The Weekly Take from CBRE

Mike Byrne, Chief Investment Officer at AEW Capital Management, and Tom Traynor, Vice Chairman at CBRE, dive into today's real estate investment climate. They discuss how investors can mitigate risks and seize opportunities amidst geopolitical shifts and economic changes. The conversation highlights the rising interest in high-quality office assets and the improving landscape for debt capital. They also emphasize the importance of technology and AI in investment strategies, advocating for flexibility in adapting to local market demands.

In this discussion, Nick Montgomery, Global Head of Real Estate for Schroder's Capital, and Lee Bruce, CBRE's executive director, dive into the rebounding U.K. real estate market. They highlight how AI is revolutionizing valuations and investment strategies. The duo also emphasizes the sharp divide in the office market, where premium spaces thrive while lower-grade assets struggle. Sustainability emerges as a key driver for investors, favoring green buildings. International confidence resurfaces, particularly from Asia and Australia, signaling a bright future for U.K. real estate.

In this engaging discussion, Jack Cox, Managing Director at CBRE, and Robert Dobrzycki, CEO of Panattoni Europe, dive into the evolving landscape of the European logistics market. They highlight the surge in demand from e-commerce and 3PLs, along with the critical role of operational expertise, especially in urban settings. The pair talks about the growing potential of data centers and contrasts the fragmented European market with that of the U.S., noting the impact of geopolitical changes and technology on investment opportunities.

Nick Firth, CIO of Industrial Outdoor Ventures, Brian Fumara, Vice Chair at CBRE, and Miles Harndon, CBRE Vice President, delve into the dynamic world of Industrial Outdoor Storage. They discuss the impressive sub-3% vacancy rates and the strong demand for existing storage sites driven by zoning challenges. The trio highlights how IOS is becoming a hot target for major investors, paralleling trends in self-storage. They also explore the impact of electrification and logistics tech reshaping the sector, showcasing IOS's vital role in modern supply chains.

Macquarie Group’s Andrew Burdick pulls the curtain back on the company’s newly reimagined Americas headquarters in Midtown Manhattan. Burdick and CBRE’s Lenny Beaudoin discuss how design, flexibility and sustainability can converge to create spaces that foster innovation, support company culture and drive long-term value.·     Workplace design can reflect and reinforce your organization’s mission and culture. When space aligns with purpose, it becomes a tool for engagement, innovation and long-term employee satisfaction. ·     Design an office to support various ways of working like collaboration, focus and events. This maximizes space efficiency while supporting evolving work patterns. ·     Open staircases and shared social zones drive spontaneous interaction, collaboration, creativity and a sense of community. ·     A great workplace integrates technology seamlessly from smart systems to digital collaboration tools, creating a cohesive experience for in-person and remote colleagues. ·     Measure engagement and satisfaction and make them the barometer of success.

CEO John Santora discusses WeWork’s revival, and its focus on real estate fundamentals, disciplined growth and delivering flexible, hospitality-driven office solutions worldwide. ·     WeWork has repositioned itself as a real estate-first company focusing on strategic locations, hospitality services and profitability.·     Demand for flexible office space is accelerating, with enterprise clients requiring scalable, adaptable solutions.·     Tech, finance and pharma are setting the pace for demand. ·     WeWork has begun training its staff using Ritz-Carlton’s hospitality standards.·     Today, WeWork utilizes revenue-sharing, management agreements and traditional lease models.

Two international experts—Pro-invest Group’s Sabine Schaffer and CBRE’s Stuart McCann—unpack the fundamentals and investment appeal behind co-living.Share these insights on co-living, which is attracting residents and capital, particularly in overseas markets: • Co-living fills a market gap between hotels and multifamily, and is distinguished by resident tenure, product mix and community social environment.• Co-living offers flexible, furnished units with strong appeal to working professionals and students.• Co-living assets can be an attractive investment, delivering stable income and occupancy as high as 95%+.• Conversions of offices and hotels can often be delivered more quickly and at lower costs than ground-up co-living development and produce better risk-adjusted returns.• Private equity is flowing into co-living and more institutional core capital may target the sector as it matures.• Urban affordability and demographic shifts are driving long-term demand, positioning co-living as a scalable residential solution.

Greg Juceam, President and CEO of Extended Stay America, shares his insights on the booming extended-stay hotel industry. He discusses the resilient investment potential in secondary markets and the operational efficiencies that simplify management. Juceam emphasizes ESA's unique growth model, blending ownership and franchising for scalability. The conversation also touches on how trends like remote work and healthcare-driven demand are shaping the need for long-term accommodations, making extended stays an appealing alternative to traditional hotels.

Brendan Wallace, Co-founder and CEO of Fifth Wall, and Connor Hall, Head of Global Digital Partnerships at CBRE, dive deep into the future of commercial real estate tech. They discuss the high risks and rewards in PropTech investing and how early access to innovations can boost asset performance. AI emerges as a game-changer for underwriting and risk modeling, offering a competitive edge. They also touch on market volatility affecting IPOs and highlight that the best PropTech companies tackle real industry challenges.

Lisa Russo, Head of Construction at the Community Preservation Corporation, and Damian Watch, Vice President at PGM Real Estate, share their insights on commercial construction risks. They discuss the impact of volatile interest rates and tariffs, emphasizing the need for detailed contract reviews. Strategies for risk mitigation, such as early material procurement and increased contingencies, are explored. Labor challenges are highlighted, especially in affordable housing, amidst ongoing market volatility and innovative financing solutions.