If you build it …
Build-to-core strategies are gaining traction among investors. Such strategies can selectively offer a strategic advantage when existing assets are being priced at material premiums to replacement costs, explains Chris Macke, managing director of research and strategy at American Realty Advisors. And, as the market strengthens, build-to-core is a sensible strategy to avoid paying very high market pricing and to capture the attractive development spreads to add value, says Tim Wang, director and head of investment research for Clarion Partners in New York City.
“These can serve as a good supplement to the existing core real estate portfolio,” notes Wang. Macke says they can also offer a strategy for profiting in markets that may have had inferior returns long term, but where a build-to-sell strategy makes sense during certain periods in the real estate cycle.
Build-to-core also can be an effective method to improve the quality of a core portfolio over time, accordin