Do the Evolution: What’s up with U.K. REITs

Author Sam Conniff argues that the boldest leaders don’t play it safe—they have a strategy for rewriting the rules. This episode explores how pirate-inspired thinking and resolute action can help executives navigate uncertainty, unlock innovation and lead with courage amid change.·     Leaders who embrace change as a strategic advantage can outperform peers.·     Championing shared values, self-governance and rule-breaking offers a provocative framework for rethinking organizational culture.·     Emotional intelligence can be a critical competency for business executives.·     Prioritizing the short-term over the long-term can cost organizations capital and credibility.·     Leaders should challenge industry “settled” truths to unlock workplace innovation.

 This week we shine a light on REITs in the U.K. Two London-based experts discuss what’s driving deal flow, investment strategies and long-term returns, especially in logistics, retail and hospitality.·      Triple-net REITs in the U.K. offer predictable income and resilience through market cycles.·      Urban logistics and convenience retail are leading sectors, driven by consumer behavior and e-commerce demand.·      Sub–£20-million lot sizes are drawing interest from family offices and regional investors focused on low-debt, high-efficiency deals.·      M&A is accelerating REIT scale and relevance, enabling cost synergies, dividend growth and greater appeal to global capital.·     Interest rate spreads and swap differentials can make U.K. real estate increasingly competitive against European and U.S. markets.

Barings’ John Lippmann and CBRE Investment Management’s Elisabeth Troni share strategies for navigating risk and unlocking value in core real estate investment portfolios. From alternatives to secondary markets, top funds are adapting to outperform in a shifting landscape.Key takeaways on evolving investor strategies: ·      Alternatives are reshaping core portfolios, with newer funds allocating heavily to data centers, seniors housing and single-family residential.·      Operational expertise is a performance driver, particularly in shorter-lease-term asset types that require service-oriented models.·      Smaller markets offer strategic upside, with investor focus shifting to high-growth, affordable areas like El Paso and West Palm Beach amid demographic and affordability trends.·      Flexible fund structures allow managers to hold through market cycles and avoid forced sales in illiquid environments.·      Benchmarking tools enhance insights into income vs. appreciation return potential and help investors measure returns.

MetLife Investment Management’s Sara Queen and CBRE’s Tommy Lee explore the shifting dynamics of commercial real estate investing. They offer seasoned insight on a range of topics, from NYC office to data centers to build-to-rent residential and much more.Key takeaways on real estate investing:  ·      High-net-worth investors are stepping in aggressively during the current market cycle, while institutional capital remains cautious and highly selective. ·      Data centers benefit from sustained strong demand, but require disciplined underwriting due to lease rollover risks and rising competition. ·      Many institutional investors prefer targeted strategies in assets like build-to-rent, industrial and retail, giving them more control and precise capital deployment.·      Office development in New York remains fundamentally attractive, but securing equity partners is challenging due to risk expectations and long completion timelines. ·      MetLife is experimenting with AI to enhance investment committee decision-making, enabling a sharpened focus on key risks and opportunities but not replacing human judgment.

Amid evolving trade dynamics, CBRE experts reveal how nearshoring, supply chain reinvention and revitalized twin-plant models are reshaping industrial markets on both sides of the U.S.-Mexico border. Notably, demand for logistics space and construction activity is booming along the I-35 Corridor.Key takeaways on U.S.-Mexico Border Markets: ·      Port Laredo Surpasses Traditional Gateways: Currently the top U.S. import hub by value, Laredo’s rise reflects a structural shift in trade flows. Demand for modern logistics facilities near the U.S.’s southern border continues to grow. ·      Kansas City Leads for Absorption and Connectivity: With 28% leasing growth and strategically situated along I-35 with access to a newly unified Canada–Mexico rail system, Kansas City is emerging as a central node for North–South supply chains—ideal for occupiers seeking scalable inland distribution. ·      14M+ SF Under Construction in El Paso and Laredo.  These border markets are seeing major development of automation-ready cold storage and FTZ-enabled facilities. This signals long-term confidence and presents opportunities for early investment in next-gen industrial assets. ·      Twin-Plant Models Resurge: The return of dual facilities operating on both sides of the border is fueling demand for more sophisticated manufacturing and distribution space t. Occupiers should evaluate cross-border strategies to optimize labor and logistics. ·      Keen Competition to Secure Labor Cost Advantages: Border markets offer up to 70% labor cost savings vs. most U.S. cities, and have a skilled workforce. However, occupiers must act strategically to secure talent in a highly competitive market.

