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Monthly Archives: July 2017

The Food halls Bussines

Food halls are a place where there’s life and there’s buzz,” said David LaPierre, vice chairman of the global retail services team at CBRE, a commercial real estate services firm. “It’s a real social environment where people want to be.”

In Downtown Brooklyn, the DeKalb Market Hall food hall opened recently in the basement of City Point, a retail, entertainment and restaurant project spanning six levels on the former site of the Albee Square Mall. Traffic for the food hall ramps up primarily in the lunch and dinner hours, and some spills into the rest of the mall, said Christopher Conlon, chief operating officer for City Point’s developer, Acadia Realty Trust, a retail property investor based in Rye, N.Y.

“DeKalb Market Hall has already had a tremendous impact on tenant traffic in the upper levels,” he said. “But we also have space on the ground floor still to lease, and the interest driven by the excitement surrounding the food hall has been just as tremendous.”

At 36,000 square feet, the food hall features 40 vendors, including the first Katz’s Deli outside Manhattan and a few Foragers Market concepts operated by Anna Castellani, who worked with Acadia Realty to select the tenants and manage DeKalb Market. A 7,500-square-foot entertainment venue opening this fall will extend food hall business hours past midnight, Mr. Conlon said.

Food halls have been around for years, especially in Europe. But the concept is becoming increasingly popular in the United States as consumers demand healthier and better-tasting “quick casual” food options in entertaining environments, observers say. The number of food halls operating in the United States is expected to exceed 200 in 2019, about double the number that were open in late 2016, said Pamela Flora, director of research for Cushman & Wakefield. That would also be a roughly 700 percent increase since 2010, according to research compiled by the brokerage firm.

Food halls are not just for retail outlets, however. Pinnacle Red Group, based in San Jose, Calif., plans to put a small one on the ground floor of a planned residential and office tower in downtown Oakland. The developer hopes to leverage a bustling street and nearby transportation hubs to create a regional destination, said Ronnie Turner, development manager for the firm.

In downtown Chicago, the 15-vendor Revival Food Hall opened last year on the ground floor of a 110-year-old, 20-story office building designed by Daniel Burnham. The food hall’s developer, Craig Golden, is finishing a renovation of the property, now known as the National. He and the restaurateur Bruce Finkelman worked as partners on Revival, which features taco, seafood, poke bowl and other restaurants as well as a book and record shop.

Food halls are still so new that they lack a standard template for success, said Philip Colicchio, a food and beverage consultant in New York, who has added food halls to his chef and hotel client list. The properties range from 5,000 square feet to more than 40,000 square feet, and developers can choose to lease out and operate a food hall themselves, collaborate with a local restaurateur to vet vendors and potentially manage it, or lease to one operator and let it find tenants and run the place.

The management piece will become critical as the concept matures, competition increases and vendors fail, he added. When developers accelerated the food hall boom a few years ago, consumers were spending as much or more on eating out than at grocery stores. But a glut of new restaurants and a change in consumer spending habits have dinged the industry.

Same-store restaurant sales dropped 2.8 percent in July and have been relatively flat or down for about a year, according to the latest report by TDn2K, which tracks weekly sales from 28,5000 restaurants.

Against that unnerving backdrop, developers of large, full-blown food halls can expect to spend at least $200 a square foot to provide expensive infrastructure like venting for open-flame cooking, Mr. Golden said. Alternatively, developers can seek vendors that prepare food off site to simplify operations and minimize costs. Smaller food halls with seven to 10 vendors are popping up with more regularity, too, Ms. Flora said.

Developers establishing food halls with those themes include North American Properties, which bought the 1970s-era Colony Square mixed-use project in Atlanta two years ago. It will soon begin demolishing a food court to make way for a food hall that will feature up to 15 vendors and emphasize live entertainment and other events.

“It’s less about bringing people onto the property to drive retail and more about being a place where people can come and commune,” said Mark Toro, a managing partner for North American Properties.

Food halls are beginning to migrate to the suburbs, and although observers expect more growth in those environments — and eventually malls — they wonder if enough demand exists to support food halls in those locations. Jeffrey A. Bayer, the chief executive of Bayer Properties, a mixed-use developer based in Birmingham, Ala., is betting there is.

Housing Market Undaunted

At the same time, many economists are forecasting that the price of undamaged homes will rise as demand outstrips supply. Early estimates suggest that tens of thousands of homes were damaged, and developers are worried about labor shortages as repairs get priority over new construction.

But as insurance and government money comes in, developers and real estate agents are betting that the area will quickly clear the backlog and continue along its normal trajectory of adding homes and people.

Throughout Houston proper and the surrounding suburbs, developers sprawl ever outward, paving over pastures and former wetlands and leaving nothing to absorb the water, when it comes.

“It is one of the most affordable housing markets in the country because people were able to build in places where they were likely to get flooded in the future,” said Svenja Gudell, chief economist at Zillow, the real estate data service.

Houstonians lose track of how many times they’ve been flooded. They repeatedly renovate or rebuild on elevated platforms and say they will go higher the next time if they have to.

