1 00:00:03,040 --> 00:00:07,600 Speaker 1: Broadcasting live to New York, Bloomberg even to Washington, d C. 2 00:00:07,840 --> 00:00:13,399 Speaker 1: Bloomber to Boston, Bloomberg twelve to San Francisco, Bloomberg nine 3 00:00:13,960 --> 00:00:19,240 Speaker 1: to the country and around the globe the Bloomberg Radio 4 00:00:19,840 --> 00:00:23,919 Speaker 1: and Bloomberg Got Gone. Is taking Stock? Coming up on 5 00:00:24,040 --> 00:00:26,720 Speaker 1: taking Stock, we're gonna be speaking with John Kevil. He 6 00:00:26,840 --> 00:00:29,840 Speaker 1: is a principal and managing director of US Capital Markets 7 00:00:29,840 --> 00:00:34,040 Speaker 1: for Avason Young. What is Avinson Young? They are a 8 00:00:34,080 --> 00:00:37,199 Speaker 1: real estate broker and he's got details about the commercial 9 00:00:37,240 --> 00:00:40,920 Speaker 1: real estate market in our nation's capital. We've got all 10 00:00:41,000 --> 00:00:43,199 Speaker 1: the details coming up. But right now, let's go to 11 00:00:43,240 --> 00:00:46,280 Speaker 1: Charlie Pellett and the Bloomberg newsroom for a Bloomberg Business Flash. 12 00:00:46,400 --> 00:00:48,440 Speaker 1: I thank you very much, Pim Fox Nan stack of 13 00:00:48,560 --> 00:00:51,920 Speaker 1: a record now fifty two sixty six, up twenty one points. 14 00:00:51,920 --> 00:00:54,760 Speaker 1: Again there of four tenths of one percent. The dollar 15 00:00:54,960 --> 00:00:58,520 Speaker 1: is falling after mixed economic day today. That is bolsterring 16 00:00:58,600 --> 00:01:01,440 Speaker 1: speculation the Federal Reserve of will be in no rush 17 00:01:01,480 --> 00:01:05,000 Speaker 1: to raise interest rates. Oil is rallying up seventy three 18 00:01:05,000 --> 00:01:08,440 Speaker 1: cents for fourteen of barrel right now on West Texas 19 00:01:08,440 --> 00:01:11,440 Speaker 1: Intermedia crewed up one and a half percent. Brent crude 20 00:01:11,480 --> 00:01:14,920 Speaker 1: up one point six percent, up seventy six cents ninety 21 00:01:14,959 --> 00:01:18,160 Speaker 1: two for a barrel of Brent natural gas hired by 22 00:01:18,240 --> 00:01:21,759 Speaker 1: two point eight percent now to seventy five per million 23 00:01:21,800 --> 00:01:25,800 Speaker 1: bt US down Industrial is up thirty five to eighteen thousand, 24 00:01:25,920 --> 00:01:28,400 Speaker 1: five hundred sixty five, a gain there of two tents 25 00:01:28,400 --> 00:01:31,800 Speaker 1: of one percent. The SMP up six to nine, a 26 00:01:31,880 --> 00:01:35,240 Speaker 1: gain of three tenths of one percent. People familiar with 27 00:01:35,240 --> 00:01:38,679 Speaker 1: the matter of state negotiations between Buyer and Montsanto are 28 00:01:38,720 --> 00:01:41,800 Speaker 1: advancing toward a deal after the company has made progress 29 00:01:41,840 --> 00:01:45,960 Speaker 1: on issues including the purchase price and termination feed. Jeff 30 00:01:46,080 --> 00:01:49,720 Speaker 1: McCracken is Managing editor for Global Mergers and Acquisitions at 31 00:01:49,720 --> 00:01:53,240 Speaker 1: Bloomberg News, and on the Bloomberg Advantage this morning, he 32 00:01:53,280 --> 00:01:57,840 Speaker 1: outlined the competitive landscape in that industry. What's been going 33 00:01:57,920 --> 00:02:01,080 Speaker 1: on in the agricam world is the bigest companies have 34 00:02:01,200 --> 00:02:04,800 Speaker 1: been merging. So last year we had Dowin DuPont come together, 35 00:02:05,040 --> 00:02:08,120 Speaker 1: and sometime perhaps later this year, that deal will get approved. 