What product type do you think is going to be the favorite for 2017? Obviously multi has been leading the way for a few years now, but most will agree we are starting to see some cracks there. Retail is still trying to figure out their new world of e-commerce. Industrial/warehouse will still be there in some capacity. What's everyone thinking?
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industrial
Definitely industrial. I believe the continued strong growth of ecommerce is really going to continue to drive demand for "last mile" warehouse and distribution assets. Well located infill industrial assets should continue to demand a premium to assets located farther away from major population centers. There is a noted shortage of land approved for industrial development to meet this demand which I think will continue to increase asking rents and the value of existing assets.
I think multifamily in certain geographies still has some runway left. I'm also very bullish on student housing. I still think that is a very fragmented industry that will benefit from increased institutional capital.
If interest rates continue to increase we could be in for an interesting 2017.
+1 student housing. Best deals I've seen come across my desk besides self-storage and industrial.
yeah this. There are guys taking down 700k - 1M sf in traditional bulk distribution center locations but also need the 150 - 250k last mile product as well to provide the fast 1 day/same day shipping
My firm doesn't like to do many student housing loans because schools can just go into the bond markets or internally fund new residential development that oversupply the market. How do you guys view that risk?
Obviously this varies from campus to campus, but a big part of our due diligence is understanding the school's future plans. Many schools are happy to move out of the student housing space and would rather focus their time, energy, and money on new academic programs, campus improvements, and athletic program improvements. These are the items that really drive enrollment growth and increase revenue for the school as opposed to building new student housing. However, if a school was committed to greatly expanding their housing stock, we would probably steer clear of that market. In general I'm more concerned with overall supply of new product as opposed to who is building/funding it.
Agreed and would like to follow up - is there any possibility that the lack of industrial zoned land, thus the increase in rents, and thus the increased cost being passed to the consumer, can positively affect smaller non-ecommerce players who will now have more competitive prices (out of commercially zoned locations)?
Also, on the subject of RE, I'm bullish on multifamily housing as well, however focused on senior care facilities which offer progressions from unassisted living to full-on care. As the baby boomer generation ages, they will need more and more support from these types of communities.
Definitely not net lease, I'm starting to see a lot of deals sit on the market.
inner city condos for the middle class to upper-middle class will kill!
Agreed. If only it penciled...
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