This is likely the best one-stop review of real estate industry trends, providing a comprehensive look at the currents driving our industry. Great conversation starters and/or interview prep material... Our top 10 takeaways from StepStone's most recent Real Estate House Views report... 1. Wider range of possible outcomes: A new cycle defined by significant global pressures and big shifts in U.S. policies, likely to inspire cross-border capital recalibration. 2. Income focus: With cap rates stabilizing, real estate returns are expected to be driven primarily by durable and stable income rather than capital appreciation. 3. End in sight for new supply: Rising material and labor costs = significantly higher construction costs = reduced new supply and longer-term upward pressure on rents. 4. Targeted distressed opportunities: Elevated interest rates and financial restructuring continue to create recapitalization and distress-buying opportunities, particularly for highly leveraged property owners facing refinancing gaps. 5. Residential strength despite challenges: High homeownership costs and demographic trends are bolstering residential sectors, which are expected to outperform due to resilience during economic uncertainty 6. Industrial sector facing trade-related uncertainty: Although industrial properties remain attractive due to strong underlying demand, tariff-related uncertainty poses near-term risks. 7. Office still challenged: Structural demand issues, though some "green shoots" exist, especially for well-located, amenitized Class A spaces. But substantial distress and repositioning are anticipated for lower-quality and suburban offices 8. Relative stability in retail: Retail, particularly grocery-anchored and necessity-based properties, is demonstrating relative resilience due to limited new supply and consistent tenant demand, despite broader macroeconomic headwinds. 9. Debt market opportunities: Private debt remains compelling with improved terms and higher spreads. The sector benefits from a refinancing "wall" and ongoing recapitalization needs across property types 10. Buying the buyer: GP-led secondaries and recap transactions have surged by 52% year-over-year, driven by liquidity pressures and the need for funding to navigate challenging markets, offering targeted attractive investment opportunities.
Excellent overview, thank you for sharing
See 3 and 5…
Brenda Jones
6mo
Excellent info! Thanks for sharing 👍
Great resource and appreciate you sharing. #3 deserves an important caveat where the time horizon should be specified. New apartment supply will drop off next year in most markets and be prevalent for the next 4-5 years if new ground up developments begin at the same time. We have yet to see the impact of tariffs in our business and the reality is that the outsized impact of rent increases on proformas should allow income to outpace cost increases so deals to start to pencil.