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Good morning. Welcome to the 467 of you who joined this week! We want the CRE Daily to be the best email in your inbox. In case you haven’t already — take our 60-second reader survey to help us make that happen.
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In today’s issue: NYC officials are reeling from all the casino proposals they’re getting, with plenty of bidders more than happy to pay the $500M one-time submission fee. Meanwhile, Amazon is expanding its reach by inviting smaller retailers to use Prime logistics network through Buy With Prime service.
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🎧️ Listen: Find out how the country’s biggest office-to-residential converter consistently pulls off such complex projects while staying profitable on this episode of Bisnow Reports.
BIG BLIND
Midtown Officials Take a Deep Breath as NYC Casino Proposals Flood In
A rendering of the proposed Caesars Palace Times Square from SL Green Realty Corp.
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We know this is old news, but the idea that there might be an NYC casino soon (much less three of them) is nuts. City officials changed the game when they began welcoming casino proposals last year. But have they bitten off more than they can chew?
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The state of play: NYC has been and still is the single most sought-after gambling city in the US. Between the city’s iconic status as a business hub and international reputation as the melting pot, gaming proponents believe the three proposed casinos could clear $4.4B in gross gambling revenues annually, no problem. So it’s no surprise that even with a $500M buy-in fee to submit a proposal (yes, just to submit one), city officials are getting slightly overwhelmed.
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Big-name bettors: Caesars Entertainment (CZR) and SL Green Realty (SLG) both want to convert a Times Square office tower into a hotel/casino. Saks is thinking about converting the top floors of its Rockefeller Center flagship into a luxury Monte Carlo-style gambling den. Soloviev Group is eyeing a location south of the United Nations HQ, while Vornado Realty Trust (VNO) is betting on a site near Penn Station. Meanwhile, Steve Cohen, Las Vegas Sands (LVS), and Thor Equities have their sights set on Flushing, Long Island, and Coney Island, respectively.
➥ THE TAKEAWAY
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Early buyer’s remorse? While there’s a lot of enthusiasm for the gambling revenues the casinos will rake in, some Midtown officials are less than thrilled about the idea. For starters, with an affordable housing crisis across the city (average rents in Manhattan are already $4K), the optics of building casinos aren’t exactly great for Mayor Adams or Governor Hochul. “There’s going to be an uphill road for any site in Manhattan,” said Borough President Mark Levine. Ultimately, no matter what decision is made, it will likely be controversial.
SPONSORED
Greysteel Texas Multifamily Benchmark Rates Report | Q4 2022
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Greysteel is a leading middle-market real estate firm for private and institutional investors that provides end-to-end investment services, from sales and financing to research and investment planning. From 2014 through the end of 2022, Greysteel closed over 380 multifamily transactions in Texas.
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In their Q4 2022 Texas Multifamily Benchmark Rates research report, they compare the top multifamily REITs in Texas to other commonly used economic benchmarks from Q4 2020 to Q4 2022.
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Interested in joining Greysteel’s growing community of professionals? Click the button below to see their current list of open positions.
IF YOU CAN’T BEAT ‘EM
Retailers Embracing Amazon’s New Revenue Stream Could Help Alleviate Its Space Constraints
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E-commerce conqueror Amazon (AMZN) is no longer satisfied with bullying smaller retailers into utter submission. Now it’s inviting them to use its Prime logistics network for themselves by signing up for its Buy With Prime service.
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The E-Commerce League: If Amazon is Superman, then smaller retailers nationwide have just been invited to the Justice League for e-commerce fulfillment. The Buy With Prime pilot, essentially a third-party logistics provider (3PL) with point-of-sale support, led to a 25% spike in purchases on sites with a Buy With Prime button at checkout. If it’s that easy to integrate into shopping carts, what retailer wouldn’t want to leverage Amazon’s nationwide network of warehouses and distribution?
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Many birds with one stone: Of course, Amazon is also benefiting from this new arrangement. Not only does Buy With Prime allow Amazon to expand its target addressable market and become even more indispensable to e-commerce as a whole, it also helps the e-commerce giant squeeze money out of its 20% excess capacity unused US warehouse spaces. Getting smaller retailers to pay a fee and hand over their data? At the end of the day, it sounds like Amazon is still winning.
➥ THE TAKEAWAY
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Casting the largest shadow: Amazon has been expanding rapidly by buying warehouses and industrial spaces nationwide. They are the largest tenant of Prologis, the world’s largest industrial landlord. However, even Prologis can’t compete with Amazon’s reach. The success of Amazon’s “Buy With Prime” remains uncertain, but it may be bad news for other 3PL providers.
📰 Editors’ Picks
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Off with his head! The Crown Estate of King Charles III just sued Twitter for failing to pay rent at its London office. Elon Musk probably doesn’t care.
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First of her kind: Kelli Carhart has been promoted to CBRE’s (CBRE) executive managing director of capital markets for US multifamily properties.
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For the people: The White House is considering new renter protections, like standardized lease lengths, grace periods for late rents, and sealed eviction records, among other proposals.
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For shame: A former FBI agent who became a senior executive at Brookfield Properties has been charged with money laundering and violating US sanctions against Russia.
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Out of steam: Hospitality’s two-year party in the US may finally be coming to an end in 2023, as experts forecast lower demand going forward.
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See you at the register: Here are the top retail investment trends to watch out for this year, including slower sales activity and the continued dominance of grocery-anchored properties.
💼 Talent Collective
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In partnership with Bullpen
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Looking for a new role? CRE Daily has partnered with Bullpen to bring hand-selected, CRE freelance jobs to our readers. Join today for access to the below roles, as well as several other freelance openings.
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Asset Manager, Mobile Home Parks
💰️ Full-time (Remote w/ monthly site visits) 📍 Geography: Florida and Georgia
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Director, Capital Markets
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Marketing Specialist
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Looking to hire? Connect with Bullpen
🤝 Deals & Dealmakers
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Deal of the day: Amazon is casually buying up 400 acres near an Intel site in Licking County, Ohio, for $116M.
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Deep endowment pockets: The University of California plans to invest another $500M in Blackstone’s (BX) BREIT, after committing $4B earlier this month.
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Now this is a story, all about how…a 260-acre property in Bel-Air, which makes up 6% of the entire neighborhood, is going up for auction.
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Long-term strategy: South Florida-based Fort Partners just paid $41.5M for the land beneath Hillcrest by the Sea in Surfside and acquired $50M in financing from Madison Realty Capital.
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The modern maze: Perhaps realizing that many shoppers find the average Costco’s labyrinthine setup tiring, the Kirkland-based wholesaler is planning a new design with apartments on top.
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Back to basics: Basis Investment Group is investing $30M in Tishman Speyer’s (TSIBU) 3.1-acre Santa Monica Collection mixed-used project.
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Brotherly love: Parkway Corp. (PKKW) secured $409M in credit tenant lease financing to develop Chubb’s new HQ in Philly’s Logan Square neighborhood.
📈 Chart of the Day
🕶️ Offering-MEME-Orandum
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