36 00:02:08,320 --> 00:02:10,320 Speaker 1: And those companies, once they come together, then they're going 37 00:02:10,360 --> 00:02:12,600 Speaker 1: to break of heart. They will come together and they 38 00:02:12,639 --> 00:02:15,520 Speaker 1: will put divisions like divisions if you will together and 39 00:02:15,520 --> 00:02:18,280 Speaker 1: then break into two or three companies. Purchases of new 40 00:02:18,320 --> 00:02:21,760 Speaker 1: homes unexpectedly jumped in July to the highest and almost 41 00:02:21,840 --> 00:02:25,400 Speaker 1: nine years, led by soaring demand in the South and 42 00:02:25,440 --> 00:02:30,800 Speaker 1: adding to signs of persistent housing market strength. Commerce Department 43 00:02:30,840 --> 00:02:34,720 Speaker 1: says sales increased twelve point four percent to a sixty 44 00:02:34,800 --> 00:02:39,480 Speaker 1: four thousand annualized pace, the fastest since October two thousand seven, 45 00:02:40,080 --> 00:02:42,280 Speaker 1: to thirty two on Wall Street. Now, let's look at 46 00:02:42,320 --> 00:02:45,680 Speaker 1: some of the other stories making news. Thank you Charlie 47 00:02:45,680 --> 00:02:48,880 Speaker 1: from the Bloomberg news room. I'm til Schneider. President Obama 48 00:02:48,919 --> 00:02:51,440 Speaker 1: spoke today after getting a first hand look at the 49 00:02:51,480 --> 00:02:54,679 Speaker 1: record flooding that has devastated parts of Louisiana. I come 50 00:02:54,720 --> 00:02:56,960 Speaker 1: here first and foremost to say that the prayers of 51 00:02:56,960 --> 00:03:01,400 Speaker 1: the entire nation are with everybody lost love. Uh, we 52 00:03:01,480 --> 00:03:05,600 Speaker 1: are heartbroken, but the loss of life. The flood damaged 53 00:03:05,720 --> 00:03:09,280 Speaker 1: tens of thousands of homes and killed thirteen people. Donald 54 00:03:09,320 --> 00:03:11,800 Speaker 1: Trump's Trump Tower is boosting the rent it charges to 55 00:03:11,840 --> 00:03:14,800 Speaker 1: one of its tenants, the Donald Trump campaign. The campaign 56 00:03:14,800 --> 00:03:17,200 Speaker 1: paid about thirty five thousand dollars a month for rent 57 00:03:17,240 --> 00:03:20,880 Speaker 1: and utilities until this April. The payment began increasing in 58 00:03:20,960 --> 00:03:24,480 Speaker 1: May and hit one seventy thousand dollars last month. Hillary 59 00:03:24,480 --> 00:03:27,840 Speaker 1: Clinton leads Donald Trump by sixteen points. In Virginia. The 60 00:03:27,960 --> 00:03:31,920 Speaker 1: Roano College Pole has Clinton with fifty and Trump thirty 61 00:03:31,919 --> 00:03:34,839 Speaker 1: six percent in a two way race. In an expanded pole, 62 00:03:34,880 --> 00:03:37,800 Speaker 1: Clinton leads forty eight percent to thirty two percent, with 63 00:03:37,920 --> 00:03:41,280 Speaker 1: Libertarian nominee Gary Johnson getting eight percent and the Green 64 00:03:41,280 --> 00:03:44,680 Speaker 1: Party's Jill Stein with three percent. It looks like private 65 00:03:44,680 --> 00:03:47,880 Speaker 1: lives are reportedly being exposed by Wiki leaks. Wiki leaks 66 00:03:47,960 --> 00:03:51,200 Speaker 1: quest to expose government secrets is costing the privacy of 67 00:03:51,280 --> 00:03:54,960 Speaker 1: hundreds of innocent people, including survivors of sexual abuse and 68 00:03:55,040 --> 00:03:58,280 Speaker 1: the mentally ill. That's according to the Associated Press a 69 00:03:58,440 --> 00:04:00,680 Speaker 1: P reports, in the past year, a low Wiki leaks 70 00:04:00,880 --> 00:04:04,560 Speaker 1: has published medical files belonging to scores of ordinary citizens, 71 00:04:04,840 --> 00:04:08,880 Speaker 1: while many hundreds more have had sensitive family, financial, or 72 00:04:08,920 --> 00:04:11,880 Speaker 1: identity records posted to the web. According to a P, 73 00:04:12,080 --> 00:04:14,560 Speaker 1: the site published the name of a Saudi citizen arrested 74 00:04:14,600 --> 00:04:18,040 Speaker 1: for being gay. In the Muslim kingdom, homosexuality is punishable 75 00:04:18,080 --> 00:04:21,800 Speaker 1: by depth. Michael Barr Bloomberg Radio Global News twenty four 76 00:04:21,800 --> 00:04:25,640 Speaker 1: hours a day, powered by more than journalists and analysts 77 00:04:25,640 --> 00:04:28,600 Speaker 1: in more than one twenty countries. I'm Jill Schneider and 78 00:04:28,640 --> 00:04:31,680 Speaker 1: this is Bloomberg