Industrial continues to be one of the best-performing sectors within the real asset class. After two years of unprecedented positive net absorption levels, tenant leasing activity is returning to more typical levels — which we don’t think should surprise any market participant.
The Editorial Advisory Board of Institutional Real Estate Americas gathered for its fall 2023 board meeting in Santa Monica, Calif., at the beginning of September, and the conversations held during the meeting will help guide this publication’s editorial content for the year ahead.
Insurance premiums for commercial real estate are surging at an unprecedented rate.
The commercial real estate industry has been stymied by uncertainty in the past 18 months amid the rising-interest-rate environment. The lack of clarity on everything from valuations to office occupancy has posed challenges for investors and investment managers. But we may be at a turning point, as interest rates appear to stabilize, removing some of the uncertainty from the market and making it easier for real estate investors to take action.
Although there are plenty of examples of office buildings that have been transformed to alternative uses, such as hotels, retail and housing, office-to-residential conversions have moved to the forefront for obvious reasons. Opinions remain mixed on whether conversions are a viable solution that can be done at scale.
Today’s capital markets environment has made it difficult for real estate investors and developers to source capital to refinance upcoming debt maturities and finance acquisitions and developments. Rising inflation and continual increases to the base rate, effective federal funds rate (EFFR), combined with geopolitical and economic uncertainties, mean that once-plentiful available cheap capital is now expensive and constrained.
For thousands of years, the marketplace has been a fixture of our daily lives — places where people buy and sell goods and services. While the nature of retail real estate has evolved over time, a certain mantra has remained: “Keep it simple.”
While industries such as finance and healthcare have embraced digital technologies to streamline processes and improve customer experience, the real estate industry has been slow on the uptake. Why? Several reasons are likely.
Government regulatory agencies are generally slow and cautious, so much so that when the California Public Utilities Commission eventually voted to allow driverless robo-taxis to operate in San Francisco 24/7, a ruling the commission made in August, the topic had already exhausted its 15 minutes of fame. Google’s unit Waymo and the GM outfit Cruise are operating the robo-taxis, also called autonomous vehicles, in the hilly seaside city, and have started in other urban areas, such as Miami and Phoenix. While the California Public Utilities Commission ruling may read like yesterday’s news for the cities and transport industry, the regulatory thumbs up is profound and unfolding in real time. Automated delivery systems for people and other cargo are rapidly evolving from testing grounds to implementation.
We are in the midst of a semiconductor arms race. Manufacturers continue to release increasingly powerful processors designed to manage new types of workloads, including artificial intelligence and machine learning. This “chip” war is understandably concerning some investors. As technology advances at a rapid pace, will the data centers supporting the servers that contain these processors become obsolete?