The Weekly Take from CBRE

Maja Rosenquist, EVP at Mortenson with a focus on data centers, joins Gordon Dolven, CBRE's research director for data centers, to explore the dynamic landscape of this sector. They discuss how AI is accelerating demand and influencing site selection due to power constraints. Maja shares insights on Mortenson's energy projects, while Gordon explains different types of data centers. The duo analyzes community concerns, potential risks of overbuilding, and trends in cooling technologies, all while forecasting sustained demand in the coming years.

In this engaging discussion, Adam Gallistel, Co-CEO and CIO of CBRE Investment Management, shares his expertise on navigating the current real assets landscape. He emphasizes the need for operational excellence over mere market hope, highlighting the potential in niche sectors like data centers and student housing. Gallistel identifies Europe as an attractive market for growth and shares insights on overlooked U.S. Midwest markets. He also discusses the importance of infrastructure and the rise of retail capital, offering a fresh perspective on investment strategies amidst evolving dynamics.

Michael Moore, Vice President of Global Real Estate and Workplace at Coca-Cola, shares insights on the brand's innovative workplace strategy across 82 countries. He discusses balancing global brand consistency with local cultural expression, using design to reflect community identity. Moore highlights Coca-Cola’s preference for flexible leasing in emerging markets, their 'Main Street' workplace model for collaboration, and the importance of measuring success through productivity and employee engagement.

Diane Hoskins, Global co-chair of Gensler, dives into the evolution of workplace design. She highlights the shift from rigid office layouts to flexible spaces, tailored for diverse organizational cultures. Destination workplaces are on the rise, aimed at attracting talent and fostering collaboration. AI is transforming architectural practices, enabling rapid design iterations. Diane also discusses the importance of reflecting local culture in office environments and how investing in high-quality spaces can yield long-term value.

Henry Chin, the Global Head of Research at CBRE, analyzes the surprising strength of Q3 investment activity in commercial real estate. He discusses why U.S. real estate is primed for investment opportunities as fundamentals improve. Retail and office sectors are highlighted as attractive, with positive leasing trends. Chin emphasizes value-add strategies for A-/B+ office spaces and examines the evolution of alternative assets into institutional staples. He also forecasts a strong market recovery, projecting double-digit growth by 2026.

In this conversation with Dr. Jean Twenge, a psychology expert, listeners explore how generational differences shape the modern workplace. She discusses lasting impacts of technology on communication and work culture, highlighting how Gen Z's entry is redefining leadership. Delayed life milestones, like marriage, are changing real estate demand, prompting a shift towards adaptable living spaces. Empathy emerges as a vital tool for building cohesive teams, along with embracing hybrid work models that cater to diverse preferences.

Sam Conniff, author of Be More Pirate and founder of the Uncertainty Experts Project, dives into how pirate-inspired leadership can revolutionize business strategies. He discusses leveraging uncertainty as a catalyst for innovation and the importance of emotional intelligence in today's workplace. Conniff critiques traditional corporate norms, emphasizing shared values and agency. He also highlights how fear, when managed, can lead to connection and action, urging leaders to challenge complacency to unlock true workplace potential.

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.