The Weekly Take from CBRE

Andrew Jones, CEO of London Metric Property, and Franco Sidoli, Executive VP at CBRE, delve into the evolving landscape of UK REITs. They explore how triple-net leases provide income stability, highlight the booming sectors of urban logistics and convenience retail, and discuss the rising interest in smaller lot sizes from family offices. They also assess the impact of M&A on scalability, investor demand amidst changing market conditions, and the potential of retail environments reshaped by e-commerce trends. A must-listen for anyone intrigued by real estate dynamics!

John Lippmann, Head of U.S. Real Estate Capital Markets at Barings, and Elisabeth Troni, Portfolio Manager for CBRE Investment Management, dive into the evolving landscape of core funds. They explore how alternatives like data centers and seniors housing are increasingly reshaping portfolios. The conversation highlights the importance of operational expertise and the strategic advantages found in emerging secondary markets. They also discuss the need for flexible fund structures to navigate market cycles and maximize returns.

MetLife Investment Management’s Sara Queen and CBRE’s Tommy Lee explore the shifting dynamics of commercial real estate investing. They offer seasoned insight on a range of topics, from NYC office to data centers to build-to-rent residential and much more.Key takeaways on real estate investing:  ·      High-net-worth investors are stepping in aggressively during the current market cycle, while institutional capital remains cautious and highly selective. ·      Data centers benefit from sustained strong demand, but require disciplined underwriting due to lease rollover risks and rising competition. ·      Many institutional investors prefer targeted strategies in assets like build-to-rent, industrial and retail, giving them more control and precise capital deployment.·      Office development in New York remains fundamentally attractive, but securing equity partners is challenging due to risk expectations and long completion timelines. ·      MetLife is experimenting with AI to enhance investment committee decision-making, enabling a sharpened focus on key risks and opportunities but not replacing human judgment.

Christian Perez-Geis, an industrial broker and director at CBRE El Paso/Ciudad Juárez office, shares insights on the evolving industrial landscape along the U.S.-Mexico border. He discusses the rise of nearshoring and the renewed twin-plant model, emphasizing their impact on manufacturing and logistics. The booming demand for automation-ready facilities and the strategic growth of cities like Laredo and El Paso signal significant investment opportunities. Competition for labor and the emergence of a new North-South supply chain archetype are reshaping market dynamics.

CBL Properties’ Stephen Lebovitz and CBRE’s Rich Frolik explain how malls are being transformed into high-performing, mixed-use assets. From casinos and hotels to pickleball and movie theaters, malls are evolving to meet modern demand.Key takeaways on the evolution of malls: ·      Malls are transitioning into multi-use destinations, integrating entertainment, hospitality and residential to diversify income and increase relevance.·      Financing is increasingly accessible for retail assets, with recent deals showing lender confidence and competitive debt structures.·      Success depends on hyper-local strategies, with redevelopment tailored to demographics, infrastructure and competitive dynamics.·      Malls in secondary markets benefit from large trade areas and limited alternatives, reinforcing their role as dominant regional retail hubs.·      Redeveloping legacy anchor spaces into formats that appeal to current customer wants and tastes can unlocks value and enhance long-term viability.

Join Teddy Kaplan, President and CEO of NetLease Strategy at New Mountain Capital, and Will Pike, President of U.S. Industrial and Logistics Capital Markets at CBRE, as they delve into the booming world of net lease investments. They discuss how this hybrid asset class is gaining traction among institutional investors, especially in volatile markets. Topics include the emergence of manufacturing facilities as solid assets, the strategic use of sale-leasebacks, and the nuances of geographic valuations—highlighting the critical blend of real estate fundamentals and tenant quality.

Brian Fumara, a seasoned Vice Chair at CBRE with over 25 years in industrial deals, joins Miles Harndon, a VP with two decades in commercial real estate, and Nick Firth, CIO of Industrial Outdoor Ventures, to delve into the booming Industrial Outdoor Storage (IOS) sector. They discuss the remarkable sub-3% vacancy rates and soaring rents, the hurdles of zoning that create demand for existing sites, and how IOS is emerging as a crucial player in logistics and utilities. The conversation also touches on the impacts of electrification and evolving logistics technologies.

Steven Wechsler, President and CEO of Nareit, is a leading advocate for Real Estate Investment Trusts (REITs). He discusses the benefits of investing in REITs, emphasizing their structural discipline and tax efficiency. The conversation highlights how public REITs, with conservative management and lower leverage, offer stability. Wechsler also explores the global investment landscape and emerging asset classes within REITs, such as data centers and healthcare facilities, while considering the evolving needs of the real estate market post-COVID.

Gordon Dolven, Director of America's Data Center Research at CBRE, and Maja Rosenquist, EVP at Mortenson with decades of construction experience, dive into the booming data center sector. They discuss how AI is reshaping site selection strategies and the crucial need for scalable power. The shift in lease structures focusing on power usage reflects the surging market demands, while rising investment from infrastructure funds signals robust growth ahead. They also tackle construction challenges and innovative approaches to meet the needs of this dynamic industry.

Stephen M. Ross, CEO and chairman of Related Ross and owner of the Miami Dolphins, shares his vision for West Palm Beach as a burgeoning business hub. He discusses the importance of walkability and a vibrant community in attracting top talent. Ross emphasizes the thriving Class A office space market, demonstrating strong demand despite national trends. He advocates for inclusive growth through investments in education and cultural amenities, creating a well-rounded ecosystem that positions Palm Beach County alongside top growth markets like Austin.