Speaker 1: Broadcasting live to New York, Bloomberg even to Washington, d C.
Speaker 1: Bloomber to Boston, Bloomberg twelve to San Francisco, Bloomberg nine
Speaker 1: to the country and around the globe the Bloomberg Radio
Speaker 1: and Bloomberg Got Gone. Is taking Stock? Coming up on
Speaker 1: taking Stock, we're gonna be speaking with John Kevil. He
Speaker 1: is a principal and managing director of US Capital Markets
Speaker 1: for Avason Young. What is Avinson Young? They are a
Speaker 1: real estate broker and he's got details about the commercial
Speaker 1: real estate market in our nation's capital. We've got all
Speaker 1: the details coming up. But right now, let's go to
Speaker 1: Charlie Pellett and the Bloomberg newsroom for a Bloomberg Business Flash.
Speaker 1: I thank you very much, Pim Fox Nan stack of
Speaker 1: a record now fifty two sixty six, up twenty one points.
Speaker 1: Again there of four tenths of one percent. The dollar
Speaker 1: is falling after mixed economic day today. That is bolsterring
Speaker 1: speculation the Federal Reserve of will be in no rush
Speaker 1: to raise interest rates. Oil is rallying up seventy three
Speaker 1: cents for fourteen of barrel right now on West Texas
Speaker 1: Intermedia crewed up one and a half percent. Brent crude
Speaker 1: up one point six percent, up seventy six cents ninety
Speaker 1: two for a barrel of Brent natural gas hired by
Speaker 1: two point eight percent now to seventy five per million
Speaker 1: bt US down Industrial is up thirty five to eighteen thousand,
Speaker 1: five hundred sixty five, a gain there of two tents
Speaker 1: of one percent. The SMP up six to nine, a
Speaker 1: gain of three tenths of one percent. People familiar with
Speaker 1: the matter of state negotiations between Buyer and Montsanto are
Speaker 1: advancing toward a deal after the company has made progress
Speaker 1: on issues including the purchase price and termination feed. Jeff
Speaker 1: McCracken is Managing editor for Global Mergers and Acquisitions at
Speaker 1: Bloomberg News, and on the Bloomberg Advantage this morning, he
Speaker 1: outlined the competitive landscape in that industry. What's been going
Speaker 1: on in the agricam world is the bigest companies have
Speaker 1: been merging. So last year we had Dowin DuPont come together,
Speaker 1: and sometime perhaps later this year, that deal will get approved.
Speaker 1: And those companies, once they come together, then they're going
Speaker 1: to break of heart. They will come together and they
Speaker 1: will put divisions like divisions if you will together and
Speaker 1: then break into two or three companies. Purchases of new
Speaker 1: homes unexpectedly jumped in July to the highest and almost
Speaker 1: nine years, led by soaring demand in the South and
Speaker 1: adding to signs of persistent housing market strength. Commerce Department
Speaker 1: says sales increased twelve point four percent to a sixty
Speaker 1: four thousand annualized pace, the fastest since October two thousand seven,
Speaker 1: to thirty two on Wall Street. Now, let's look at
Speaker 1: some of the other stories making news. Thank you Charlie
Speaker 1: from the Bloomberg news room. I'm til Schneider. President Obama
Speaker 1: spoke today after getting a first hand look at the
Speaker 1: record flooding that has devastated parts of Louisiana. I come
Speaker 1: here first and foremost to say that the prayers of
Speaker 1: the entire nation are with everybody lost love. Uh, we
Speaker 1: are heartbroken, but the loss of life. The flood damaged
Speaker 1: tens of thousands of homes and killed thirteen people. Donald
Speaker 1: Trump's Trump Tower is boosting the rent it charges to
Speaker 1: one of its tenants, the Donald Trump campaign. The campaign
Speaker 1: paid about thirty five thousand dollars a month for rent
Speaker 1: and utilities until this April. The payment began increasing in
Speaker 1: May and hit one seventy thousand dollars last month. Hillary
Speaker 1: Clinton leads Donald Trump by sixteen points. In Virginia. The
Speaker 1: Roano College Pole has Clinton with fifty and Trump thirty
Speaker 1: six percent in a two way race. In an expanded pole,
Speaker 1: Clinton leads forty eight percent to thirty two percent, with
Speaker 1: Libertarian nominee Gary Johnson getting eight percent and the Green
Speaker 1: Party's Jill Stein with three percent. It looks like private
