses and logistics facilities, explains why so much of the new generation of development has focused on adaptive reuse and infill projects.

“Memphis is worth championing, but how can we rebuild that and sustain that?” says Justin Entzminger, executive director of Innovate Memphis, a public-private partnership focused on solving urban problems.

Crosstown Concourse exemplifies the way Memphis developers have breathed new life into older structures. The $200 million reconstruction project reanimated the gigantic warehouse facility. During construction, 3,200 window sections were added-more windows than the White House and U.S. Capitol combined-and 10 million pounds of metal were removed from within the aged building.

According to Entzminger, the growth downtown and in surrounding neighborhoods has changed how Memphians see their city.

“There was a generation of Memphians that were told that success meant a career somewhere else, usually a bigger city or the latest 'it' city,” he says. “Now, for people who want to have a creative career, Memphis is a viable option. You don't have to climb and climb a ladder to get in front of somebody. The barriers to entry are pretty small.”

Making sure development works for every Memphian

While things have changed for the better, Entzminger also agrees that Memphis, like most American cities, struggles with equity and leveling the playing field for residents and neighborhoods disadvantaged by generations of segregation, especially in the southern, predominantly black sections of the city. In 2016, the poverty rate in Memphis was almost 27 percent, with half of Memphis's children living in poverty.

“We still struggle with access to opportunity,” he says.

Roshun Austin, executive director of the Works, a community development corporation operating in South Memphis, says city leadership has done a much better job over the last 20 years listening to people in the field and having conversations about inclusive development. “We're having real conversations,” she says, “and they're putting their money where it matters.”

Austin says she has seen significant change on a few fronts: Her organization helped bring grocery stores to areas lacking access to fresh food, and pushed to improve transit access to new jobs downtown.

The city's seen particular success with improvements in biking infrastructure. In a spread-out landscape lacking transit access and sufficient bus service-trolleys cover a small fraction of the city-a rapid investment in cycling infrastructure has made significant inroads. According to the Memphis Flyer, the city went from 1.5 miles of bike lanes in 2010 to 400-plus miles of bike-friendly thoroughfares today.

“We built our lives around the automobile,” she says. “We built our parkways 75 feet wide without a median. People can't walk that way safely. The lack of transit leaves people in a desert; not just for food, but [for] retail, jobs, and medicine.”

Can a city change without losing its character?

Many Memphians have put their hopes in the forthcoming comprehensive plan, and in promises to create inclusive growth that links the city's far-flung neighborhoods. Other developments around the edges of downtown also aim to capitalize on the business district's resurgence. According to Pacello, president of the MMDC, the nearby medical district is in the midst of a large-scale redevelopment, anchored by a commitment from St. Jude hospital to invest $1 billion. With 24,000 employees and students working and studying in the area every day, the district has the potential to become an even larger job creator. He's hoping to convince more Memphians to make the neighborhood home.

Studio Gang

Part of Studio Gang's vision to redesign the city's riverfront.

Memphis has also committed to reclaiming its working riverfront for residents, historically an industrial area lined with warehouses. The city recently allocated $75 million for the first phase of waterfront development set to create a connective network of parks and public green space. A Studio Gang-designed park project, covering six miles of waterfront that will connect to Beale Street downtown, will begin work next year with a redevelopment of Tom Lee Park, the first phase of a more extensive Memphis Riverfront Concept being pursued by the Memphis River Parks Partnership.

Set up like a series of rooms offering different entertainment and recreation offerings, the park project is “emblematic of where Memphis is heading right now,” says Gia Biagi, Studio Gang's head of urbanism and civic impact.

“We worked really hard to position the riverfront as part of the whole city, great for people who live close to it and those who live very far away,” says Biagi. ”The idea is to create a holistic civic asset.”

In its own under-the-radar manner, Memphis has managed to avoid the kind of supercharged growth that has changed the character of other cities. For all the activity, the city isn't yet covered in cranes. But as a reinvigorated downtown spreads outward, it's important that everyone feels connected to growth.

According to Austin, the community activist, development needed to start downtown. Historically, that's been the city's engine, where it all began on the riverfront three centuries ago. But it's time to build more connections for all Memphians. “We learned to be a suburb,” Austin says. “Let's learn how to be a city.”

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