Publications

- June 1, 2022: Vol. 9, Number 6

Roundtable: Private wealth executives on real estate property types

by participating executives

What real estate property type do you expect to perform best over the next five years?

 

Josh Schuster, managing principal, Silverback Development

Multifamily housing has proven resilient over the past two years, further underscoring the desirability of this asset class. The multifamily market made a remarkable comeback, especially in metropolitan areas such as New York City, and continues to perform exceedingly well — a trend we don’t anticipate slowing over the next several years. Despite rising costs, there is growing demand for rental properties that are well located and thoughtfully amenitized. While we believe in the long-term value of condos, we are starting to focus on more rental developments and mixed-use projects that have both condos and rentals, in addition to office, retail or hotel components.

Amy Howland,vice president, real estate industries portfolio, management group
The four primary classes of commercial real estate include office, industrial, multifamily, and retail. While often viewed as the least intriguing of the classes, I anticipate that industrial real estate will reflect a favorable trend over the next five years. Growth in e-commerce has resulted in increased demand for warehouse, distribution, and manufacturing centers. Industrial demand is forecasted to persist as more companies launch e-commerce businesses in response to consumer preferences for convenience and flexibility. In addition, high-growth industries, such as cannabis and cryptocurrency, require facilities for growing product and mining coins, respectively. As the need for physical space increases, so, too, will the demand for industrial real estate.

Kristopher Oxtal, principal, Capright 

Over the next five years, the single-family rental (SFR) sector will outperform other asset classes. The amount of capital targeted for the sector, combined with strong fundamentals, will boost returns for this sector. In addition, the convergence of technology will allow for more-efficient operations, and the assemblage of portfolios from mom-and-pop operators will create substantial value for SFR owners.

Andy Wang, senior vice president, Passco Cos.

I would anticipate apartments to continue their run of success over the next five years. Rent growth has been extremely strong, and I certainly don't anticipate continuing the 10 percent to 12 percent annual growth rates we have experienced. However, apartments are a great hedge during inflationary times and rising interest rates. The lease flexibility and high occupancy will provide the ability to retain value and perform to expectations.

Tim Ronan, Jr., founder and managing partner, Stanton Road Capital

The supply/demand imbalance favors residential properties in high-growth markets with strong in-bound migration and job growth. Simply, there are not enough residential units, especially single-family rentals, in markets experiencing steady population growth. We also believe there will be a rotation of capital back into well-amenitized, core-plus and value-add office properties in these same high-growth markets. Generally, these markets have had minimal new supply, resulting in favorable absorption trends. Because of this, we are deploying capital for single-family residential developments, and continue to acquire and evaluate office opportunities in Florida, Texas, Utah, Arizona and the Carolinas.

Brian King, CEO, Realto

Real Estate trends can certainly affect us all, so, while it is important to pay attention to the trends, in the end we believe it is always about asset allocation. That being said, multifamily and industrial continue to look promising, and are riding high atop their peer group from a performance and new product entrants’ perspective. We continue to see robust growth in both the REIT and DST space in these asset classes. We also believe retail and office show promise. The reality is, there are a lot of great investments out there, but unless a client has a specific sector need, we believe diversification remains king.

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