The Weekly Take from CBRE

Regional economic development leader Victor Hoskins and CBRE’s Cathy Delcoco discuss Northern Virginia’s opportunities and challenges as well as its thriving real estate market.Share these insights from this week’s episode: ·      Northern Virginia is benefiting from substantial job growth, especially in the technology sector, including AI-related roles. Tech job growth supports demand for office space and housing. ·      High-quality, amenity-rich office space is seeing strong demand. Tenants are willing to pay a premium for Class A trophy buildings with amenities, despite downsizing due to hybrid work. ·      Older office buildings are being redeveloped into residential units or data centers. This represents an attractive buying opportunity for nimble investors.

Jordan Schnitzer, President of Schnitzer Properties, shares insights from his family's journey in real estate, transitioning from scrap metals to a leading industrial powerhouse. He discusses the advantages of flex-industrial properties over big-box warehouses due to steady demand. Schnitzer emphasizes the value of 'aggressive moderation' in business decisions, advocating for a decentralized model that empowers local teams. He also highlights the blend of data-driven analysis and gut instincts in investment strategies, illustrating the dynamic nature of the real estate market.

Clarion Partners’ Drew Fung and CBRE’s James Millon discuss the improvement in market sentiment and a pickup in investment activity amid a brightening interest rate outlook.Share these insights from this week’s episode: The Federal Reserve’s initial rate cut improved market psychology and increased liquidity in the marketplace.While banks remain a critical capital source, private debt funds have stepped up their lending at a time when many banks have pulled back.3.    Harnessing data and predictive analytics is essential for navigating market complexities and optimizing returns.4.    Investors are primarily focused on multifamily, industrial and alternative asset classes, with data centers emerging as a particularly attractive investment opportunity.5.    The next 18 months are expected to see a gradual normalization of transaction volumes, with opportunities in both traditional and alternative real estate sectors.

Rob Bernard, CBRE Chief Sustainability Officer, and Miro Sutton, CBRE's new Global Head of Energy and Renewables, discuss the critical role that renewable energy can play in meeting carbon emission-reduction goals and simplify the complexity around implementing and investing in sustainability in commercial real estate.Share these insights on sustainability and renewable energy: -      Companies should integrate renewable energy and sustainability strategies into their core business plans to remain competitive and resilient.-      The renewable energy market is evolving, with regulatory frameworks playing a significant role. Governments can make it easier to achieve environmental goals by writing clear and understandable regulations.-      Collaboration among technology, business and regulatory bodies can help to drive innovation and advance sustainability initiatives.-      Broader adoption of renewable energy can mean economic and environmental benefits for many companies.-      A holistic approach to sustainability, encompassing everything from energy procurement to building materials, is necessary for long-term success.

Community opposition can thwart the most desirable—and needed—development projects. Connecticut developer Jerry Davis and CBRE’s Jessica Lall offer tips and strategies for marshalling community support for worthwhile projects and overcoming the instinct to “just say no” to new development.1.     Engaging the community early and maintaining open lines of communication are crucial for real estate developers to overcome community objections. By involving local stakeholders in the planning process and addressing their concerns, developers can build trust, gain allies and smooth the path for project approval.2.    Local governments that adapt regulations to allow for a variety of housing types can ease the "missing middle" problem—affordable housing that falls between single-family homes and large multifamily properties.3.    The affordable housing shortage can provide an impetus for regulatory changes and innovative solutions.4.    Successful pilot projects can demonstrate how local communities can benefit from new development.5.    Collaboration between government and the private sector can advance worthwhile projects that can be derailed by well-intention community opposition.

Ryan Summers, Managing Director of Financial Services at Project Management Consultants, Bhavan Patel, Founder of Green Harvest Capital, and Jamie Dunford, a capital markets professional for CBRE, discuss Cleveland's dynamic approach to repurposing office spaces. They highlight the historical significance of these conversions and the ambitious Project Scarlet, aiming to reshape urban living. The trio dives into financial complexities, innovative public-private partnerships, and the city's commitment to enhancing its downtown and waterfront, promising a bright future for Cleveland's real estate.

Austin has been transformed over the past 20 years. A traditional government and college town has become a top tech hub and a model for developing metros. Heritage Title Company of Austin’s Gary Farmer and CBRE’s Bradley Bailey discuss the city’s ambitions, growth prospects and challenges.Share these highlights from our conversation about Austin:Austin's economy has diversified significantly in the past 20 years, particularly with the growth of the tech, life sciences and automotive sectors.Infrastructure improvements, such as airport expansions and major roadway projects, are crucial for sustaining growth.Investing in social infrastructure to support students, seniors and everyone in between has been a major focus for Austin.The city's young, educated workforce is a major draw for companies, contributing to the rapid growth of Austin's tech sector.

Zoe Hughes, an expert from the National Association of Real Estate Investment Managers, and David Chang, a representative of CoreNet Global, discuss the evolving relationship between investors and occupiers in real estate. They highlight shared priorities like operational efficiency and sustainability, advocating for strong communication and data-sharing to boost asset performance. The conversation also emphasizes the need for adaptive office spaces in the wake of hybrid work models and the importance of collaboration for future success.

Principal Asset Management’s Rod Vogel, a private equity investor, and Chris Duey, a debt specialist, share different perspectives on the current real estate market and identify sectors where they find common ground.Debt and equity investors often see the market differently.Rod Vogel, a private equity investor, remains bullish about the long-term.Chris Duey, a debt specialist, believes a new credit cycle may be emerging as property values adjust to the current interest rate environment.The investors share enthusiasm for data centers, Sun Belt multifamily and selective office investments.

Entrepreneurs Atticus LeBlanc of PadSplit and Christine Wendell of Pronto Housing discuss innovative ways to help address the acute affordable housing shortage. They discuss how new business models, paired with technology, can make housing more accessible and cost-effective for residents and more profitable for property owners.Utilizing new business models, coupled with technology, can make affordable housing more accessible and cost-effective.Optimizing the use of current housing stock through co-living can help to alleviate supply shortages and improve affordability.Using technology to streamline the compliance processes can get qualified residents into affordable housing faster.