Charlie, and we thank you and again 79 00:04:31,720 --> 00:04:36,120 Speaker 1: recapping the SMP five hundred index up six to nine, 80 00:04:36,160 --> 00:04:39,359 Speaker 1: a gain of three tents of one percent. Navstack trading 81 00:04:39,360 --> 00:04:41,480 Speaker 1: at a record of four tenths of one percent, downd 82 00:04:41,520 --> 00:04:44,480 Speaker 1: US reels up two tenths of one percent. I'm Charlie 83 00:04:44,520 --> 00:04:48,520 Speaker 1: Pellett and Pat's a Bloombred business flash. You're listening to 84 00:04:48,680 --> 00:04:53,839 Speaker 1: taking stock with Kathleen pim Fox on Bloomberg Radio. Commercial 85 00:04:53,880 --> 00:04:57,520 Speaker 1: real estate in our nation's capital. We've got an expert. 86 00:04:57,600 --> 00:05:01,040 Speaker 1: John Kevil is Principal Managing direct or if US Capital 87 00:05:01,240 --> 00:05:06,520 Speaker 1: Markets for Abison Young. He's based in Washington, d C. John, 88 00:05:06,560 --> 00:05:08,760 Speaker 1: thank you very much for being with us. Thank you, Pam. 89 00:05:09,040 --> 00:05:12,080 Speaker 1: Tell us a little bit about your company, about Avison Young, 90 00:05:12,120 --> 00:05:15,400 Speaker 1: because you're based in Toronto, but you have lots of 91 00:05:15,440 --> 00:05:18,799 Speaker 1: experience in the DC market. You've executed more than twenty 92 00:05:18,800 --> 00:05:23,080 Speaker 1: five billion dollars worth of transactions over your nearly quarter 93 00:05:23,160 --> 00:05:26,880 Speaker 1: century career. Well, Avison Young is Toronto based and in 94 00:05:26,920 --> 00:05:29,839 Speaker 1: the US we're Chicago based, and then we're we're the 95 00:05:29,920 --> 00:05:33,880 Speaker 1: largest the fastest growing real estate services firm in in 96 00:05:34,200 --> 00:05:36,480 Speaker 1: the country. We've gone from four n people just four 97 00:05:36,520 --> 00:05:39,440 Speaker 1: years ago to nearly three thousand people. And we've done 98 00:05:39,480 --> 00:05:42,880 Speaker 1: that through requiring acquiring companies, acquiring and keep people, and 99 00:05:43,000 --> 00:05:47,160 Speaker 1: really focusing on on high levels of client service and 100 00:05:47,279 --> 00:05:53,160 Speaker 1: markets across the country. We're in seventy markets globally, including Canada, Mexico, Germany, 101 00:05:53,240 --> 00:05:56,880 Speaker 1: the UK, and UH and we're continually growing. So tell 102 00:05:57,080 --> 00:05:58,520 Speaker 1: all right, so tell us about some of that. I 103 00:05:58,520 --> 00:06:02,480 Speaker 1: know you've broken uh seven real deals in Washington, d C. 104 00:06:03,360 --> 00:06:06,160 Speaker 1: And UH, we'll tell us about two of them in particular. 105 00:06:06,200 --> 00:06:08,080 Speaker 1: I know that those are regarded as some of the 106 00:06:08,160 --> 00:06:12,719 Speaker 1: largest deals ever well in in Washington. I think the 107 00:06:13,520 --> 00:06:17,240 Speaker 1: is an interesting market right now. UM, we're we're a 108 00:06:17,279 --> 00:06:19,560 Speaker 1: little bit lower on the on the scale and the 109 00:06:19,600 --> 00:06:22,560 Speaker 1: attractiveness scale for global investment than we typically have been. 110 00:06:22,560 --> 00:06:25,520 Speaker 1: And that's that's Um, that's I think largely due to 111 00:06:25,560 --> 00:06:27,880 Speaker 1: the fact that the federal government has not been in 112 00:06:28,040 --> 00:06:31,800 Speaker 1: sort of a growth on mode over the last few years. Uh. 113 00:06:31,839 --> 00:06:34,480 Speaker 1: That being said, what we've seen is not that not 114 00:06:34,520 --> 00:06:37,880 Speaker 1: necessarily the largest deals, but some of the most interesting deals. 