Most asset classes are more fragile today than they were two years ago. CRE might be the exception.
To be clear, it’s not because fundamentals are strong (they aren’t). But unlike much of the market, real estate already took its medicine.
Private market values are down ~20% since early 2022, and REITs have underperformed the S&P by ~30 percentage points over that stretch.
While other sectors chased AI-fueled momentum, CRE was resetting to a new cost of capital.
That pain may now be an advantage.
...especially considering that new supply—long the Achilles’ heel of this industry—is finally in check.
And as the broader economy looks shakier by the day, CRE enters this phase less extended than most asset classes.
It may not be a haven. But it’s not expensive. And in this environment, that matters.
As strange as it sounds in a world defined by macro volatility, commercial real estate may slowly be making its way back, at least in relative value terms.
Sometimes, being out of favor is a better starting point than being over-loved.
PS -- We kick off every FastTrack course with a deep dive into capital markets because real estate follows the capital. In moments like this, it’s critical to know how to follow the dollars. If this sounds interesting, DM us to learn more about the upcoming cohort.
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