The FORT Podcast: Chris Powers – Real Estate Rant on Industrial, Office, and Capital Markets Heading into 2022
On this solo episode, Chris provides an update on industrial fundamentals and how they’re holding up to date. He also deep dives into interesting things he is thinking about by way of capital markets and provides insight into what the office data is saying. Enjoy!
Listen on:
Spotify
Apple Podcasts
YouTube
Topics:
(02:30) – Thoughts on Industrial for 2022
(04:28) – The Fundamentals of Industrial – Location Premium
(6:45) – Class B: A Diminishing Portion Of The Industrial Stock
(8:59) – Accelerated Rent Growth & Increasing Tenant Demand
(11:10) – Capex Requirements and Operating Expenses Are Changing
(12:10) – Is having multiple tenants better than having one tenant?
(12:34) – Does there continue to be portfolio premiums?
(13:27) – Just In Case Inventory
(14:38) – Industrial Price Increases Across Texas & Non-Texas Markets
(16:34) – Transaction Volume Increases, E-commerce & CapEx
(18:54) – Thoughts on Office
(21:34) – The Great Game of Chicken With WFH
(24:38) – Thoughts on Commercial Real Estate
(25:33) – Dry Powder, Open and Closed Funds, Mega-Funds, and Allocations From Pensions and Institutions
(28:18) – Family Offices & Non-Listed REIT Fundraising
(30:10) – Debt & Lending
(31:30) – (non) Distress in the Private Markets and Cap Rate Compression
(32:20) – Debt Pricing & Proptech
(33:50) – Migration
(37:32) – Market Liquidity, Inflation, Net Profits interests and Industry Leverage
(40:57) – Final Thoughts
Episode Summary
Chris shares his astute observations on the burgeoning industrial real estate sector. With a discerning eye on the palpable shifts, Powers elucidates the role of burgeoning e-commerce growth, emphasizing the critical need for strategically positioned distribution centers to meet the escalating demands of timely and efficient delivery in this new era.
Highlighting the intersection of technology and real estate, Powers underscores the seamless integration of advanced technological solutions in optimizing warehouse operations. This transformation, as highlighted by Powers, is pivotal in enhancing efficiency and meeting the surging e-commerce demands, reflecting the ongoing evolution in the industrial real estate landscape.
As the dialogue progresses, the lens shifts to the office space market. Amidst the global pandemic, the dynamics of the office real estate market are in flux, marked by a growing inclination towards remote and hybrid working models. Despite these evolving paradigms, Powers emphasizes the unyielding demand for physical office spaces, underscored by continued leasing activities by major tech giants. This observation stands as a testament to the enduring need for tangible workspaces, fostering creativity, innovation, and collaborative synergies.
Delving deeper into the office real estate market, Powers sheds light on the variegated leasing levels across diverse markets. His sharp analysis reveals a game of anticipation, as various institutions delay the return to physical offices. Despite this postponement, the underlying yearning to resume physical operations remains robust, underscoring the perennial relevance of office spaces in bolstering collaboration and innovation.
Amidst the uncertainties surrounding the return to office spaces, Powers highlights the continued demand, particularly among smaller to mid-sized companies. Despite the hurdles, the prevailing inclination to reconvene in physical spaces underscores the irreplaceable role of office environments in nurturing collaboration, innovation, and organizational cohesion.
In a detailed exploration of the financial facets of real estate, Powers presents an incisive analysis of current borrowing rates and industry leverage. His insights reveal a conscientious and strategic financial approach in the contemporary real estate landscape, marked by adherence to robust lending standards. This financial prudence, as emphasized by Powers, plays a quintessential role in ensuring the sustainability and stability of real estate investments.
Wrapping up the extensive discussion, Powers refrains from speculative predictions for the upcoming year. Instead, his focus remains unwavering on the importance of data and factual insights in navigating the intricate terrains of the real estate sector. His emphasis on credible and comprehensive data stands as a beacon, guiding stakeholders in making informed and strategic decisions in the real estate industry.
The Fort is produced by Johnny Peterson & Straight Up Podcasts