Trends Watch: Real Estate Investment Outlook

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Todd Glass, Senior Managing Director, Investments, Humphreys Capital.

What is your outlook for real estate investing?

There are solid opportunities in real estate despite what people may read in the headline media which tends to paint everything with a very broad, blunt brush.  Sure, central business district office buildings in gateway markets like New York, San Francisco, Chicago and Los Angeles are struggling and will continue to struggle – no argument there and thank goodness we do not invest in that sector of the market.  But there are tremendous investment opportunities in growing markets in the right sectors where there is clear demand outpacing supply and where lease-ups continue to be strong.

Where do you see the greatest opportunities and why?

We see continued strong performance in multifamily housing in markets where there is a clear lack of supply in relation to the demand for housing.  These supply/demand dynamics are not going away any time soon and this remains a strong place to invest.  We also see healthy supply/demand dynamics in industrial properties below 500,000 square feet where lease-up data is strong for multitenant industrial warehouses.  These industrial properties tend to be in the Sun Belt states where we see continued outperformance in relation to expectations.

What are the greatest challenges you face and why?

Real estate investors prefer predictability and stability when it comes to knowing the interest rate environment they’re working in, so the Fed’s overall lack of predictability on what they’re going to do next is the primary challenge.

What keeps you up at night?

We have stayed very disciplined as it relates to leverage and structure so our portfolios and funds remain in good shape.  With that said, the overall indecisive nature of what the Fed will do next is causing both debt and equity providers to be very cautious in their underwriting, and temporarily restricts the amount of liquidity in the market.  The market needs a little more clarity from the Fed and we believe that will be coming soon. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.