We Study Billionaires - The Investor’s Podcast Network TIP537: The Surprising Opportunities in Commercial Real Estate w/ Ian Formigle
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Mar 24, 2023 Ian Formigle, Chief Investment Officer at Crowdstreet and a commercial real estate expert, discusses the current landscape of office and retail markets. He shares insights on how rising interest rates and bank failures impact investment strategies. Formigle highlights the multifamily sector as a promising opportunity and emphasizes the challenges posed by capital calls. He also predicts the future of office spaces, considering post-pandemic recovery and changing market dynamics, offering valuable guidance for investors navigating these turbulent times.
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Commercial Property 2022
- Commercial property prices dropped 13% in 2022, similar to the S&P 500.
- The decline was concentrated in the latter half of the year, accelerating in Q4.
Interest Rate Impact
- Rapid interest rate hikes, the fastest since the 1980s, impacted commercial real estate by creating pricing pressure and issues with floating-rate debt.
- Many sellers accepted lower prices, often giving back some of the gains from 2021.
Cap Rates vs. Interest Rates
- Cap rates are primarily influenced by supply and demand, not solely interest rates.
- Increased demand or decreased demand generally moves cap rates.