Speaker 1: lives are reportedly being exposed by Wiki leaks. Wiki leaks
Speaker 1: quest to expose government secrets is costing the privacy of
Speaker 1: hundreds of innocent people, including survivors of sexual abuse and
Speaker 1: the mentally ill. That's according to the Associated Press a
Speaker 1: P reports, in the past year, a low Wiki leaks
Speaker 1: has published medical files belonging to scores of ordinary citizens,
Speaker 1: while many hundreds more have had sensitive family, financial, or
Speaker 1: identity records posted to the web. According to a P,
Speaker 1: the site published the name of a Saudi citizen arrested
Speaker 1: for being gay. In the Muslim kingdom, homosexuality is punishable
Speaker 1: by depth. Michael Barr Bloomberg Radio Global News twenty four
Speaker 1: hours a day, powered by more than journalists and analysts
Speaker 1: in more than one twenty countries. I'm Jill Schneider and
Speaker 1: this is Bloomberg Charlie, and we thank you and again
Speaker 1: recapping the SMP five hundred index up six to nine,
Speaker 1: a gain of three tents of one percent. Navstack trading
Speaker 1: at a record of four tenths of one percent, downd
Speaker 1: US reels up two tenths of one percent. I'm Charlie
Speaker 1: Pellett and Pat's a Bloombred business flash. You're listening to
Speaker 1: taking stock with Kathleen pim Fox on Bloomberg Radio. Commercial
Speaker 1: real estate in our nation's capital. We've got an expert.
Speaker 1: John Kevil is Principal Managing direct or if US Capital
Speaker 1: Markets for Abison Young. He's based in Washington, d C. John,
Speaker 1: thank you very much for being with us. Thank you, Pam.
Speaker 1: Tell us a little bit about your company, about Avison Young,
Speaker 1: because you're based in Toronto, but you have lots of
Speaker 1: experience in the DC market. You've executed more than twenty
Speaker 1: five billion dollars worth of transactions over your nearly quarter
Speaker 1: century career. Well, Avison Young is Toronto based and in
Speaker 1: the US we're Chicago based, and then we're we're the
Speaker 1: largest the fastest growing real estate services firm in in
Speaker 1: the country. We've gone from four n people just four
Speaker 1: years ago to nearly three thousand people. And we've done
Speaker 1: that through requiring acquiring companies, acquiring and keep people, and
Speaker 1: really focusing on on high levels of client service and
Speaker 1: markets across the country. We're in seventy markets globally, including Canada, Mexico, Germany,
Speaker 1: the UK, and UH and we're continually growing. So tell
Speaker 1: all right, so tell us about some of that. I
Speaker 1: know you've broken uh seven real deals in Washington, d C.
Speaker 1: And UH, we'll tell us about two of them in particular.
Speaker 1: I know that those are regarded as some of the
Speaker 1: largest deals ever well in in Washington. I think the
Speaker 1: is an interesting market right now. UM, we're we're a
Speaker 1: little bit lower on the on the scale and the
Speaker 1: attractiveness scale for global investment than we typically have been.
Speaker 1: And that's that's Um, that's I think largely due to
Speaker 1: the fact that the federal government has not been in
Speaker 1: sort of a growth on mode over the last few years. Uh.
Speaker 1: That being said, what we've seen is not that not
Speaker 1: necessarily the largest deals, but some of the most interesting deals.
Speaker 1: I've been on our deals where are quite frankly, some
Speaker 1: of the smaller deals, some of the deals where we've
Speaker 1: seen the urbanization trends that we're seeing across the area
Speaker 1: take route and office investors are increasingly looking to live, work,
Speaker 1: play environments where where the firms that our tenants in
Speaker 1: the buildings UM, the buildings are close to where people live,
Speaker 1: where people play and UM, and those buildings become sort
Speaker 1: of more of a part of the fabric of the tendency.
Speaker 1: And and therefore the tenants are more more prone to
Speaker 1: staying there, and and and you see higher rental growth,
Speaker 1: and those tend to be the investments that people can
Speaker 1: make sense of a little bit better right now than
Speaker 1: than those that we rely on the pure sort of
Speaker 1: economic growth on the back of our traditional demand generators,
Speaker 1: which have been the government and law firms and contractors.
