Commercial property markets are facing a volatile mix of indicators, and that choppiness is setting up investors for a bumpy ride. Real estate fund managers are buckling their seatbelts and adapting strategies to better balance risk and reward in a changing marketplace.

“There has been turbulence in the market recently. We have headwinds, tailwinds and whirlwinds of swirling issues out there,” says Bryan Thornton, a partner at PCCP, LLC. Some of the top concerns include potential changes to U.S. policy and geopolitical risk, slowing economic growth, and rising interest rates, as well as high property valuations and pricing. “Real estate is expensive. We have fully recovered from the recession on a pricing perspective and surpassed the prior peak,” says Thornton.

“Specifically talking about real estate asset values, we have seen a great run over the last five years with respect to asset appreciation and improvement in the operating fundamentals,” says Alfons