115 00:06:37,880 --> 00:06:41,080 Speaker 1: I've been on our deals where are quite frankly, some 116 00:06:41,120 --> 00:06:43,000 Speaker 1: of the smaller deals, some of the deals where we've 117 00:06:43,040 --> 00:06:46,080 Speaker 1: seen the urbanization trends that we're seeing across the area 118 00:06:46,160 --> 00:06:50,920 Speaker 1: take route and office investors are increasingly looking to live, work, 119 00:06:50,960 --> 00:06:54,520 Speaker 1: play environments where where the firms that our tenants in 120 00:06:54,520 --> 00:06:58,440 Speaker 1: the buildings UM, the buildings are close to where people live, 121 00:06:58,480 --> 00:07:02,839 Speaker 1: where people play and UM, and those buildings become sort 122 00:07:02,839 --> 00:07:05,120 Speaker 1: of more of a part of the fabric of the tendency. 123 00:07:05,320 --> 00:07:08,039 Speaker 1: And and therefore the tenants are more more prone to 124 00:07:08,080 --> 00:07:10,840 Speaker 1: staying there, and and and you see higher rental growth, 125 00:07:10,880 --> 00:07:12,880 Speaker 1: and those tend to be the investments that people can 126 00:07:12,880 --> 00:07:15,760 Speaker 1: make sense of a little bit better right now than 127 00:07:15,840 --> 00:07:18,760 Speaker 1: than those that we rely on the pure sort of 128 00:07:18,840 --> 00:07:21,920 Speaker 1: economic growth on the back of our traditional demand generators, 129 00:07:21,920 --> 00:07:25,200 Speaker 1: which have been the government and law firms and contractors. 130 00:07:25,560 --> 00:07:27,840 Speaker 1: Now we're just going to really point to one particular deal. 131 00:07:27,880 --> 00:07:31,440 Speaker 1: This was the one inteen five five five twelfth Street 132 00:07:31,560 --> 00:07:35,200 Speaker 1: Northwest that was a nearly five hundred million dollar deal 133 00:07:35,320 --> 00:07:39,720 Speaker 1: going for six hundred and thirty five dollars a square foot. 134 00:07:39,960 --> 00:07:44,080 Speaker 1: Can you tell us what does prime business commercial space 135 00:07:44,320 --> 00:07:48,400 Speaker 1: rent for or sell for right now in Washington, d C? Well, 136 00:07:48,480 --> 00:07:50,840 Speaker 1: right now that the best indicator of the prime space 137 00:07:50,920 --> 00:07:53,680 Speaker 1: is not necessarily the price per square foot, but more 138 00:07:53,720 --> 00:07:56,440 Speaker 1: to cap right that investors are willing to pay UM. 139 00:07:56,480 --> 00:08:00,480 Speaker 1: I would say that for prime trophy rental in downtown 140 00:08:00,600 --> 00:08:04,480 Speaker 1: d C right now, someone would buy that first, say 141 00:08:04,720 --> 00:08:08,640 Speaker 1: a three three and a half percent cap rate, assuming 142 00:08:08,640 --> 00:08:11,360 Speaker 1: that there's some some level of growth implied in the 143 00:08:11,400 --> 00:08:15,000 Speaker 1: rent based on who the tendency is. UH, stabilized cap 144 00:08:15,080 --> 00:08:17,880 Speaker 1: rates would be a little bit higher in that particular case. 145 00:08:17,960 --> 00:08:19,800 Speaker 1: That was a deal that was a full city block 146 00:08:19,840 --> 00:08:23,960 Speaker 1: in downtown d C. And that's the sort of investment 147 00:08:24,160 --> 00:08:28,040 Speaker 1: that gets global attention, UH. And that was that was 148 00:08:28,080 --> 00:08:30,520 Speaker 1: really the key there. The the global attention that that 149 00:08:30,560 --> 00:08:33,200 Speaker 1: asset received in the market because of its size and 150 00:08:33,240 --> 00:08:37,000 Speaker 1: because of its location in a gateway city almost transcends Washington, 151 00:08:37,120 --> 00:08:40,479 Speaker 1: d C. And really is an indicator of how attractive 152 00:08:40,520 --> 00:08:43,680 Speaker 1: it is to put major amounts of capital to work 153 00:08:43,800 --> 00:08:46,840 Speaker 1: in in gateway cities across the US. And just to 154 00:08:46,920 --> 00:08:50,440 Speaker 1: do the quick definition of cap rate, it's the ratio 155 00:08:50,520 --> 00:08:56,400 Speaker 1: of net operating income to property asset value. Tell us 156 00:08:56,440 --> 00:09:01,080 Speaker 1: a little bit about the expansion of infrastructure in Washington. 