The hammers of August lost a bit of their schwing this summer. Overall construction starts during the month slumped by 9 percent to an annualized rate of $541 billion, according to a report from McGraw Hill Construction.

In 2005, Tom Shapiro left his job as senior managing director at Tishman Speyer, the white shoe real estate firm where he worked for nearly two decades, to strike out on his own. In less than a decade, Shapiro’s GTIS Partners, which specializes in opportunistic real estate investments, has grown its assets under management to some $3 billion and risen to become one of the largest real estate private equity companies in Brazil.

Apartment living agreed with the people at DRA Advisors. But everyone has a price. For DRA and Bell Partners, its joint venture colleague, it was $1.8 billion, the price that Lone Star Funds is dishing out for 20,000-plus units in 64 apartment communities scattered across the United States.

While late October’s Editorial Advisory Board meeting in Tokyo for The Letter – Asia Pacific had yet to take place at the time of this writing, we have been spending quite a bit of time reflecting on what we have learned from the participants at the board meetings for our Americas and Europe publications, which were held separately in September.

Dogma, or received wisdom, can, and often does, blind the otherwise discerning investor, especially when the investor must report to institutional investors and their investment committees. “Drinking the Kool-Aid,” which usually pertains to those holding an unquestioned belief without critical examination or nuanced introspection, can also refer to endorsing knowingly or supporting reluctantly a doomed or dangerous idea because of peer pressure, so-called expert opinion, or the money management equivalent of acting in a flagrantly arbitrary and self-serving fashion. Authority trumps evidence under pressure!

Thematic investors are forever trying to understand and capitalize on the overarching forces that drive real estate. They just got a helping hand from TIAA Henderson Real Estate, which just published a new report identifying five megatrends with major implications for real estate.

More investors than ever are taking bites of the Big Apple — at least in dollar terms. New York City attracted the most commercial real estate investment during the past year, some $55.4 billion, a 7 percent global market share and an 11 percent increase over the previous 12 months, according to Cushman & Wakefield’s annual Winning in Growth Cities report. During the 12 months ending June 30, 2014, Gotham outdistanced London and Tokyo — which placed second and third in the ranking respectively — to retain its title as the world’s largest real estate investment market.

On Oct. 15, 2008, the failure of Lehman Bros. forever changed the financial landscape. Lehman, a perennial investment banking powerhouse, had become a major player in the ownership, financing and structuring of real estate deals, fueling a white-hot market for large, complex and risky transactions. With Lehman’s failure and the onset of the global financial crisis came a nearly complete retrenchment of liquidity in the commercial real estate market, a dramatic (greater than 50 percent in many cases) decline in valuations, fears of a meltdown in the CMBS market comparable to what occurred in the RMBS market, and concerns over potential massive losses embedded in the equity and debt portfolios held by major global investors. It was seemingly shaping up to be the worst of times …

For institutional real estate investors and money managers, the second half of the decade promises to be busy — and probably more lucrative — as additional trillions of dollars are channeled into investment-worthy property. By 2020, the global pool of investable assets will soar to more than $100 trillion, up from about $64 trillion in 2014, according to a recent report from PwC, the global accounting and business services giant. With yields depressed in the bond market — and some say low interest rates are the “new norm” — there have been predictions of a “wall of capital” to enter institutional real estate to finish out the decade. 

A solid real estate investment strategy uses top-down analysis to identify the location and timing of new investments. Determining what countries to target is the first challenge, as country-level factors are a primary driver of financial performance for real estate investments. These factors include macroeconomic and demographic conditions, as well as the local property market cycle and its drivers.

After experiencing strong growth in August, the FTSE NAREIT All REIT Index declined 5.63 percent during September. Monthly REIT performance was well below the Dow Jones Industrial Average (–0.32 percent), and the S&P 500 Index (–1.40 percent).