Speaker 1: Now we're just going to really point to one particular deal.
Speaker 1: This was the one inteen five five five twelfth Street
Speaker 1: Northwest that was a nearly five hundred million dollar deal
Speaker 1: going for six hundred and thirty five dollars a square foot.
Speaker 1: Can you tell us what does prime business commercial space
Speaker 1: rent for or sell for right now in Washington, d C? Well,
Speaker 1: right now that the best indicator of the prime space
Speaker 1: is not necessarily the price per square foot, but more
Speaker 1: to cap right that investors are willing to pay UM.
Speaker 1: I would say that for prime trophy rental in downtown
Speaker 1: d C right now, someone would buy that first, say
Speaker 1: a three three and a half percent cap rate, assuming
Speaker 1: that there's some some level of growth implied in the
Speaker 1: rent based on who the tendency is. UH, stabilized cap
Speaker 1: rates would be a little bit higher in that particular case.
Speaker 1: That was a deal that was a full city block
Speaker 1: in downtown d C. And that's the sort of investment
Speaker 1: that gets global attention, UH. And that was that was
Speaker 1: really the key there. The the global attention that that
Speaker 1: asset received in the market because of its size and
Speaker 1: because of its location in a gateway city almost transcends Washington,
Speaker 1: d C. And really is an indicator of how attractive
Speaker 1: it is to put major amounts of capital to work
Speaker 1: in in gateway cities across the US. And just to
Speaker 1: do the quick definition of cap rate, it's the ratio
Speaker 1: of net operating income to property asset value. Tell us
Speaker 1: a little bit about the expansion of infrastructure in Washington.
Speaker 1: I keep thinking, for example of the Metro, which is
Speaker 1: the second biggest UH public transport system in the US.
Speaker 1: For example, the the expansion of the Silver Line. How's
Speaker 1: that changing commercial real estate? Well, what you're seeing on
Speaker 1: the Silver Line in particular is is real estate investment
Speaker 1: is occurring around mass transportation around the country. And I
Speaker 1: think that's that's one of the that's one of the
Speaker 1: key drivers in this region. So investors from from outside
Speaker 1: the market and inside the market are focusing on where
Speaker 1: people want to live, where people can office, and where
Speaker 1: people can get around the region without cars, and and
Speaker 1: so that's leading to dense development around metro's and that's
Speaker 1: where we that's where investors for sea run growth and
Speaker 1: so that makes that that that that makes those investments
Speaker 1: more attractive. And I think you're seeing more and more
Speaker 1: capital um wanting to pay up to be around Silver
Speaker 1: Line metros. And you see it through Tyson's Corner, you
Speaker 1: see it out, and you see it out and resting
Speaker 1: in Herndon, and certainly you've seen it for a long
Speaker 1: time the Rose and Boston Quarter locally. Just last point
Speaker 1: to make the distinction for us between rental growth and
Speaker 1: asset types, because that's not necessarily what you think of
Speaker 1: when you think institutional assets, is it um I'm not
Speaker 1: social leading to rental growth, business trends leading to rental growth,
Speaker 1: and asset types that are not typically thought of as
Speaker 1: true institutional assets. Right, So I think, what what? What?
Speaker 1: What people have looked at? And you need to find
Speaker 1: cap rate a little while ago, and I think what
Speaker 1: what Many institutional investors have come to the conclusion that
Speaker 1: for the most part, pure cap rate compression has has stabilized,
Speaker 1: and they're going to get there. They're going to get
Speaker 1: their investment growth based on uh demographic increase, in demographic
Speaker 1: growth and the urbanization trends, and that's where where their
Speaker 1: urbanization is occurring. That's where you're gonna see rental growth.
Speaker 1: And I think that's where I leave it there. John Kevil, Principle,
Speaker 1: Managing director US capital Markets for Avaston Young. This is
Speaker 1: Bloomberg coming up Von Bloomberg taking stock. We're going to
Speaker 1: take stock of a potential deal Monsanto Bayer. Will the
Speaker 1: deal come together for these two giant agrichemical companies. Details ahead.