Real Assets Adviser

June 1, 2021: Vol. 8, Number 6

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From the Current Issue

Industrial and logistics marks its best year ever

The North America industrial and logistics market had its strongest year on record in 2020 despite — or perhaps because of — the coronavirus pandemic that otherwise caused a severe economic downturn. CBRE reported that occupiers moved into facilities in droves to serve a rapidly growing online consumer base and increase their safety stock to avoid inventory disruptions that plagued the past year. All sizes and types of industrial real estate performed well in 2020 but none more so than the big-box sector, according to the report, titled 2020 North America Industrial Big Box.

The ‘hard-to-decarbonize’: Some economic sectors still heavily reliant on fossil fuels

Up to $3 trillion of infrastructure investment may be needed by 2030, and up to $20 trillion by 2050 to develop the “hydrogen economy,” according to a report by QIC. The report, titled Gathering Pace: Infrastructure opportunities in the hydrogen economy, notes that although significant progress has been made globally to reduce carbon emissions from […]

Crowdfunding investors had better beware of some big risks that have gone unnoticed

Warren Buffet famously said, “Only when the tide goes out do you discover who’s been swimming naked.” In recent years, the U.S. real estate industry has enjoyed positive economic growth and market fundamentals (with the obvious exception of spring 2020). During this five- to 10-year expansion period, crowdfunding emerged as a democratized way for investors to access commercial real estate. This new form of fundraising has opened doors to opportunities historically only available to large investors.

5 Questions: Taking note of a world of investment strategies

There is no shortage of investment strategies. There is value investing, growth investing, momentum investing, endowment model investing, contrarian investing, dollar-cost averaging, and the options go on and on from there. But what investment strategies truly work and bring sustained returns over the long term and during various economic conditions? It’s a question that has obsessed and bedeviled investment officers and asset managers since financial time immemorial.

Buzz cities: Young professionals are in motion, and here is where the talent, action and profits can be found

Now, more than in a long time, young American professionals are on the move — driven from their fixed positions in major U.S. cities, and no longer tethered to their physical places of employment. Yes, it’s one of the symptoms of the coronavirus pandemic, but more accurately the pandemic has accelerated changes in the job market that have been trending for a couple of decades, especially among members of the so-called knowledge economy (people who work with information in its various forms can pretty much work from anywhere that has a dependable internet connection).

Renewable energy — beyond sun and wind

Although there is still a vocal contingent of people who view renewable power sources as unworkable, the truth is that renewable power generation has gone mainstream. In 2020, about 20 percent of the energy generated in the United States came from sustainable sources, according to U.S Energy Information Administration (EIA). And this percentage will only grow as the states with formal renewable power targets, some of which are aiming for 100 percent renewable energy generation by 2050, move toward achieving those targets.

Regenerative farmland, the sprawling greenfield opportunity smart real estate investors are embracing

There’s a buzz about a beautiful, 4,200-acre farm just 55 miles east of San Francisco. It’s the epitome of a happy place, where regenerative agriculture and commercial real estate meet. More than 1,700 acres of organic crops, including sweet corn, tomatoes, green beans, squash and others, grow in rotation with a lush, green pasture where sheep and cattle roam freely. Two-hundred acres of previously less robust soil can now grow olives for olive oil, next to 300 acres of nut trees. One hundred fifty acres of organic blueberries are in production, contracted by a well-known national produce brand, with 150 more acres on the way because the company (not to mention its customers) loves the exceptional appearance and flavor of the berries produced by happy plants growing in rich, organic soil.

Going for seconds: Survey shows real estate investors now favoring secondary U.S. markets

For the first time in the seven-year history of the CBRE Americas Investor Intentions Survey, large investors (those with assets under management of more than $50 billion) are more interested in secondary markets than primary markets. Especially appealing are secondary markets in the U.S. Sun Belt, with Austin being identified as the most preferred market, followed by Dallas.

Profile: Julie Caperton, head of banking, lending and trust at Wells Fargo’s Wealth and Investment Management

In 2008, sitting squarely in the vortex of the global financial crisis and teetering on the brink of financial collapse was Charlotte, N.C.-based Wachovia Bank, the fourth-largest bank holding company in the United States as measured by total assets. The economic ramifications of Wachovia’s collapse suggested themselves, which is why the U.S. government intervened and ordered the forced sale of the institution.

Megacities, Sino-style

China has urbanized with unprecedented speed. About 20 years ago, only 30 percent of the Chinese population lived in cities; today it’s 60 percent. That translates to roughly 400 million people — more than the entire U.S. population — moving into China’s cities in the past two decades. And this migration isn’t over; 70 percent of China’s population is expected to be urban by 2035. To accommodate the influx, China has shifted from expanding individual cities to systematically building out massive city clusters, each of which will be home to as many as 100 million people. Cities in a cluster will collaborate economically, ecologically, and politically, the thinking goes, in turn boosting each region’s competitiveness. By 2035, five major city clusters are expected to be established. (The Download by MIT)

RIAs need to consider private real estate investments

Registered investment advisers (RIAs) have spent much of 2020 reallocating their clients’ portfolios as the recession gripped the equity and debt markets and the COVID-19 pandemic plunged the global economy into severe contraction. The extreme market dislocation caused by the pandemic has caused many RIAs to look for alternative investment opportunities that will sustain value and cash flow through a downturn and be well positioned when the recovery begins.

Investing in disruptive technologies

Just as the internet became a tool every business in every industry can use in their operations, the same will be true of robotics and artificial intelligence. Consider them to be general-purpose technologies, meaning they can be applied to every market and every industry, very much like the internet over the past 20 years, or electricity at the beginning of the 20th century.

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