The Weekly Take from CBRE

·     With sub-3% vacancy and strong rent growth, Industrial Outdoor Storage (IOS) is outperforming traditional industrial assets.·     Zoning and entitlement hurdles limit new IOS development, boosting demand for existing sites.·     Major investors are amassing IOS portfolios, following the path of self-storage and single-family rental.·     IOS supports logistics, construction and utilities with strategic infill locations and flexible outdoor space.·     Electrification and evolving logistics technology are reshaping IOS.

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.

David Welch, CEO of Robinson Weeks Partners, specializes in industrial real estate, while Chris Riley, Vice Chair of CBRE, is making a strategic shift to join Welch's firm. They dive into the booming impact of e-commerce on industrial growth, alongside the challenges brought by rapid development. Key topics include the potential of transforming former military sites and the importance of modern building designs. They also discuss site selection factors such as transportation access and local regulations, emphasizing the need for flexibility in this evolving landscape.

In this bonus episode, CBRE's new Global Head of Research, Dr. Henry Chin, discusses the current outlook for commercial real estate for both occupiers and investors. Key Takeaways on the Economic and Real Estate Outlook ·     Market Sentiment: Real estate fundamentals don’t change overnight. Leasing activity is proceeding across asset classes though some occupiers are delaying decisions until they have more clarity on potential policy changes and their economic impact. ·      Economic Indicators: Monitoring not only job growth and inflation but also softer indicators like travel bookings and restaurant reservations provides a feel of the real economy. ·      Nimble Capital: High-net-worth individuals can move quickly to pounce on attractively priced opportunities.

Galvanize Climate Solutions’ Joe Sumberg and CBRE Chief Sustainability Officer Rob Bernard share insights on achieving high returns through sustainable investment strategies. ·     Profitable Sustainability: Commercial real estate investment strategies that integrate today’s sustainability and decarbonization technologies can enhance returns.·     Economic Opportunities: There is high occupier demand for green buildings, presenting investment opportunities.·     Technological Integration is the key: Using energy-efficiency systems and AI can enhance the operating performance and value of real estate assets.·     Strategic Market Focus: Regulatory frameworks and government incentives can increase the appeal of sustainable investment strategies in certain markets.