Ok, fellas. I'm bored to tears in real estate and am looking for new interesting paths and new challenges. What are some niche real estate products that people rarely think about? Self-storage was the trendy niche that, in my view, is now overbought in a lot of U.S. markets. What are some other interesting niches? Section 8 housing, military housing, data centers, etc. Thoughts?
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Racetracks seem fun/interesting. What about power plants? Missile silo->doomsday bunker conversions?
I don't think any asset classes are boring, but rather it is various risk profiles that are boring. If you're buying a stabilized Class A apartment building, sure there isn't a whole lot of interesting analysis to do there. But if you're building a Class A apartment building on an environmentally contaminated site, now you've got all kinds of "interesting paths and challenges" as you put it.
Well now my investment criteria will actually have competition... the gig is up
Haha you are already way too late, everyone knows about the missile silo bunker game. The real next hot niche asset = MOON LAND.
I'm actually interested in building car or (loosely) "race" tracks for a future when autonomous cars dominate and people want to go to the track to get in some real driving time. But I fear I'm a decade ahead of my time. Timing is everything.
Can't speak for the others but Sec8 is pretty overpriced as well. Folks realized about 10 years ago that it's a superb asset class.
One play I'd be interested in within the Section 8 market is buying PBS8 buildings in low cost of living areas and then moving the contract in-state to a high cost of living area. As in, buy 100 units in Baker, CA or Utica, NY and then move those contracts in LA/NYC. Haven't done enough research but I am pretty sure you can do it as long you can prove out that the original building won't suffer from having the contract removed. Seems like there should be a real arbitrage opportunity there.
How would that work? I thought that the section 8 was tenant based not property based. As a property owner, if you weren't able to attract voucher tenants in Utica or Baker, you'd just have to adjust rents appropriately if you wanted to lease up - right?
Look into Bowlero they manage bowling alleys around the nation.
How is the bowling sector doing? I haven't gone in years
Probably as you'd imagine. They seem to be a section of the entertainment industry that is stagnant and nowhere near as popular as it was 15-20 years ago. I mentioned this primarily to seeing Bowlero posting a position for an acquisitions analyst.
Border security.
I'm surprised you don't lobby for privatization or public/private partnerships on the wall and kid cages. Hard costs are basically a retaining wall and low-fi self-storage.
;)
Incredibly niche but I find airport development extremely interesting, I don’t know why.
I would love to work for say, JetBlue in their Real Estate/infrastructure group for their JFK development.
+1 on the airport development. Coming out of engineering school a couple years back, it seems like a lot of my friends ended up doing design/construction on airports. With rapid urbanization of the south/fringe cities, it seems like expansion and development can't keep up. Don't know much about it but it definitely seems hip.
Even well-established airports like ATL are undergoing massive renovations
Airports are very difficult from the construction/ development perspective.
I bet.
JetBlue had a Senior Analyst position a couple months back. Seems like you need a heavy technical background in construction/engineering/architecture.
On top of that everything has to be approved by the Port Authority who runs the airport security and such along with the City who typically owns the airport.
Yeah, the Berlin Airport has been under construction for something like a decade.
Or a place like Skanska that works on multi billion dollar airport redevelopment projects Laguardia's terminal B
Hey now, don't shortchange Walsh out there too.
Didnt they get the contract for the Newark Airport expansion as well ?
I worked in retail, Airport development is huge and they are looking to retail players to make the retail in their terminals top notch.
VINCI Airports is big in this space, GIP sold their stake in Gatwick to them late last year.
On another note, a reit in my market has started to develop their FBO (fixed-base operator) activities. Could be an subsection worth looking into.
There's firms that specialize in inside the fence developments at airports. Like logistic type stuff. I think you end up with a lot of P3 type deals. Realterm is one
Master planned weed parks in permitted use areas of municipality's
Indoor grows are generally much higher quality...or so I've heard...
How about Sports Arena developments? Anyone have personal experience with something like Barclays Center or Chase Center? Fully private developments. Owners in each case hire top guy to lead whole team. Build an arena,offices, retail, put a whole business plan into operation then bounce somewhere else in the world to do it again.
I got to tour SunTrust Park when it was under construction. Built by "Braves Development Company" while selling off other uses (like the multifamily and the retail) to well known local developers.
Met a guy recently whose job it was to appraise private islands. He would literally be flown out private and spend a couple weeks there sipping alcohol and "working".
How does one get this job?
Not sure if this qualifies as niche or flat out creepy but I know a group that specializes in funeral homes and cemeteries. In talking with a few guys who work on this platform the returns were pretty compelling. Not exactly what anyone in undergrad might aspire to be but cash flow is cash flow. I mean if nothing else talk about a reliable sector!
