Takeaways from Bloomberg’s Commercial Real Estate Outlook Panel on 2/24/16:
A few of us at CAPFUNDR attended Bloomberg’s Commercial Real Estate Outlook Panel yesterday. It was a lively and entertaining discussion featuring some top New York real estate players including Drew Fung of Clarion Partners, Scott Rechler of RXR, Anthony Orso of Cantor Fitzgerald, and David Lichtenstein of the Lightstone Group. Here are my top takeaways from the panel:
· Real estate loans will be more expensive and harder to come by.
Basel III is dislocating the real estate lending markets. CMBS lending spreads have shot up and issuance has declined due to increased capital requirements. Out of favor property types such as shopping malls and hotels largely rely on CMBS financing, and will be especially affected.
· Re-urbanization is spilling over to secondary cities and older, infill suburbs.
Urban areas continue to attract young, educated workers. As prices in gateway cities such as New York, San Francisco, and Boston increase, there is a spillover effect to secondary cities and to close suburbs served by rapid transportation. RXR is working on some large urban redevelopment projects in older NYC suburbs such as New Rochelle, in Westchester, and Hempstead on Long Island. Lightstone is actively pursuing this trend as well.
· Technology is democratizing real estate investment.
New web based investment platforms are springing up that enable individual investors to access institutional real estate much more efficiently. The idea of web-based investment is becoming more mainstream and we should expect some large institutional fund managers to enter the fray.
They were preaching to the CAPFUNDR choir on the last point! We’re happy to see our strategy validated by the real estate establishment. It’s good for investors, and real estate is a huge market with room for multiple players.