Stefanie Asin and her husband, Jake Everett, live about a block from Brays Bayou in an area of Houston called Braes Heights, where the flood reached the middle of stop signs. After the storm they sat on their porch watching motorboats go by. Their closest neighbor was pulled from the roof of his house by a helicopter.

Their own home was fine because after the last flood, two years ago, they moved out and built a new one on an elevated platform, returning in March. The storm waters of Harvey rose up six of their seven front steps.

Elevated homes are common in Houston, particularly around Ms. Asin’s neighborhood. In July, the City Council approved construction on the first nine homes in a batch of 42 near Brays Bayou that will be elevated using FEMA funding.

The appeal is particularly obvious right now: Elevated homes sit untouched above devastated houses with massive piles of debris all around them. Across the street from Ms. Asin, Arturo Loza, part of a Mormon volunteer relief effort, was helping gut a flooded house with a sink, cabinets and piles of books heaped in front.

 Ms. Asin had been through three large floods since she moved near the bayou two decades ago. In Harvey, her losses were contained to the garage, which was not elevated, and so her daughters’ cars were ruined, and a refrigerator was left floating. But this was nothing new. She said her family had lost five cars to rain and water damage in the last three years.

Asked why they had bought a home in the neighborhood to begin with, Ms. Asin said: “The house was built in 1955 and it had never flooded. We thought, it hasn’t flooded yet!”

Then Tropical Storm Allison hit in 2001 and left a foot of water on the ground floor of the house. “We got it remodeled,” Ms. Asin said. “They told us it was a 500-year flood.”

But in 2015, the so-called Memorial Day flood almost completely covered their front yard, and Mr. Everett was photographed standing on a little patch of ground surrounded on all sides by water.

That flood left three inches of water in their home, enough that everything had to be torn out — Sheetrock, cabinets, floors.

They’d had enough, and considered moving away, but decided to stay put. “We were looking at how to come up with the mortgage for somewhere we didn’t really want to live versus building our dream house,” Mr. Everett said.

So they put up their dream house – seven feet above the street level.

A builder, Brian Silver of BAS Concepts, said that over the last 15 years, his company had built more than 50 homes around Brays Bayou that were elevated in some way – including Ms. Asin’s – and 10 just in the last year.

“If you elevate your house, you’re out of the floodplain,” Mr. Silver said, adding that it was his practice to build new homes a foot above the elevation that FEMA expected floodwaters to rise or the high-water mark of the last storm — whichever was higher.

He predicted that after Harvey, even more homeowners would decide to demolish their flooded homes and build from scratch, but higher, and that already elevated homes would increase in value. (According to the Insurance Information Institute, homeowners in flood-prone areas are often required to elevate their houses to get flood insurance, and the areas designated can change with storms and development.)

DowDuPont into distinct businesses

The new plan, announced in a statement, would divide DowDuPont into three distinct businesses: an agricultural company, a materials science specialist and a specialty products business.

But as part of the reorganization announced on Tuesday, DowDuPont would shift several units that had been destined for the materials science company, which makes plastics and materials, into the specialty products business instead. As a result, the material science company would be smaller than originally planned and the specialty products business bigger.

The new specialty products division will add several businesses that are expected to account for more than $8 billion in combined sales this year. The change is expected to ease concerns by some investors that the materials science company would have too broad a product range, dividing its focus.

After the realignment, the new materials science company, which is expected to be called Dow, is expected to have about $40 billion in annual revenue. The specialty products business would have about $21 billion in annual sales and the agriculture business would have about $14 billion in annual revenue.

Andrew N. Liveris, the DowDuPont executive chairman, said in an interview that the reorganization created a “more focused material company, an exciting specialty products company that will have four distinct, independent businesses that will have growth because they’re best in breed in each of their market verticals.”

“That’s the work we’ve done,” Mr. Liveris said. “If you study any other chemical company out there, they’re still in 30 or 40 markets. There’s been no corporate restructuring of this type, of this value creation, in any sector, let alone the chemicals sector.”

Activist investors had criticized the original plan as unwieldy and unfocused, and the hedge fund Third Point had urged in May that the company be split into six, rather than three, businesses. That suggestion was not accepted, but Third Point’s warning that several units might be “stranded” in the new materials science company appears to have had an effect.

The merger behind DowDuPont was announced in December 2015, bringing together DuPont, the inventor of Kevlar, which was founded more than 200 years ago, and Dow, a maker of plastics and chemicals that is more than a century old.

It has taken nearly two years to complete the transaction as the companies have navigated regulatory concerns.

The European Union signed off on the deal in March after the companies agreed to sell off parts of DuPont’s global pesticide business. In June, the United States Justice Department required the companies to sell certain herbicides, insecticides and plastics products in order for the transaction to proceed.

At the time they announced the transaction, the two companies made clear that they intended to separate the merged company into three. But that plan met opposition from activist investors like the hedge funds Trian Partners and Third Point, which argued that the new companies would each be too large and unfocused.

DowDuPont had been working with the consulting firm McKinsey & Company for several months on the reorganization plan — as part of the merger, a review of the combined company’s operations had been long planned for after regulatory review.