Like, he would build funeral homes? Or he would actually enter the funeral business?
Acquisition, ownership and operation. They don't build them. The company typically targets “combination” facilities, characterized by a large cemetery with a funeral home either on-site or in close proximity. Overarching attraction here in talking to them was the lack of correlation to broader economic cycles and the high barriers to entry. Interesting to say the least.
This is a very interesting idea. The only real threat is a decline in the popularity of religion. What kind of cap rates we talking?
I'm not sure they even look at cap rates since it's so capital intensive, multiple would be the metric they're following. From what I gather public companies trade at a 9x EBITDA multiple.
https://www.wsj.com/articles/cremation-nation-our-new-way-to-go-1155388…
Really? I always heard that was a dead-end career path....
The good news with cemeteries is that tenants are typically on long term leases, and the odds of them leaving for the newest Class A cemetery on the market is pretty low.
Do you model the average death rate instead of vacancy?
Now this is creepy - I had a meeting with an adviser for a Chilean pension fund. They were heavily invested in Chilean cemeteries where the plots were financed with debt from the property owner. When the plot owner couldn't pay the debt service, the cemetery would foreclose on the plot, dig up the casket, and sell to a new buyer...
Do you remember the name of the group?
Didn't Peter Lynch write about something similar in One Up on Wall Street?
Private Prison reits have always made me uneasy and def stick out to me.
I'd imagine the average tenancy is pretty long there....
lol yah and now that they’re expanding in partnership with ICE to house detained illegal immigrants they must be making a killing. Anything for that roi you know what I mean?
Some college student will jump on here saying how it's all about the IRR and EM because sleeping at night isn't prestigious
Return on Incarcerated?
Much cheaper and easier for Texans to defend the border against invasion with firearms.
Cell towers are pretty interesting, as well as billboards. Not traditional real estate plays, by any measure, but they have a lot in common and the returns/strategies are pretty interesting.
You're a f*cking genius. This is the out-of-the-box thinking I was looking for.
Thanks haha. Wish I could say they were my idea...I think I heard about them on the podcast "Real Estate Investing for Cashflow ." Super cheesy name and the host always spends 3-5 minutes pitching his latest mobile home park fund at the beginning of the show, but he has had on a very wide range of interesting real estate investors, from cell towers to billboards to car washes - lots of odds and ends, as well as traditional RE food groups. I highly recommend it, as long as you don't mind hitting fast forward a few times until you reach the interview in each episode.
There is like 1 or 2 billboard REITs that literally own every sign on Sunset Blvd and other high signage places I wanna say regency and one other company.
Edit: Regency & Outfront
Look into bus stop shelter advertising if you're really trying to get creative.
There’s a publicly traded company called landmark infrastructure that owns / leases the land underneath cell towers
I like this one. Actually saw a job posting for one of the major billboard operators recently
I keep seeing development associate/manager jobs for cell tower companies popping up in my area. Sounds boring so I've mostly ignored it. Anyone have experience running these projects? Interested to hear what it's like.
I worked on cell tower leases (on behalf of the property owner) directly with the cell company's project managers. Those guys seemed like well traveled blue collared guys who knew in detail a very sophisticated and highly niche product. I was impressed.
Manufactured housing guys make a killing. Don't know if it's particularly fun, and you have to deal with a LOT of interesting tenants, but think it would be interesting.
Have a buddy who's been taking down RV and mobile home parks over the last three years. At first he did it as a one off and it's grown so fast they created a new arm of the company specializing in it. I spoke with the guy that's been financing them and he said it's been a goldmine since Fannie/Freddie will lend on it. Been lobbying for my group to allocate some money and move on this for a while but can't get them on board!
Are you an operator? We want to invest capital into the space right now.
I used to do it. Very good to projects, but it's the most boring type of real estate out there. There's just so little complexity, yet ppl still screw it up
Equity LifeStyle has been making a killing with this.
Daycare, private education, food halls, mobile homes, glamping, entertainment...
Funny you mention Food Halls.
I just had a food hall operator reach out to me regarding a Real Estate Strategy position..not sure whether to pursue or not.
Could be interesting as I think we are experiencing a movement towards food halls, not a short-term trend. No harm in meeting with them...
Outdoor industrial storage (Specifically container yards with close proximity to shipping ports).
Very high barrier to entry use as most municipalities don’t want to give land owners new CUPs to allow them to stack shipping containers. Also, there is largely a lack of land in these markets.
I know of a family office that bought 44 acres near the Port of Long Beach and ground leased it to a container yard operator. I think they were into it for like 8% unlevered.
