U.S. real estate is experiencing a prolonged cycle of value dislocation. Ryan Cotton, partner and head of Bain Capital Real Estate, tells IREI that current market conditions are analogous, in part, to the 1970s, when rising interest rates initially challenged real estate, but the sector later became one of the strongest performers as fundamentals tightened. He highlights that current conditions favor thematic, sector-focused strategies that target long-term demand and income growth, rather than broad “beta” investments. Cotton also notes that while interest rates are an important input into valuations, they are not the only factor; volatility and underlying fundamentals, such as earnings growth, net operating income (NOI), and EBITDA, are also significant metrics to consider.
How would you describe the state of U.S. real estate?
We are now more than 48 months into the third-longest cycle in the history of commercial real estate in the United States
