Keynote: Morning Economic Outlook Summit — 2022 Commercial Real Estate Outlook
Spencer Levy, Global Chief Client Officer, Senior Economist, CBRE
6 Predictions for 2022
1. Strong growth until 2024. The economy seemed to grow miraculously over the past year, but the real cause can be attributed to the amount of money we pumped into the economy in 2021. Spencer Levy predicted that we will continue to see the effects of this until 2024.
2. Low inflation and interest rates. “The weight of money is the single most important factor in all of real estate,” Spencer said. He predicted that inflation will continue to rise over the next year, but then lower. He also noted that commercial real estate is positively correlated to inflation in all asset classes.
3. Office is evolving. Offices are poised to make a comeback; however, they will need to be designed differently to make people want to spend time there.
4. Industrial and multifamily are on cruise control. Issues currently facing these categories include growth in e-commerce, increased inventory storage needed to meet high demand, and last-mile/high-density locations getting rents that are higher than the local office rents.
5. Retail’s going to surprise on the upside. Retail is currently succeeding due to “revenge retail,” or consumers making up for time lost during the pandemic by increasing spending.
6. Don’t worry, be happy. Spencer is optimistic about the macro and micro for the reasons listed in predictions 1–5. The future looks bright for commercial real estate in 2022.
Keynote: Learning Through Cycles
Vicky Schiff, CEO, JP2
Vicky Schiff discussed the significance of long-term cycles, based on the 500-year cycles Ray Dalio wrote about in relation to empires’ rises and declines in The Changing World Order. She applied these long-term cycles to her own life and analyzed how they have affected her throughout her career, highlighting lessons she has learned from five different companies along the way.
The Big 5 Real Estate Lessons
1. Cycles will happen — have a research-driven strategy.
2. Do your due diligence — understand where your money is going.
3. Staying power is key — have a downside protection plan.
4. Understand the deal and leverage — the devil is in the details.
5. Know your counterpart — understand their dynamics, reputation, and style.
The Big 5 Personal Lessons
1. Show up — be present at critical times.
2. Just do it — be the person who gets shit done.
3. Unique strength — discover it, leverage it, and be of service to others.
4. Resilience — again and again, get up after falling.
5. Be you — be yourself and do the right thing.
The biggest lesson Vicky has learned through these cycles? “Have your own values and stick to them, even if you’re the only person that’s standing up for those values,” she said.
Morning Economic Outlook Summit: The 5 Most Significant Trends Driving Real Estate in 2022
John Chang, Senior Vice President, Director Research & Advisory Services, Marcus & Millichap
The 5 Most Significant Trends Driving Real Estate in 2022
1. COVID-19/the pandemic.
2. Labor shortage.
3. Supply chain issues.
4. Interest rates in response to inflation.
5. Changing demographics, aging, and maturing of the millennial generation.
9 Commercial Real Estate Snapshots
1. The average U.S. vacancy rate is favorable across all property types.
2. Single-tenant retail offers steady yield and cash flow as well as simplified management.
3. Office properties are poised for recovery. Urban is still a question mark, but suburbs are emerging as a focal point.
4. Not all multi-tenant retail has been hard hit. Grocery/necessity-anchored retail is performing well.
5. The outlook for apartments is strong — the housing shortage will remain in play for approximately five years.
6. Self-storage has demonstrated recession resistance. Household formation and migration drive space demand.
7. Supply chain disruptions reiterate the need for local investors; e-commerce, restoring, and safety inventories drive demand.
8. Cap rate ranges and merging trend investor demand are creating broad-based downward pressure.
9. The current climate favors real estate investment; numerous positive drivers have a multi-year runway.
John Chang Best Ever Podcast Episodes:
JF2670: Will Interest Rates Be Higher In 24 Months? ft. Ryan Smith, John Chang, Hunter Thompson, and Neal Bawa
JF2705: Beyond the Pandemic: Adapting Investment Strategies to the New Normal ft. John Chang
Keynote: I’m Here to Be Helpful
Joe Fairless, Co-founder, Ashcroft Capital
Joe’s 3-Part System for Creating Relationships at Scale (that doesn’t directly involve you)
First, if you’re planning to scale your business, you’ll need a team: specifically, a marketing manager, CRM administrator, and investor relations person. Once you have the team in place, Joe recommends doing the following to scale:
1. Turn your investor relations team into micro-CRE celebs. They should be well-respected and listened to by 1,000 people. Play to the individual strengths of your team members to build a following.
2. Create, share, and use a content treasure chest.
3. Require your team members to share what they have learned from professional development with the rest of the team on a quarterly basis.
Avoid This Common Partnership Blunder
In a proper partnership, you should never have to train your partner. If you have to train them, they are simply an expensive employee.
According to Joe, the right partner should immediately elevate you to another level and immediately be THE solution for what you’re looking to solve. You should not have to hold your partner accountable or teach them about what they are responsible for doing.
To avoid forming a partnership you might regret, Joe recommends asking one question before selecting a partner: Have they successfully done EXACTLY what they will be doing with you?
5 Quick Success Tips from Joe
If you are seeking…
1. More rest and a better tomorrow: Shut off electronics after 10 p.m.
2. Humility: Play chess.
3. Perspective: Volunteer.
4. Sanity and clarity: Make a habit of listing your primary objective at the top of every email and document you write.
5. More smarts: Place a book in every room of the house.
More from BEC2022:
Top Takeaways from BEC2022 Day 1
Top Takeaways from BEC2022 Day 3
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.