Both Sides, Now: Principal Asset Management on debt and equity opportunities

Regional economic development leader Victor Hoskins and CBRE’s Cathy Delcoco discuss Northern Virginia’s opportunities and challenges as well as its thriving real estate market.Share these insights from this week’s episode: ·      Northern Virginia is benefiting from substantial job growth, especially in the technology sector, including AI-related roles. Tech job growth supports demand for office space and housing. ·      High-quality, amenity-rich office space is seeing strong demand. Tenants are willing to pay a premium for Class A trophy buildings with amenities, despite downsizing due to hybrid work. ·      Older office buildings are being redeveloped into residential units or data centers. This represents an attractive buying opportunity for nimble investors.

Jordan Schnitzer shares the strategies that propelled his family’s business from scrap metals to West Coast real estate powerhouse. Plus insights on building a thriving decentralized business and the benefits of balancing data-informed and gut instinct investment decisions.Insights to Share: 1.     Look at competition as well as returns. Schnitzer Properies’ prefers flex-industrial properties over big-box warehouses because there is steady demand and less competition.Do more, but be mindful of how much you can do. Jordan Schnitzer refers to his approach as “aggressive moderation.” Over-extending yourself can sacrifice long-term stability.Trust your leaders to use their local expertise. Schnitzer Properies embraces a decentralized business model with local teams empowered to make decisions and grow the business.Embrace data, but don’t ignore your experience. Utilize a data-driven approach combined with gut instincts to make informed and timely investment decisions.

Clarion Partners’ Drew Fung and CBRE’s James Millon discuss the improvement in market sentiment and a pickup in investment activity amid a brightening interest rate outlook.Share these insights from this week’s episode: The Federal Reserve’s initial rate cut improved market psychology and increased liquidity in the marketplace.While banks remain a critical capital source, private debt funds have stepped up their lending at a time when many banks have pulled back.3.    Harnessing data and predictive analytics is essential for navigating market complexities and optimizing returns.4.    Investors are primarily focused on multifamily, industrial and alternative asset classes, with data centers emerging as a particularly attractive investment opportunity.5.    The next 18 months are expected to see a gradual normalization of transaction volumes, with opportunities in both traditional and alternative real estate sectors.

Rob Bernard, CBRE Chief Sustainability Officer, and Miro Sutton, CBRE's new Global Head of Energy and Renewables, discuss the critical role that renewable energy can play in meeting carbon emission-reduction goals and simplify the complexity around implementing and investing in sustainability in commercial real estate.Share these insights on sustainability and renewable energy: -      Companies should integrate renewable energy and sustainability strategies into their core business plans to remain competitive and resilient.-      The renewable energy market is evolving, with regulatory frameworks playing a significant role. Governments can make it easier to achieve environmental goals by writing clear and understandable regulations.-      Collaboration among technology, business and regulatory bodies can help to drive innovation and advance sustainability initiatives.-      Broader adoption of renewable energy can mean economic and environmental benefits for many companies.-      A holistic approach to sustainability, encompassing everything from energy procurement to building materials, is necessary for long-term success.

Community opposition can thwart the most desirable—and needed—development projects. Connecticut developer Jerry Davis and CBRE’s Jessica Lall offer tips and strategies for marshalling community support for worthwhile projects and overcoming the instinct to “just say no” to new development.1.     Engaging the community early and maintaining open lines of communication are crucial for real estate developers to overcome community objections. By involving local stakeholders in the planning process and addressing their concerns, developers can build trust, gain allies and smooth the path for project approval.2.    Local governments that adapt regulations to allow for a variety of housing types can ease the "missing middle" problem—affordable housing that falls between single-family homes and large multifamily properties.3.    The affordable housing shortage can provide an impetus for regulatory changes and innovative solutions.4.    Successful pilot projects can demonstrate how local communities can benefit from new development.5.    Collaboration between government and the private sector can advance worthwhile projects that can be derailed by well-intention community opposition.

Office conversions are nothing new in Cleveland where older assets have long been transformed into higher and better uses. Three seasoned professionals shed light on the financial and logistical complexities of conversions, and the importance of public-private partnerships.Share these Insights on Cleveland Office Conversions: -      Cleveland has a long history of converting older office spaces into different uses, long before it became fashionable.-      The city has a promising future with a growing downtown resident population. Office conversion projects and broader urban re- development plans will support this trend.-      Cleveland’s focus on enhancing its natural assets, like the lakefront, is another factor supporting the city’s revitalization.

Austin has been transformed over the past 20 years. A traditional government and college town has become a top tech hub and a model for developing metros. Heritage Title Company of Austin’s Gary Farmer and CBRE’s Bradley Bailey discuss the city’s ambitions, growth prospects and challenges.Share these highlights from our conversation about Austin:Austin's economy has diversified significantly in the past 20 years, particularly with the growth of the tech, life sciences and automotive sectors.Infrastructure improvements, such as airport expansions and major roadway projects, are crucial for sustaining growth.Investing in social infrastructure to support students, seniors and everyone in between has been a major focus for Austin.The city's young, educated workforce is a major draw for companies, contributing to the rapid growth of Austin's tech sector.

Zoe Hughes of the National Association of Real Estate Investment Managers and David Chang of CoreNet Global highlight the benefits of a symbiotic relationship between real estate investors and occupiers.Insights to Share: Investors and occupiers increasingly have similar priorities, especially with respect to operational efficiency and sustainability.Data-sharing between occupiers and investors can enhance asset performance.Consistent, open communication is essential for adapting to market changes and meeting the evolving needs of occupiers and investors.

Principal Asset Management’s Rod Vogel, a private equity investor, and Chris Duey, a debt specialist, share different perspectives on the current real estate market and identify sectors where they find common ground.Debt and equity investors often see the market differently.Rod Vogel, a private equity investor, remains bullish about the long-term.Chris Duey, a debt specialist, believes a new credit cycle may be emerging as property values adjust to the current interest rate environment.The investors share enthusiasm for data centers, Sun Belt multifamily and selective office investments.

Entrepreneurs Atticus LeBlanc of PadSplit and Christine Wendell of Pronto Housing discuss innovative ways to help address the acute affordable housing shortage. They discuss how new business models, paired with technology, can make housing more accessible and cost-effective for residents and more profitable for property owners.Utilizing new business models, coupled with technology, can make affordable housing more accessible and cost-effective.Optimizing the use of current housing stock through co-living can help to alleviate supply shortages and improve affordability.Using technology to streamline the compliance processes can get qualified residents into affordable housing faster.