CBL Properties’ Stephen Lebovitz and CBRE’s Rich Frolik explain how malls are being transformed into high-performing, mixed-use assets. From casinos and hotels to pickleball and movie theaters, malls are evolving to meet modern demand.Key takeaways on the evolution of malls: ·      Malls are transitioning into multi-use destinations, integrating entertainment, hospitality and residential to diversify income and increase relevance.·      Financing is increasingly accessible for retail assets, with recent deals showing lender confidence and competitive debt structures.·      Success depends on hyper-local strategies, with redevelopment tailored to demographics, infrastructure and competitive dynamics.·      Malls in secondary markets benefit from large trade areas and limited alternatives, reinforcing their role as dominant regional retail hubs.·      Redeveloping legacy anchor spaces into formats that appeal to current customer wants and tastes can unlocks value and enhance long-term viability.

Net lease assets are attracting more institutional capital. New Mountain Capital’s Teddy Kaplan and CBRE’s Will Pike explore why this resilient, tax-efficient investment strategy is gaining favor.Attractive in volatile markets: Positioned as a hybrid asset class—part real estate and part structured finance, net lease investments offer cash flow backed by quality credit tenants.Manufacturing momentum: Production facilities are emerging as high-performing assets due to their strong cash flow and tenant investment in infrastructure.Sale-leasebacks as strategic tools: Investors and corporate occupiers are increasingly using sale-leasebacks to unlock capital, especially in sectors where considerable capital is tied up in operating assets.·      Capital market resilience: Despite macroeconomic headwinds, net lease is attracting institutional capital, with growing interest from large institutions and wealth management channels.·      Risk-adjusted returns and geographic nuance: Cap rates and valuations vary significantly by location and tenant credit quality, underscoring the importance of underwriting both real estate fundamentals and corporate financial health.

·Industrial Outdoor Storage (IOS), a twist on a classic property type, is attracting institutional capital.  With sub-3% vacancy and strong rent growth, Industrial Outdoor Storage (IOS) is outperforming traditional industrial assets.·     Zoning and entitlement hurdles limit new IOS development, boosting demand for existing sites.·     Major investors are amassing IOS portfolios, following the path of self-storage and single-family rental.·     IOS supports logistics, construction and utilities with strategic infill locations and flexible outdoor space.·     Electrification and evolving logistics technology are reshaping IOS.

Nareit’s Steven Wechsler explains the advantages of investing in real estate through REITs. The conversation touches on the evolution of REIT sectors, the impact of interest rate movement, liquidity and tax efficiencies and the wide range of investment options available.Key takeaways: ·      Organized to Provide Structural Discipline and Tax Efficiency: REITs must distribute at least 90% of taxable income annually and maintain strict asset and income thresholds, creating a disciplined framework that supports consistent investor returns. ·      Public REITs Are Conservatively Managed: With average leverage around 30%, public REITs are significantly less leveraged than private real estate vehicles, reducing financial risk and enhancing long-term stability. ·      Global Options: REITs are publicly traded in major markets around the world. ·      Positioned for Opportunistic Acquisitions: REITs with strong balance sheets and access to capital are well-positioned to acquire assets or portfolios when pricing becomes accretive. ·      Provide Access to Emerging Asset Classes: The REIT structure includes data centers, cell towers and healthcare facilities, aligning with broader economic and technological changes.

Mortenson’s Maja Rosenquist and CBRE’s Gordon Dolven examine one of real estate’s most dynamic sectors. They discuss how AI’s growth has accelerated data center development, how site-selection strategies are evolving and the challenges posed by power constraints.Key takeaways on data center trends:·     Data center site selection is increasingly dictated by access to scalable power, increasing  development in markets with robust energy infrastructure.·     AI-driven demand is accelerating the need for hyperscale campuses, with some sites spanning thousands of acres and requiring gigawatt-level capacity.·     Lease structures are based on power usage rather than square footage, with rental rates rebounding over 50% since 2021 due to limited availability.·     Long-term capital is flowing into the sector, with infrastructure funds driving a shift in investment strategies.·     Labor and construction cost pressures are prompting innovations like prefabrication to meet the demands of billion-dollar builds.