3 Important Questions For Commercial Real Estate Investors

October 6th, 2017 by Jessica MacDonald

Original article by Kyle Hagert, Bisnow Houston October 5, 2017

For office investors, 2017 has been an uncertain time. Between the rising prominence of Southern markets, the disruption of co-working and an increasingly hard-to-define business cycle, there are no longer any easy answers. We (Bisnow) put three questions to some of commercial real estate’s sharpest minds to get a better sense of the market.

We (Bisnow) asked Granite Properties CEO Michael Dardick, Cawley Partners CEO Bill Cawley, Quadrant Investment Properties founder Chad Cook and PegasusAblon principal Mike Ablon three questions:

  • Co-working: Threat, partner or whole different ballgame?
  • You have $1B and can invest anywhere in the Sun Belt — what city do you invest in and do you build new, buy trophy or buy value-add/adaptive reuse?
  • Where are we in the cycle?

Here is what they had to say:

Where are we in the cycle?

Cawley: “Late, I think. There is more risk in front of us. I think we have 18 to 24 months before any significant softening.”

Cook:  “We don’t spend a lot of time pontificating on what inning we might be in. As long as the new construction continues to absorb and jobs continue to come our way, we still see plenty of room for continued appreciation in this cycle. As a whole, Dallas is still underpriced compared to most major metropolitan areas.” Dardick “We are in the ‘not quite’ part of the cycle.”

Ablon: “There is an irony in the question itself; it is a question of megatrends vs. microtrends. In the current economy, real estate might well be more of a derivative and reflective of a microtrend, which means the current environment might transcend the classical real estate cycles.”

 

You have $1B and can invest anywhere in the Sun Belt — what city do you place it in, and do you build new, buy trophy or buy value-add/adaptive reuse?

Cawley: “I still think investing in the coastal cities is the safest investment. Dallas is an awesome market and one that will outperform most. Buy trophy on the coasts, buy or build new in either. With Class-B and value-add out of favor, you have to be in the right market.”

Cook:  “New construction seems to be outperforming in Austin, but I would still target adaptive reuse in Dallas.”

Dardick: “Atlanta — buy core and value-add.”

 

Co-working: threat, partner or whole different ballgame?

Cawley: “Co-working is a partner or benefit, but [I] do feel only the strong will survive. You have to be careful who you align with. There will be more failure than success.”

Cook: “Partner.”

Dardick: “Co-working is an alternative way of working that will be part of [the] future of real estate.”

Image: PegausAblon principal Mike Ablon, Avison Young Managing Director Greg Langston, Quadrant Investment Properties’ Chad Cook, Pillar Commercial founder Manny Ybarra and Champion Partners Co-Managing Director Steve Modory. Photo by Julia Bunch, Bisnow