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WeWork planning brick-and-mortar retail platform; Kimco plans Md. project

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WeWork planning brick-and-mortar retail platform; Kimco plans Md. project

Commercial real estate

* Co-working space provider WeWork Cos. is "quietly" advancing plans to launch a brick-and-mortar retail platform before an expected public offering, The Real Deal reported, citing unnamed sources. Exact details of the planned business are unclear but sources told The Real Deal that it could possibly extend the company's short-term leasing model for furnished spaces to retailers.

Citing another source familiar with the company, the report said WeWork could also venture into the hospitality sector. WeWork, which also has a co-living segment, has announced plans for an elementary school and recently opened its first gym, the report noted.

* Kimco Realty Corp. plans to develop a new roughly $108 million open-air shopping center at the site of the former Owings Mills Mall in Baltimore County. The 575,000-square-foot Kimco Signature Series ground-up development will be anchored by Costco, which will open a 148,000-square-foot warehouse club at the location.

The destination will include up to 30 national, regional and local retailers and restaurants along with parking, green space and walkways. Construction is expected to commence in early 2018, with completion expected in early 2019.

* Hudson's Bay Co. denied Taubman Centers Inc.'s allegations that it is delaying repairs at its Saks Fifth Avenue store in Taubman's Puerto Rican mall that was damaged by Hurricane Maria in September, The Wall Street Journal reported. Taubman filed a court complaint to compel the store to commence reconstruction and reopen at the earliest, Chairman, President and CEO Robert Taubman said in the company's third-quarter earnings call earlier in November.

Hudson Bay said in a court filing that it has already taken steps towards reopening its store in the Mall of San Juan and moved to oppose the injunction sought by Taubman. The landlord said it stands behind its lawsuit and previous comments, the publication noted.

The mall, which opened in 2015, is anchored by Nordstrom and Saks. The report noted that 55 of the 90 tenants had reopened their stores as of early November.

* SL Green Realty Corp. moved closer to acquiring the troubled 2 Herald Square office and retail building in in Midtown Manhattan, N.Y., after a court authorized foreclosure on the leasehold first mortgage, the New York Post reported. SL Green acquired the securitized debt on the 11-story building in May. Paramount Group Inc. holds a preferred-equity position in the property.

An auction for the property is expected to take place in the first quarter of 2018, and SL Green can make a bid without putting up additional money beyond the mortgage and interest value, according to the publication.

Amazon.com Inc. recently signed a membership deal to take up all of WeWork's 122,000-square-foot space in the 354,000-square-foot building, and was also reported to be in talks to lease part of the building's retail component. The report noted that the property has 59,000 square feet of vacant retail space, with Victoria's Secret as the only retail tenant at present.

The Real Deal also reported on the summary judgment by the New York State Supreme Court judge to SL Green over the first mortgage. The leasehold is owned by Sitt Asset Management and over 80 limited partners.

* Retail rents in Manhattan are in their "deepest and longest slump in 17 years" following a two-year downward trajectory in most shopping districts, the New York Post reported, citing the Real Estate Board of New York.

* Multiple landlords have been leasing retail space to independent bookstores to boost the "cool factor" of their buildings, The Real Deal reported. New York City has experienced high-profile closures of bookstores in recent years, and leasing to bookstores means settling for lower rent versus other tenants, the report pointed out.

* The Land Use Committee of New York's City Council approved a proposal to rezone Manhattan's East Harlem neighborhood under the Mandatory Inclusionary Housing program, which is expected to make at least 20% to 25% of all new residential units in the area affordable, The Real Deal reported. The move is expected to result in 1,288 affordable units on private sites. The proposal now requires a final vote from the full City Council.

* The Journal featured a report on mall landlords spending big ahead of the holiday season to attract customers through the likes of temporary skating rinks, gingerbread-making classes and winter castles. The publication noted that the landlords are "under no illusion their efforts will bring windfalls to them or their tenants," but would be happy with "a few impulse purchases" by people coming in to ice skate as most consumers have taken to doing at least part of their holiday shopping online.

* Another Journal report featured a look at the real estate industry's steps to adopt cryptocurrencies as several U.S. states change laws to allow the technology to be used for property deals. The publication noted that some real estate companies have also begun to explore payments via cryptocurrencies for rent or acquisitions.

* The growing number of pricey data centers and campuses in Dallas-Forth Worth is attracting even bigger investors due to high returns in the sector, the Dallas Business Journal reported, citing Ali Greenwood, vice president in JLL's Dallas office. The high returns are catching the attention of investment bankers who are advising clients on potential data center real estate investments, the report noted.

* The 52-story, 1.3 million-square-foot former First National Bank Tower in Dallas, which is undergoing a $380 million redevelopment, could be placed on the auction block in December after one of the project's lenders claimed the development group was in default on a $55 million loan, the Dallas Business Journal reported. GCP Income Properties I LLC is the lending group, and the development group is led by Maxwell Drever.

Citing real estate sources, the report noted that the development group is expected to receive a $67 million loan from Starwood Capital Group "in the near future."

* Brazilian developer Galwan is planning a 41-story, 445-room hotel tower at 88 Southwest 10th St. near Miami's Mary Brickell Village, which would mark its first U.S. project, The Real Deal reported, citing a release. The plans comprise a 200-room Wyndham Grand and a 245-room Tryp by Wyndham. Opening is expected in late 2019.

* NAI Southern Real Estate plans to develop a 20-story office tower in midtown Charlotte, N.C., on a 3.4-acre parcel bounded by Baldwin Ave. and Third and Fourth streets, the Charlotte Business Journal reported, citing the company. NAI has applied for a rezoning of the parcel to allow for up to 512,500 square feet of office space, 30,000 square feet of ground-floor retail space and an adjacent 240-room hotel, the report noted.

* Continental Realty Corp. paid $80 million for the 345-unit Millworks apartment community at 1888 Emery St. in downtown Atlanta's Buckhead district, citybizlist reported. The five-building asset was acquired from developer Pollack Shores, according to the report.

After the bell

* Select Income REIT subsidiary Industrial Logistics Properties Trust filed for an IPO of an undisclosed number of common shares of beneficial interest.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng rose 0.62% to 30,003.49 and the Nikkei 225 climbed 0.48% to 22,523.15.

In Europe, around midday, the FTSE 100 had gained 0.47% to 7,446.25 and the Euronext 100 was up 0.05% at 1,039.58.

On the macro front

Mortgage applications increased 0.1% on a seasonally adjusted basis in the week ended Nov. 17, the Mortgage Bankers Association reported, citing data from its weekly mortgage applications survey.

The EIA Petroleum Status Report, EIA Natural Gas Report and the Federal Open Market Committee minutes are due out today.

The Daily Dose is updated as of 7:30 a.m. ET. Some external links may require a subscription. Articles and links are correct as of publication time.