157 00:09:01,160 --> 00:09:03,640 Speaker 1: I keep thinking, for example of the Metro, which is 158 00:09:03,679 --> 00:09:08,280 Speaker 1: the second biggest UH public transport system in the US. 159 00:09:08,880 --> 00:09:12,480 Speaker 1: For example, the the expansion of the Silver Line. How's 160 00:09:12,559 --> 00:09:15,120 Speaker 1: that changing commercial real estate? Well, what you're seeing on 161 00:09:15,160 --> 00:09:18,960 Speaker 1: the Silver Line in particular is is real estate investment 162 00:09:19,000 --> 00:09:22,080 Speaker 1: is occurring around mass transportation around the country. And I 163 00:09:22,120 --> 00:09:24,199 Speaker 1: think that's that's one of the that's one of the 164 00:09:24,280 --> 00:09:29,560 Speaker 1: key drivers in this region. So investors from from outside 165 00:09:29,600 --> 00:09:31,720 Speaker 1: the market and inside the market are focusing on where 166 00:09:31,720 --> 00:09:34,640 Speaker 1: people want to live, where people can office, and where 167 00:09:34,720 --> 00:09:37,839 Speaker 1: people can get around the region without cars, and and 168 00:09:37,880 --> 00:09:40,920 Speaker 1: so that's leading to dense development around metro's and that's 169 00:09:40,920 --> 00:09:44,360 Speaker 1: where we that's where investors for sea run growth and 170 00:09:44,400 --> 00:09:47,440 Speaker 1: so that makes that that that that makes those investments 171 00:09:47,440 --> 00:09:49,719 Speaker 1: more attractive. And I think you're seeing more and more 172 00:09:49,760 --> 00:09:53,000 Speaker 1: capital um wanting to pay up to be around Silver 173 00:09:53,080 --> 00:09:55,040 Speaker 1: Line metros. And you see it through Tyson's Corner, you 174 00:09:55,040 --> 00:09:57,400 Speaker 1: see it out, and you see it out and resting 175 00:09:57,480 --> 00:09:59,679 Speaker 1: in Herndon, and certainly you've seen it for a long 176 00:09:59,720 --> 00:10:03,000 Speaker 1: time the Rose and Boston Quarter locally. Just last point 177 00:10:03,040 --> 00:10:06,280 Speaker 1: to make the distinction for us between rental growth and 178 00:10:06,320 --> 00:10:09,960 Speaker 1: asset types, because that's not necessarily what you think of 179 00:10:09,960 --> 00:10:15,880 Speaker 1: when you think institutional assets, is it um I'm not 180 00:10:15,960 --> 00:10:19,640 Speaker 1: social leading to rental growth, business trends leading to rental growth, 181 00:10:19,640 --> 00:10:21,679 Speaker 1: and asset types that are not typically thought of as 182 00:10:21,720 --> 00:10:25,080 Speaker 1: true institutional assets. Right, So I think, what what? What? 183 00:10:25,080 --> 00:10:27,040 Speaker 1: What people have looked at? And you need to find 184 00:10:27,080 --> 00:10:29,120 Speaker 1: cap rate a little while ago, and I think what 185 00:10:29,120 --> 00:10:32,000 Speaker 1: what Many institutional investors have come to the conclusion that 186 00:10:32,480 --> 00:10:36,920 Speaker 1: for the most part, pure cap rate compression has has stabilized, 187 00:10:37,200 --> 00:10:38,760 Speaker 1: and they're going to get there. They're going to get 188 00:10:38,800 --> 00:10:43,200 Speaker 1: their investment growth based on uh demographic increase, in demographic 189 00:10:43,240 --> 00:10:45,800 Speaker 1: growth and the urbanization trends, and that's where where their 190 00:10:45,880 --> 00:10:49,079 Speaker 1: urbanization is occurring. That's where you're gonna see rental growth. 191 00:10:49,120 --> 00:10:52,559 Speaker 1: And I think that's where I leave it there. John Kevil, Principle, 192 00:10:52,679 --> 00:10:57,480 Speaker 1: Managing director US capital Markets for Avaston Young. This is 193 00:10:57,480 --> 00:11:03,719 Speaker 1: Bloomberg coming up Von Bloomberg taking stock. We're going to 194 00:11:03,800 --> 00:11:07,760 Speaker 1: take stock of a potential deal Monsanto Bayer. Will the 195 00:11:07,920 --> 00:11:13,560 Speaker 1: deal come together for these two giant agrichemical companies. Details ahead.