I suspect the likes of Evergreen or some of the Dutch shipping outfits would be very keen on the ground leasing these types of sites.
Speaking of shipping… I think owning the shipping terminal/port would be bad ass. More of an infrastructure play than real estate though.
Good idea. This is also very high in demand in O&G fields like the Permian Basin.
There's a high demand in the Permian Basin, and it's doing very well now, but it's such a boom and bust area.
Are you aware of any US based reits in this space, or who are the players in that market?
Skilled Nursing. Not a "sexy" asset class by any means. Very litigious and reimbursements/supply constraints vary by state.
I can see the Skilled Nursing/LTC space being a mess in a few years. At some point this sector will become overbuilt.
It’s not a good business, SNFs have declining occupancy due to hospitals sending patients home with visiting RNs. Also it is a tough operationally driven business it’s not Multifamily or Hotels plus. CRE guys have oftentimes underestimated the space and lost. In addition memory care or AL is way more attractive or even vanilla 55+ communities.
I lend in this space and can personally confirm you're right. State regulatory practices and budgetary constraints are nothing to sneeze at in this industry, plus a lot of the worse facilities struggle with relatively high labor costs.
Limited service car washes in secondary and tertiary markets across the Southwest where land is super cheap. They practically print money and with the limited service model, all you need is one or two people on staff to answer questions and make sure people don’t drive full speed into the tunnel.
Look into waterparks - I am not kidding. That will keep you busy for a while...
My former boss who was once the CIO of a major series of REPE funds said that the most lucrative acquisition deal he ever saw was a waterpark. Gross margin on concessions.
Marinas - check out SunTex. I recall an investor presentation from back in 2016 where they were buying "institutional quality" marinas at 9-caps. According to the deck the business was pretty recession proof (TBD on that).
We kicked the tires on marinas. Our biggest fear was timing in the cycle, people stop recreational boating when they have to tighten their belt. I think its an awesome asset class and would love to be involved one day
I don't disagree. The investor presentation I saw had the quote below on the cycle risk (I don't buy it)... that said they were raising equity at the time and looking to go public in the next couple of years.
"A notable trend over the last several decades is that average slip sizes at marinas have materially increased to accommodate larger boats. These boats have fewer alternate storage options than smaller, trailerable boats, thus providing greater stability of occupancy. While boat usage and the ancillary revenues associated with usage decrease in an economic downturn, slip rental income, the highest margin cash flow stream, remains largely intact. As a result, despite some moderate volatility of top line revenues, recessionary period marina NOI has proven to be quite stable."
Play of the decade, quietly buy up all the oil rights of upstate NY that the marcellus spills over from PA then lobby the state to legalize fracking. Instant billions.
What are your guys' thoughts on cold storage and temperature-controlled warehousing? More people continuing to move into cities wanting access to flash-frozen vegetables and whatnot, am I missing anything? Americold has a nice edge in this.
Just saw this on SNL - Americold Realty to acquire Cloverleaf Cold Storage in $1.24B deal
Yeah exactly, they'll total more than 1B cubic ft and I think will be the largest public firm in the space, behind Lineage which is in PE.
The tax credit space is pretty interesting and niche. Almost zero principal risk for the investor and cheap capital for the developer/ can give sizable returns if at the right place. Check out Historic Tax Credit (HTC's), New Market Tax Credits (NMTC's), or Low Income Housing Tax Credits (LIHTC's)
My problem with that space is that I fundamentally reject tax credit housing as immoral and inefficient. So I can't do a product that I think is bad for individuals and for my country, even if it is profitable.
Historic tax credits is something I could look into more, however.
Are TIFs also inefficient and immoral?
I just moved into the historic tax credit world after doing GSE underwriting for several years and I can say it’s a breath of fresh air. The projects you work on usually have an interesting background and are in locations where the redevelopment will make a positive impact in the community.
The time horizon is a bit different too as there is a shorter recapture period compared to LIHTC deals.
God, this thread is like a trip down memory lane. All this crap seems like a great idea when you are chasing yield late in the cycle. Three years later, when you are the workout officer trying to put the broken pieces back together, these will all seem like the most hair-brained ideas in the world.
"I used to be a bartender, now I own a boat!"
Great movie lol
Hahahahahaha you own a boat? How many are adjustable rate mortgages?
Self storage is pretty boring honestly. It has been a great asset class for the last several years, and there is a lot of beauty in that, but after you do a few self storage deals, it gets monotonous.
Some interesting areas to look into if you are curious: senior care/skilled nursing facilities, data centers (electricity reimbursement in leases tend to be really interesting) and creative office campuses.
I’m really interested in data centers, but I’m a little concerned about the obsolescence risk.
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