The company’s shares rose 1.9 percent in early trading to $68.13.

Trian Partners, the hedge fund run by the billionaire investor Nelson Peltz, welcomed the announcement on Tuesday, saying it “fully supports the portfolio adjustments announced today by DowDuPont.”

Third Point said it was “pleased to be part of a dialogue that created such a positive outcome for all of DowDuPont’s shareholders.”

Glenview Capital Management, another activist firm that called for changes in the breakup proposal, also praised the new plan.

Activist investors have gone after some of the world’s biggest companies in recent years as their influence has increased.

Driving System Faulted

The agency said the system, known as Autopilot, had performed as intended, but lacked safeguards to prevent drivers from using it improperly.

In the Florida case, the driver was able to use the system on a road for which it was not designed, and to turn his attention away from the road for an extended period just before the crash, the N.T.S.B. said.

In January, in what was interpreted as a victory for Tesla, the National Highway Traffic Safety Administration’s report on the accident said that the company’s Autopilot-enabled vehicles did not need to be recalled. That inquiry, however, focused only on the question of whether any flaws in the system had led to the crash; it found no such flaws.

The renewed attention to the Tesla system came as automakers are jockeying to push driverless technologies forward, while lawmakers and regulators scramble to keep pace, with the Trump administration putting forward its approach on Tuesday.

The Transportation Department unveiled voluntary guidelines for testing autonomous vehicles on Tuesday as part of a broader government effort to encourage automakers’ development of self-driving technology.

The department announced the initiative as Transportation Secretary Elaine L. Chao visited a testing center for self-driving vehicles in Ann Arbor, Mich.

The proposal establishes a voluntary framework of safety guidelines for companies to test autonomous vehicles on public roads. The approach also aims to clarify the role that state governments play in regulating the technology, including the enforcement of traffic laws and vehicle insurance requirements.

The guidelines replace policies set down by the Obama administration last year that called for automakers to submit safety assessments of their self-driving models before testing them on public roads.

Under the new guidelines, it will be left to automakers and other companies to decide whether to submit safety reviews to federal regulators. While the Trump administration will encourage public disclosures of such assessments, the documents will not be subject to federal approval.

There will be no waiting period for a company to begin testing autonomous models, although the vehicles remain subject to broader safety rules and standards for equipment and parts.

Industry officials lauded the less restrictive guidelines, which are intended to be a model for state policies. “The guidance provides the right balance, allowing emerging innovations to thrive while government still keeps a watchful eye over new developments,” said the Alliance of Automobile Manufacturers, a trade group.

Separately, the House approved a bill last week allowing automakers to deploy hundreds of thousands of autonomous vehicles on American roads over the next few years. A similar bill is being drafted in the Senate.

In addition to Tesla’s efforts, the competition to develop self-driving cars has become fierce among auto industry giants such as General Motors and Ford Motor, as well as technology companies including Google and Apple.

The companies have been accelerating their testing and have backed legislation exempting autonomous vehicles from current motor vehicle laws.

Some safety campaigners and consumer groups have been critical of the move toward voluntary rules covering self-driving technology, including the guidelines introduced by Ms. Chao, saying they reduce federal oversight that was already too limited.

Automakers and government officials contend that self-driving technology could reduce vehicle accidents and traffic fatalities, which rose by nearly 8 percent in 2015 to more than 35,000 deaths. Tesla reiterated that safety potential Tuesday after the transportation safety board issued its report on the Florida crash.

The accident killed Joshua Brown, 40, of Canton, Ohio. His 2015 Tesla Model S was operating under its Autopilot system on May 7, 2016, on state highway in Williston, Fla., when it crashed into a tractor-trailer that was crossing the road in front of him.

The system’s forward-looking camera failed to recognize the white truck against a bright sky, and neither Mr. Brown nor the Autopilot system activated the brakes. Data from the car showed it had been traveling at 74 miles per hour at the time of the crash and that Mr. Brown had ignored several warnings to keep his hands on the steering wheel. A preliminary N.T.S.B. report found that he had at least seven seconds to notice the truck before impact.

Like the National Highway Traffic Safety Administration, the N.T.S.B. found that the version of Autopilot in Mr. Brown’s car had performed as it had been designed to.

But Mr. Sumwalt said that version of Autopilot “gave far too much leeway to the driver to divert his attention to something other than driving.” He also said it was intended for use on limited-access highways rather than routes with cross traffic and intersections, such as the state highway Mr. Brown was traveling on.

Since the accident, Tesla has modified Autopilot to warn drivers more frequently to keep their hands on the steering wheel. After three warnings, the system cannot be engaged without stopping and restarting the car.

Tesla has also modified how Autopilot’s radar and camera sensors interact to improve its ability to recognize obstacles. The Autopilot upgrade was rolled out a year ago.

Tesla introduced Autopilot in October 2015, to great fanfare. And for a time it seemed that Tesla was far ahead of the big, established automakers as the notion of self-driving cars caught the imagination of both the media and technology enthusiasts.