REIT industry FFO rises 7.9% in Q2, surpasses $15B to set record | Office deal volume likely to remain subdued in second half | New household formation still fuels apartment demand
August 17, 2017
Real Estate Advisor
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Risk Management, Insurance & Claims
REIT industry FFO rises 7.9% in Q2, surpasses $15B to set record
The REIT industry's funds from operations rose 7.9% in the second quarter to a record $15.6 billion, NAREIT's T-Tracker shows. "Retail REITs have been able to sustain occupancy levels by attracting new and more productive tenants to replace those that have left," thereby spurring higher earnings, said NAREIT economist Calvin Schnure.
GlobeSt (8/15),  NAREIT (8/16) 
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Office deal volume likely to remain subdued in second half
Signs are pointing to a lackluster remainder of 2017 for office sales, following a 2% drop in deal volume for the first half of the year, according to Real Capital Analytics' figures. "There's still so much uncertainty around the economic policy picture, and if investors sell, they need to have a redeployment strategy," says David Bitner of Cushman & Wakefield.
Commercial Property Executive (8/14) 
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New household formation still fuels apartment demand
Despite the post-recession high of new apartment construction, there is still not enough supply to meet the demands of new household formation, which has outpaced construction by more than 3 million housing units. "There is a lot of building going on, and while no one is saying that we need another luxury apartment building in many of America's cities, we desperately need more housing," says Mark Hickey, real estate consultant for CoStar Portfolio Strategy.
CoStar Group (8/10) 
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Downturn hits NYC commercial real estate
The value of commercial real estate transactions fell by 39% in New York City during the first half of this year compared with the same period last year. A significant decline hit every borough except Staten Island, according to the Real Estate Board of New York.
The Wall Street Journal (tiered subscription model) (8/14) 
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Laws & Regulations
Executive order curbs building rules in flood-prone areas
Executive order curbs building rules in flood-prone areas
Trump and Transportation Secretary Elaine Chao (Drew Angerer/Getty Images)
President Donald Trump has signed an executive order to reduce standards and reviews for federally funded construction projects in areas at risk of flooding. The order, part of Trump's $1 trillion infrastructure plan, got a positive response from business groups but criticism from environmentalists because of climate-related and cost concerns.
Reuters (8/15),  NJ Spotlight (New Jersey) (8/16) 
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USGS awards $4.9M toward earthquake-alert system for West Coast
The US Geological Survey said $4.9 million in funding and $1 million in equipment will go toward academic efforts to establish a system for early warnings of West Coast earthquakes. The ShakeAlert project has been threatened with funding cuts in the proposed federal budget this year.
Los Angeles Daily News/City News Service (8/14) 
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News from Aon
Insurers see greater demand for political risk coverage
Political risk and trade credit insurance markets continue to experience growth, spurred by insurers' moves to deploy capital, greater political volatility, and security and credit needs worldwide. This growing interest aids insurers in diversifying their risks. "The political risk market tends to be countercyclical to the property/casualty market," said John Minor, director of crisis management and political risk for Aon Risk Solutions in Chicago. "So, when rates soften in the property/casualty market, a lot of that capital seeks a better return and ends up in the political risk market." Read more.
Business Insurance (tiered subscription model) (8/7) 
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Risk or reward? The future of the on-demand economy
The on-demand economy is transforming industries as quickly as it delivers the services that have come to define it. However, the transformation itself is not proving to be as smooth as those swift deliveries ordered at the tap of a finger. For business leaders and consumers, we are on an exciting journey -- but for the former, the on-demand economy is not only opening up new opportunities, it is changing risk profiles, creating business challenges, and prompting new legislation and regulations. Read more.
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