August 3, 2017
By Dennis Kaiser
The CRE investment market is continuing to experience significant shifts as a result of a host of factors. Those range from rising interest rates and an uncertain political and policy landscape, to volatile global investment demand. Success in today’s marketplace requires savvy and experienced investors who can sift through the hype and chart a solid course.
Recently, Houston-based Transwestern named Charles Hazen to lead Transwestern Investment Group (TIG). Hazen spent the majority of his 32-year career at Hines, and Connect Media wanted to tap into his vast investment management experience. Here’s what he had to say in our latest 3 CRE Q&A.
Q: What are the biggest storylines you are tracking that may have the biggest impact on CRE investment?
A: There are several major storylines of interest to CRE investors. One is the disruption in brick-and-mortar retail as a result of e-commerce and changing customer tastes. Second is the amount of high-end multifamily that has been constructed in this cycle for the millennial demographic, and subsequent lack of more modest product at a lower price point. The last major issue is where we are in the current economic cycle, and how much runway the economy and the real estate markets have before the next downturn.
Q: How are you navigating the varied shifts (i.e. interest rates, market fundamentals, political landscape, global capital allocations, regulatory issues, etc.) from both a 30,000-foot level, as well as a market-by-market perspective?
A: TIG is being cautious, but not defensive. Fortunately, supply for the most part has not dramatically exceeded demand in most markets and in most sectors. However, we are coming to the point in the cycle where the risk of overbuilding is becoming more pronounced. As to interest rates, fixing rates in certain cases makes sense now and we are considering that in most financings.
Q: What are some examples of deals that are getting completed, and what do you see on the horizon?
A: Most of TIG’s deals have been for industrial, office and multifamily product. Industrial, specifically warehouse and distribution centers, have been performing well from increased e-commerce, which we believe will remain strong. We are also attracted to Class A office product with credit tenants in growing markets. For example, last week, we closed on a sale-leaseback with State Farm for Park Center I in Atlanta.
For comments, questions or concerns, please contact Dennis Kaiser